Introduction by Bill McKibben
Solar has come of age. When I first put panels on my roof fifteen years ago, it was hard to justify economically: this was still a fringe industry, albeit one that those who cared about climate change were rooting hard to see succeed.
Flash forward to 2016. Installations across America are soaring. The price of a solar panel has come down 80% in the last decade. There are tax credits available that drop the price even more. And for New Yorkers, there’s a special pride: the biggest high-efficiency solar panel factory on our planet is nearing completion in Buffalo.
So now is the time to be joining your neighbors in making this important change. But the rapid spread of solar technology doesn’t mean shopping for a system has gotten easier. If anything, there are more options now, from leasing to direct ownership to community solar. Nationwide installers compete with local contractors; even hidebound utilities are getting into the act. Finding the right match for your situation will mean maximizing the value of your investment, both for your bank account and for the atmosphere’s carbon burden.
Article by Christopher Corbett
The residential movement to go solar continues to sweep the country, as well as New York State. The early adopters, who have responded to both federal and state renewable energy policy priorities, have accumulated valuable experience and insight that can greatly benefit consumers concerned about the environment. Most important, this experience can enable consumers who are willing to critically re-examine their own energy consumption habits and sources to take meaningful action to help the environment. The purpose of this article is to share my experience on the chance it will be helpful to others. It follows my earlier article: “Should I Go Solar?” published in Adirondac (September-October 2015, p. 40); a more detailed account of those experiences can be found at http://www.adktrailhead.org/should-i-go-solar-one-homeowners/.
Here is a brief summary of my first year of ownership with actual production and known costs and tax benefits realized, along with the rationale and recommendations.
During the summer of 2014, a door-to-door solar agent approached us; his company was installing photovoltaic (PV) systems nearby. He stated our house had ideal southern exposure and offered a quote on a system. While I declined, I knew research was needed to properly assess the environmental and cost implications of going solar.
Over a few months, I investigated eight solar providers in the Albany, N.Y., region. This effort created much confusion due to many choices offered, including purchase power agreements, leases, pre-paid leases, and purchase options. Yet, this educational process revealed many facets and complexities to sort out to determine which option, if any, was best for us.
Buy or Lease?
As a homeowner, I have found three quotes from qualified contractors sufficient to make a well-informed decision. Yet with solar systems, after consulting with three providers, I found more research was needed due to the complexities involved and many options available. As a result, I consulted with eight solar providers to obtain adequate information to make an informed decision and located a provider in whom I was very confident.
My initial conclusion was that the lease arrangement was best because there was no money down and the contractor would be responsible for all system maintenance and repair for 20 years. Upon closer examination, I changed my mind as the 20-year legal obligation seemed too onerous.
A few reasons entered into this decision. First, I was concerned the system could become technologically obsolete yet I would be bound by a 20-year legal commitment. Second, I was concerned that supportive federal and state government public policy could change to the detriment of solar customers, especially those with long-term contracts. This concern resulted from my state-level public utility regulatory experience where I had seen energy policy priorities often shift, or totally reverse, every several years as a result of elective politics. This results from normal partisan turnover at federal and/or state levels and is a function of the will of the electorate.
I concluded I needed greater flexibility to respond to changing future conditions and a 20- year legal commitment was too restrictive. Another complication: if we decided to sell the house. That is, either I would have to buy out my 20-year lease contract, or a new owner would have to agree to take on the lease obligation, possibly impeding a sale. Further, the leaseholder would be obligated to perform its own credit check of the prospective buyer, given the leaseholder’s understandable need to protect its financial interests, presenting further complications.
In sum, I came to view the 20-year lease as a liability, possibly decreasing the value of the house, whereas the outright purchase of a PV system would be an asset, almost certainly increasing the value of the house. Considering the preceding, we viewed a system purchase as the only viable option for us, with the downside that I would have to front capital and also be responsible for maintenance and repairs, and exercise and enforcement of warranties.
