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Solar as an investment
Oct01

Solar as an investment

By now everyone knows that solar can save you money on your electric bill, but let’s take a deeper look at solar as an investment. On average, a 6kW system that costs about $15,000 after the federal tax credit generates about 9,000 kWh in a year. If your current cost of electricity is $0.20/kWh, you would save about $1,800 per year on electricity and even if the electricity company never raises your rate, the system pays for itself in about 8 years. After the system has paid for itself you will continue to profit over the 25+ year lifespan of the system. With no electric rate increase, the system you bought for $15,000 will generate $45,000+ of electricity. But, electric rates aren’t going to stay the same and looking at the last two decades, they have risen an average of about 3% per year and as high as 7% per year in some areas. Just going with the average 3% annual increase in electric rates bumps up the return to $65,600 over the 25 year warrantied life of the solar panels. That results in a 14% Internal Rate of Return (IRR). Realistically, that IRR will be even higher because the solar won’t automatically turn off after 25 years. It will likely keep producing for quite a while after that. We are just being conservative and sticking with the length of the warranty. For the sake of argument, we should compare this to other investments like the stock market. The S&P 500 has an average IRR of about 7-8% over the last few decades. That means you can expect twice the return from solar. It is a shame that your investment in solar is capped by the amount of electricity you use. Still not convinced? Let’s look at it another way. How happy would you be right now if you had bought all the gasoline you have been using for the last 25 years back in 1993 when the average price was only $1.11/gallon? You’d be grinning from ear to ear every time you thought about all that money you saved. With solar, you have that opportunity right now. When you install solar on your home, you are purchasing the next 25 years of electricity at even lower price than the current rate. Going back to our 6kW system example, the cost of electricity comes out to just under $0.07/kWh. You would be locking in that low rate for the life of the system. Every time electricity rate hikes were mentioned in the news you could pat yourself on the back for making such a smart investment. This investment also...

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What Solar Can and Can’t Do
Sep25

What Solar Can and Can’t Do

People have a lot of misconceptions about solar, often due to misleading marketing tactics by solar companies. If you are going solar, you should know the facts so you have realistic expectations. Solar can save you money. A standard grid-tied system feeds energy to your house so you don’t have to buy as much electricity from the electric company. But this is generally where it stops. Solar will not make extra money for you. Unless you are lucky enough to live in a place where you can sell Renewable Energy Credits (RECs), you are limited to saving what you normally spend on electricity. If you generate most of the electricity you use, you can reduce your electric bill to almost nothing. But if you generate more electricity than you use, you will get little or nothing back from the electric company for the excess kilowatt hours.   Solar can be used to provide backup power during a power outage, but this functionality typically costs extra and/or is very limited. The least expensive way to get back up power from solar is to use an SMA inverter that can be installed with a special power outlet that works during power outages. The limitations are that it only provides power when the sun is out and even then, it is only 1800 watts. So, if the power goes out at night or during a thunderstorm, that outlet won’t be much help until you have sun again. But, once you have sun, you will be able to power small devices, charge your phone or laptop and possibly even run your refrigerator. Beyond that special outlet, solar backup systems with batteries are available but they are pricey. They generally start around $7,000 for a small one. The more appliances you want to run during the power outage, the more the system will cost. It is usually cheaper and less limiting to purchase a backup generator that runs on diesel or propane. Solar can be used to run remote devices like well pumps and signal repeating towers. These systems can be set up two different ways. One way is to install solar directly to the device and when the sun is out, the device will work, when it is cloudy or dark, the device will not work. The other way is to install the solar with a battery system that stores the power when the sun is out so you can run the device any time. These types of systems are great options to run something that is too far away from the power grid. But, if everything you want to run is near...

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Chinese Vs American Solar Panels
Sep17

Chinese Vs American Solar Panels

Yes, you should buy solar panels, but… Should you buy solar panels that are made in America or solar panels that are made in China? We live in a modern world that operates on a global level. Things are made all over the world and solar panels are no exception to this. Even if a solar panel is labeled and marketed as “Made in the USA” it is very likely that the solar cells and/or other parts of the panel were made overseas. All the manufacturer must do for that “USA” label is assemble the foreign parts here in America. There are exceptions to this, but most solar cells are made in Asian countries, even in those panels that are assembled in the US. Does being made in Asia automatically mean the solar cell is of lesser quality. No, it doesn’t. The truth is that there are poor quality products being made in every country. History has shown that even some solar panels that were fully manufactured in the United States have had issues. But, fear not, there are also high quality products being made in every country.  There are top tier Chinese panels made by public companies with world class factories and clean rooms like Trina, Canadian Solar and JA Solar. Just as there are great solar panels made or assembled in America like Sunspark, SolarWorld and Gigawatt. Finding quality solar panels is more about brand than country of origin. We have a magic word we use in the solar industry, “bankability”. When a bank decides to offer leases on solar equipment, they have a lot at stake. They will end up owning hundreds if not thousands of systems, all with contracts that guarantee the end user a certain amount of production for up to 20 years. If the solar panels in these systems fail on a large scale, it will cost the bank a lot of money. So, before investing in a particular solar brand, the bank will do everything they can to ensure they are getting a quality, “bankable” product. This assurance includes third party engineering assessments of factories and products as well as evaluation of the manufacturing company’s longevity and ability to honor warranties in the long term. The banks have a lot of resources to put into these bankability studies. As an individual consumer, all you have to do is look at what brands the banks have chosen and use those on your own projects. There is also the consideration of price. Researching Chinese solar panels will bring up many news articles about tariffs being passed and the price hikes they may cause. In the end...

