• The Journey to Solar – Part 1

    I have long advocated the benefits of using renewable power sources instead of fossil fuel based power. For our purposes here, I’m talking about electricity for the home, not automobiles.

    A few years ago, I lived in an area that had the option for power provided 100% by wind energy. For four years, that what I used. Moving to my new place though, removed that option. Texas law regarding electrical power is a hodgepodge of state, county, and local laws that are often nebulous. The final result however is that I now live in an area with a legally allowed monopoly on who provides power. That company is making some strides toward acquiring energy from renewable sources, but it’s not the 100% that I wanted.

    I need to make a note here. Some will say that my power didn’t come from 100% renewable sources. It came from the grid, with it’s mix of coal, natural gas, hydro, wind, and solar. And, that is true, but it’s a meaningless distinction. My money went to company that inserted wind energy into the Texas grid (which, uniquely, is almost completely separate from the rest of the US grid). What that means is that the owners of the wind turbines were getting money that would have otherwise gone to a company that used fossil fuels.

    Through some savings and some paying off of some bills, I’m now in a position to do some more. About a month back, our local electricity provider had a “solar fair”. There was a discussion panel with the provider, about 8 solar vendors showed up, and they had some neat things for kids to do, like building solar powered race cars. I spoke to a number of the vendors and arranged for several to come by and take measurements of the roof.

    Several weeks went by, and several groups come out and study our roof and provide bids. I ended up receiving 5 bids and ended up requesting two more from the vendors that we modifications to the original bids. Here are some things that I learned and I hope you will take to heart if you consider adding solar panels.

    First, there is a 30% tax credit from the federal government. This tax credit is set to expire in 2016 and that’s important, as I’ll explain in a minute. But before you do anything, especially financing, talk to your tax professional… and I don’t mean reading what Billy Jake says at Bob’s Taxes and BrewHouse forums. Let me preface this discussion with the statement that I am not a tax professional and this is only my understanding, which may be flawed.

    The tax credit is a credit, that means that it is not a returnable amount. However, that credit is counted third of all the things that go toward your tax bill. What that means is that it allows some amount of your payments to the IRS to be returned instead of being used to pay your final tax bill. However, and this is important, that value may not be the full 30% of the cost of the solar system. Good news, you can carry any remainder over to the next tax year. Bad news, if you financed your solar system and used that rebate as a down payment (which many companies do), you may owe more than you bargained for because you don’t get the expected amount. TALK TO A TAX PROFESSIONAL!!!

    Second, of the companies I talked to and spent time with, a full 75% of them existed because of that tax credit. They weren’t really electrical people, they were solar people who used that tax credit to undercut other bidders for solar installations. One of them even told me that if the solar credit wasn’t extended, then they wouldn’t be doing solar work any more. These are the people you want to avoid at all costs. Most of the products have a 25 year warranty, which is pretty much useless if the installers shutdown in January of 2017.

    You want to look for a company that has a lot of experience with solar, but does other electrical work as well. These types of companies are much more likely to be around whether the tax break exists or not. Our final selection was a family owned electrical contractor who does high end, custom homes and solar, and has been in business for 75 years. Currently, the owners are two brothers, mid-30s, both with industrial engineering degrees and are both master electricians.

    Which brings me to my next point. Talk very seriously about the people installing the hardware. You want someone on the jobsite who is, at a minimum, a journeyman electrician and preferably a master electrician. Ask to see certificates and licenses. The company we choose has one of the brothers on the job site and who does the final testing. One of the other companies has a master electrician who sits in an office and designs systems, but doesn’t go into the field. A journeyman is supposed to be the “supervisor” and they depend on the local electric company to test the system. Not a good plan.

    When designing your system, talk to your power company in detail. Get specific information on rates that you pay and that they pay you for electricity. Find out when the power meters reset. Find out your peak and average usage. Use all that to determine what kind of system is most efficient for you.

    Ideally, I wanted a 100% system. Meaning that my solar panels would cover 100% of my peak usage (which, in Texas, is August and September). That was totally possible, but we were getting into the $50,000 range.

    The downside to that was that our power company sells electricity to us at $0.11 per kilowatt hour. But they only pay us $0.05 per kilowatt hour for electricity that we produce over what we use. I need to explain how this works.

