Monday, May 16, 2022

The Money Post: What's Included in my Solar Power System, and What It's Going To Cost

The papers are signed, all the arrangements are made, and the contractors arrive this week to start installing things on my roof, in my basement and on the outside of the house.

This, as they say, is the moment when the rubber meets the road, or in this case, my wallet.

When you start a conversation about getting a solar power syste, the subject turns quickly to overall costs and the break-even point. So let’s start at the top line and with the big number:

What I’m getting:

39 REC Alpha 395 Pure modules: These are the “panels” that will be visible from the roof. They’re rated to produce up to 15,405 kilowatt hours per year, which as I wrote previously, works out to a little more than what I think my average annual electrical consumption is. The end result: I think I’ll have the capacity to produce more power than I use, which is important for reasons I’ll get to later. Each module will have a rack to attach it to the roof.

•Two SolarEdge SE10000H-us inverters: These are central to the system and will be mounted on a wall in the basement near the circuit breaker box. Basically, the panels produce DC power. Mounted on a wall in the basement, the inverters convert that DC power to AC. They also optimize consumption and serve as a connection to the backup battery. It also enables remote monitoring and management, so I can keep track what’s going on with the panels — Are they producing? Are they damaged? — via a mobile app.

•One LG Chem RESU16H Prime backup battery: Also installed in the basement, this will store power generated by the panels and during the night we’ll use some of it rather than power from the utility grid. And when the utility grid fails, as it occasionally does, we’ll have enough power to keep the lights on until either the sun comes up or the grid comes back. The battery adds about $15,000 to my net cost.

In approximate figures, here’s how much it would cost to buy it all: ~$70,000.

Here’s how much I’m getting in tax credits: A rebate worth ~$18,000 or 26 percent from the federal government and another worth $5,000 from the state of New York. The federal rebate declines to 22 percent next year and expires the year after that. 

Plus I’ve applied for block grant incentives from a state based-program called NY-Sun which will offset another ~$7,700 at a rate of 50 cents per watt.

Total in incentives: ~$30,500

All of the incentives will go straight to the vendor, who has handled all of the paperwork and filings. And when I file my taxes next year, I’ll have a few more forms to hand over to the accountant, but that’s about it.

A few details about the financing: I had to join the Clean Energy Federal Credit Union to apply for a loan for the above amount. It’s a 20-year loan, but realistically I’ll pay it off within 18 months. But in order to be eligible for membership in that credit union and apply for the loan, I had to first join the Northeast Sustainable Energy Association which has a $75 membership fee. This was an odd step, but I didn’t mind it.

All in I’ll be paying about ~$39,500 to get the system installed. When it’s installed and running, I’m expecting to pay a fixed fee to my electrical utility for the life of the system, one that is far below my current average monthly electrical bill, which is running about $300 a month, sometimes higher, sometimes lower. It should also remain the same as electrical rates rise which I expect they are likely to do given the volatility in energy markets of late. 

Once the system is running I’ll be watching both the production and utility bills pretty closely for a few months. If my assumptions are right, after you take out the additional cost for the battery, my accountant says I should expect to break even within nine years. By that I mean the amount of money not sent to the local power utility will add up to the same amount I would have paid. I think I can reach that point in seven years. Meanwhile, the investment in the battery is a hedge against grid failures. 

We’ll get a good test of my assumptions right away. Summer is here, and the air conditioner and pool heater will be running from June until late September. Last year’s electrical bills, which were our first since buying this house, came as a bit of a shock compared to those for a city apartment. If the summer is anywhere near as sunny as last year if we might end up seeing a benefit right away.

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