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Benefits of DIY Solar
Sep10

Benefits of DIY Solar

We all know the benefits of going solar. The solar salespeople knocking on your door and calling you incessantly have made it clear that a solar power system will quickly pay for itself by saving you money on your electric bill. But what about the benefits of doing the install yourself? The most obvious benefit of DIY solar is the cost savings. As much as half the cost of a solar system install is labor charges. It is not the contractor’s fault that these charges are so high.  Solar contractors have some of the highest workers’ compensation insurance rates of all the construction trades, so not only do they have to pay their workers, they also must pay high insurance premiums. Let’s also not forget those solar salespeople at your door. If you buy from them, their commission is coming directly out of your pocket. Another benefit is confidence that the job will be done right. In general, solar contractors know what they are doing, but larger solar installers often have issues with quality control. Solar crews are under the gun to complete an install in a certain amount of time and corner cutting happens. Some smaller companies do solar on the side and their main business is roofing or electrical work. These guys may not be fully up to date on all the changes to solar equipment or the ever changing requirements of local building departments and utility companies. The bottom line is who would you rather have putting a bunch of holes in your roof? Would you choose a guy who is in a big hurry because his boss says he has to finish the job by tomorrow? Would you pick an electrician whose training on installing roof flashings began and ended with the installation manual that came in the box? Or, would you rather do it yourself? You know you will take the time to learn the right and wrong way to install that flashing. You will take your time on the roof to get it done right. You will also carefully choose the right flashing which brings up the next point. Getting to choose the equipment yourself is another reason to DIY on your solar project. Most installation companies offer one or two choices on solar panels and inverters and will never even discuss the smaller details like racking or flashings. Solar contractors typically choose these accessories based on the cheapest price which is a little scary when you think about those flashings being the only thing that is going to prevent all those holes in the roof from turning into leaks a few years...

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How Solar Affects Selling Your Home
Aug28

How Solar Affects Selling Your Home

A common question people ask when making the decision to go solar is how will having solar affect selling the house? The first thing to note is that according to a few independent studies, solar definitely increases a home’s value. The National Bureau of Economic Research did a study in 2011 comparing statistics for home sales in Both the San Diego and Sacramento areas and concluded that solar panels typically increase a home’s value by 3.5%. It even went as high as 4.5% in communities with higher percentages of college graduates and Toyota Prius owners. Another Study done by US Department of Energy’s Lawrence Berkeley National Laboratory in 2011 concluded that homes with solar sold for more across California. The amounts ranged from $3.90 to $6.40 per watt more with the average amount being $5.50 per watt. A follow up study in 2015 by the same Berkeley Lab in partnership with Sandia National Laboratories looked at home sales across many states and found that the solar increased the homes’ values by an average of $4 per watt. According to these studies, it appears that in most cases, installing solar will increase a home’s value by more than the cost of the install. On top of the increased values, NREL has also released statistics showing that homes with solar sell 17% faster on average than homes without solar. So, not only will you get more money, but your solar home is likely to sit on the market for less time. What these studies don’t account for is homes with a solar lease or PPA agreement. In these cases, either the home buyer must take over the lease or PPA agreement or the buyer or seller must “buy out” of the lease agreement. There is a general perception that these types of solar agreements would cause problems with selling the home, but Berkley Lab worked on this too. They conducted interviews and online surveys of home buyers, sellers and real estate agents that were involved in the sales of home with solar lease and PPA agreements between 2010 and 2013. The evidence collected suggests that the solar lease or PPA had no negative effect on the sale. Both buyers and sellers were satisfied with their experiences. If you are planning to lease solar or enter into a PPA agreement, you should look at the contract and what it stipulates for the sale of the home. Keep in mind that while you think you will stay in your home forever, life happens and things change. You should always be aware of what you getting into before signing a contract that could affect...

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