The Bright Idea That Powered My Home (And My Savings)
As a proud data geek and homeowner, the idea of solar panels had been simmering in the back of my mind for years. When we finally moved into our new home in 2020, my spouse and I decided to take the plunge and invest in a solar panel array for our roof.
Let me tell you, the day those panels went online in June 2021 was a game-changer. I eagerly started crunching the numbers, and let me just say – the savings were nothing short of staggering.
First things first, a shout-out to our incredible installer, Solar Solutions. They did a fantastic job, and I can’t recommend them enough if you’re in the DC area. I know, I know, this sounds like a sponsored post, but I assure you, it’s not. They were truly superb.
Now, let’s dive into the numbers. Our 23 solar panels are rated to produce a total of 828 kilowatts (kW), but in reality, energy production doesn’t quite reach those lofty heights. Our peak production is around 66 kW when the sun is highest in the sky and closest to the direction our panels face. The highest total energy production we’re likely to see in a day is 56 kilowatt-hours (kWh), which we achieved on a bright, cloudless day just a few weeks after the panels were installed.
Now, that 56 kWh figure might sound impressive, but get this – in our first electric utility billing cycle after the panels were turned on, our house used an average of 53 kWh per day. Our solar energy production during the same time was, on average, 40 kWh per day. In other words, 75% of our energy used that month came from the sun!
The Seasonal Solar Roller Coaster
Now, I should note that June is about as good as it gets when it comes to solar energy production. In the other seasons, there are fewer hours of daylight, and the sun is lower in the sky, which reduces energy capture. According to PVWatts, June is around 25% brighter than the average month. The best summer days can generate almost twice as much energy as the best winter days.
Over the course of our first year with the solar panels, about 38% of our energy usage was powered by the sun. And that’s with our furnace for heat in the winter being powered by natural gas rather than electricity. If I had included our gas usage by converting it into an equivalent amount of electricity, the percentage would be even higher.
The Power of Net Metering
One of the most interesting aspects of our solar setup is the concept of net metering. You see, there are many moments during the brightest parts of the day when we produce more energy than we’re actually consuming. And since we don’t have a battery to store that excess energy, it flows back into the power grid for someone else to use.
Here’s where net metering comes in – any energy that flows back into the power grid is credited to our utility bill. So, the grid basically acts as an infinite-capacity, free battery, taking our excess when we have it and giving it back to us (and more, of course) when we need it.
It’s worth noting that because we didn’t purchase a battery, our panels won’t provide power if the electric grid goes down. Battery backup power is a more expensive and complex setup, and the production of lithium batteries isn’t without its own environmental impact, which is why we opted not to go that route.
Calculating the Savings
Now, you’re probably wondering about the financial aspect of all this. How much are we actually saving on our electric bill? Well, let me break it down for you.
From our first full-month utility bill after installing the panels, we consumed 1,144 kWh from the grid and sent back 690 kWh in excess. When I multiplied the marginal electricity rate on our utility bill (which varies from about 10 to 12 cents per kWh) by the total energy produced by our panels during the bill’s service period, I saw a probable utility bill savings of $1,058 over the year.
That’s right, $1,058 in savings! And that’s just the beginning.
The Gift That Keeps on Giving: SRECs
But wait, there’s more! There’s another completely separate monetary benefit we’re reaping from our solar panels: Solar Renewable Energy Certificates (SRECs).
Here’s how it works: For each megawatt-hour (MWh) of solar power we produce, we’re credited with an SREC token. These tokens are then purchased by electric power utilities to offset penalties in local laws for non-renewable energy production.
It’s essentially a form of double-dipping. We get the energy bill savings, including any net metering credits, and on top of that, we’re credited with an SREC token for each MWh we generate – regardless of whether we consume that energy ourselves.
Here in DC, the penalty for non-renewable energy production is especially high, making SRECs unusually valuable. When we first installed the panels, the market price for an SREC was about $400. After the 7% transaction fee to our broker and regular income tax, we’re still left with around $300 per SREC.
In our first year, we sold about $2,500 worth of SRECs, which, after taxes, is really worth around $1,875. That’s almost twice as much as the actual cost savings we saw that year from the solar power itself!
Now, I should note that the SREC market is a bit of a wild card. Supply and demand could change dramatically in the coming years, potentially reducing the value of these certificates. But for now, they’re a crucial part of the financial equation, and our solar installer even offered a financing method where they keep the SRECs and lower the upfront cost to us.
Sizing Up the Investment
So, you’re probably wondering, “Is this whole solar thing actually worth it?” Well, let’s crunch some more numbers.
The cost of the panels and installation was about $28,000. This will be offset by the generous 26% federal solar energy tax credit we’ll receive next year, but keep in mind that this credit may have expired by the time you’re reading this.
The key metric to look at is the cost per watt of production, which is the production rating of the panels in watts multiplied by the number of panels. We ended up with an installation cost of $2.62 per watt after the tax credit.
Now, the manufacturer’s warranty estimated that our REC365 panels would have a 92% power output warranty at the end of the 25th year. But these warranty estimates might be overly optimistic, so it’s important to factor in differences in expected future output when comparing installation proposals using different manufacturers’ panels.
There’s also the opportunity cost of the upfront investment, which, assuming a 4% return, is around $3,000. Add that to the installation cost, and the total investment was about $25,000.
The Payback Period Puzzle
So, when will we recoup that investment? Well, our solar installer projected that we’d do it in around 6 years, thanks to the lower utility bill, SREC credits, and federal tax credit. But as with anything involving the future, there are a lot of variables at play.
In our first year, the total savings from electricity and SRECs was about $2,933. If that keeps up, we’d recoup the investment in around 9 years. But if the value of SRECs goes down, say to zero after a decade, it might take around 11 years.
The key thing to remember is that whether the panels pay for themselves doesn’t actually depend on our energy consumption. The panels will generate the same electricity – and the same financial benefit – regardless of how much energy our house consumes. As long as we have net metering or a battery that we never fill to capacity, the savings will keep on coming.
The Bright Future of Solar
So, there you have it – my personal journey into the world of solar energy. It’s been a roller coaster of numbers, warranties, and market fluctuations, but the bottom line is this: Investing in solar has been an absolute game-changer for our home, our wallet, and the environment.
And the best part? The future of solar is only getting brighter. Advancements in technology, cost reductions, and evolving policies are making this renewable energy solution more accessible than ever.
If you’re on the fence about going solar, I urge you to take the plunge. Solar Solutions and other reputable installers can help you navigate the process and unlock the incredible savings and benefits that solar has to offer. Trust me, your electric bill (and the planet) will thank you.