    During the day, the solar system produces electricity. If it produces more than your home uses, the rest goes through your meter, effectively running it backwards, to the rest of the grid. During our billing cycle (30 or 31 days) I can provide extra electricity to the grid and then, at night, take electricity from the grid. It’s a 1:1 ratio. I put one kWh in and I can take one kWh out with no penalty. But, when they read the meter for that billing cycle, everything resets.

    If I have put more electricity into the system than I took out, I get a credit on my bill for HALF the amount that they would charge me for that same electricity. In other words, on that meter reading day, everything extra is paid back at a 1:2 ratio. I’m losing half the value of whatever extra I put in. Since my original system design would produce large amounts of extra electricity during most months, I would actually be losing money and it would take significantly longer for the solar system to break even and begin paying for itself.

    Now, your local electricity provider may have a different arrangement. So talk with them.

    For us, it makes much more sense to have a system that covers your average yearly use. In this way, you aren’t over producing at any point, but you also aren’t getting that zero electric bill which is a goal for some people.

    Another factor is something called “peak pricing” which will probably become more common as Earth warms up. Basically, the electric company sets an arbitrary value of kilowatt hours per month. If you go over that amount, the amount of money you are charged for your electricity can increase radically. I’ve heard stories of electric bills going from $100 to $150 a month to over $600 the next month, because of peak pricing. Even a small solar system may be able to keep you under the peak pricing limit.

    Smaller solar systems are obviously cheaper. We choose to end up with a “standard sized” system, that just means it’s a commonly sized system that many people use. This will take the edge off our summer bills and provide near as makes no difference to 100% of our electricity in the spring. Once the system is paid off in 3 years, we can add another bank of panels or wait for a while, depending on what the local electric company is charging.

    Some other things to keep in mind when talking to installers. Many will say that solar panels are all basically the same and you are buying a commodity, so price (and or Return on Investment (ROI)) should be your primary focus. In my experience, the vendors saying that have cheap ass products.

    There are differences in solar panels; efficiency, power production, manufacture techniques, degradation rate, and integrity are all factors you should think about. I could have increased my solar energy production by about 15% for the same cost going with a vendor who used “no name” brand panels with mediocre lifespans. I choose to go with a more expensive, but higher quality product with guaranteed production and degradation rates that are better than others.

    Let me explain. Solar panels are like cars, as soon as you put them on the roof, they start to degrade. They get hot, then they freeze, the wind shakes them, maybe a hail storm or two hit them, etc. etc. etc. Over time a lot of little things add up to a lot of lost production. Most solar panels use a single sheet of crystalline silicon with conductors glued to the top. Other panels use a single sheet of silicon bonded to a sheet of copper with the conductors embedded into the copper. This provides both structural and performance benefits.

    Most panels are guaranteed to provide between 60% and 75% of their initial power after 20 years. Those copper backed panels that I went with are guaranteed to provide 85% of their initial power after 25 years. Otherwise, it’s a manufacture defect and we get a replacement panel. More power produced means a better ROI. I think that this is worth paying a little extra for, you might not.

    A last equipment consideration is how does the direct current produced by the panel get changed into alternating current used by your house and the grid. There’s three basic types of inverters (DC to AC) right now. The string inverter is cheapest. It connects a large group of solar panels in a circuit and converts their DC produced power to AC power. The problem with them is that if one part of one panel is in shade, then ALL of the panels in that string are producing reduced power, even if they aren’t in shade.¬†Think of it like old Christmas lights. Pull one out and the whole string is dead. This might be OK if you have open terrain and no chance of shade, but even bird droppings or shade from a plumbing pipe can affect production.

    The other two are microinverters and DC optimizers. A microinverter system means that each panel (or sometimes pair of panels) have their own inverter. So if one panel is shaded, the others can still produce full power. The DC optimizer acts like a microinverter in a string inverter. All the panels are connected together, but they all produce their full power, even if one is in shade.

    Obviously string inverters are cheaper and may be all that’s needed. The others are more expensive, but may be required to get the most out of your panels.

    Finally, spend some serious time talking about installation. How does it work? what steps are used to prevent water damage to your roof and attic space?

    What I found was that a salesman who has spent some time in the trenches, actually installing panels, is a better source of information than a former economist that talks about value and ROI, but can’t tell you if the system is grounded or not (another thing to ask).

    I’ll provide another post about this during installation and afterwards.

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    Article by: Smilodon's Retreat