Several purchase quotes were obtained as well as an investigation of Better Business Bureau ratings, which ranged from A+ to F. In my experience, BBB ratings are not infallible but have provided me very valuable insight to help identify competent and ethical providers. In this case, a top-rated provider in whom I developed great confidence provided a competitive price, making the decision easier than expected. See Table 1 for a summary and ranking of providers.
|Table 1: Comparison of Providers|
|Contractor Type Comment Inverter # of Panels List Net Cost * Rank|
|Provider A PPA** 20 yr. contract string 16 $.11/kWh n/a —|
|Provider B lease 20 yr. contract (lease determined as not feasible) n/a —|
|Provider C purchase (annual usage below Provider minimum requirement) n/a —|
|Provider D purchase (annual usage below Provider minimum requirement) n/a —|
|Provider E purchase (annual usage below Provider minimum requirement) n/a —|
|Provider F purchase (regional provider) string 14 $16,380 $6,060 3|
|Provider G purchase (national provider) string 15 $14,500 $5,172 2|
|Provider H purchase (regional provider) micro 13 $12,513 $4,460 1|
|* After NYSERDA rebate, Federal and NY State tax credits received, based on the 2015 tax year.|
|** Purchase Power Agreement with rate subject to escalation at Provider discretion, not to exceed ~3% annually.|
|Note: Provider estimates of payback periods varied widely from 3 to 7.5 years, based on different assumptions and forecasts of future energy costs and utility delivery costs. Financing was not considered to minimize payback period.|
Our system demands are modest for several reasons. First, our house, a three-bedroom raised ranch, faces south and is equipped with energy-efficient appliances and lighting. Second, to control electric consumption, we use ceiling fans or two window air conditioners, as needed, to avoid central air. On the other hand, we do have an above-ground pool whose filter runs, on a timer, during June, July, and August, using substantial energy. Our historic usage supports annual consumption of about 4200 kWh. One contractor proposed a 13-panel system.
System Design & Costs
Several estimates were solicited and various designs were considered. For system monitoring and efficiency reasons, the micro-inverter design was selected over string inverters. Individual panel monitoring was a strong consideration which also aligned with best installer recommendations. Inverter and module brands were carefully selected, particularly considering my brand and warranty provision research. The system:
Module: Axitec 250 W Number of panels: 13 cost: $ 3900
Inverter: Enphase M215 Number: 13 w/ Envoy 3250
Rack & Parts: 2600
Install Labor: 2763
Total Cost: $12,513
Also, given the new “asset” on my roof, my homeowner’s insurance increased about $30/year. One issue occurred over the internet connection. Given preference for hard-wiring rather than wireless connection to the Envoy monitor to avoid wireless interference or signal complications, I incurred the cost of a simple router for internet connection, a Trendnet TW100 at a cost of $20.
Incentives & Tax Credits Received
In February 2015, our incentive from the New York State Energy Research and Development Agency (NYSERDA) was $2600, resulting in a net billed cost of $9,913. The Federal Tax Credit of 30% resulted in a credit of $2974 and New York State Tax Credit of 25% of $2478, bringing the total incentives and tax credits to $8052. This resulted in a net cost to us of about $4460. Note: NYSERDA incentives decline with time.
For my first year of operation ending February 2016, given the banking and drawdown of kWhs used and generated, I produced a surplus of ~45 kWhs.
|Table 2: Year 1 Production & Usage (kWh)|
|Month ending Production Billed Usage Banked|
|March 2015 357 0 306 51|
|April 363 0 244 119|
|May 578 0 288 290|
|June 436 0 399 37|
|July 474 0 391 83|
|August 541 0 529 12|
|September 410 0 325 85|
|October 282 0 238 44|
|November 221 0 332 (111)|
|December 164 0 386 (222)|
|January 2016 163 0 400 (237)|
|February 199 0 305 (106)|
|4188 0 4143 +45|
Utility Bills: Meter Costs
Given annual usage of about 4200 kWhs, our 13 panels generated approximately 1% more than used, based on our first year of experience. Due to generation of all electrical needs, our National Grid monthly bill was about $17, which is the meter-only cost, with no electric commodity or distribution costs incurred.
Conclusion & Recommendations
Our first year’s experience was seamless and without complications. Daily and monthly monitoring of production and consumption is effortless and a terrific benefit of system design. Beyond lost production from snow, we received only one System Alert. It was caused by low voltage input from the utility due to a system outage of other customers, causing one day of lost production. Once the utility repaired its system, no action on our part was required. Moreover, the system performed as designed and generated all energy needs, sparing us from any commodity and distribution costs.
I believe a thoughtful solar decision that fully captures the risks and implications is among the most challenging of decisions a homeowner will ever make. First, the inability to accurately forecast future energy prices, which powerfully influences future electric commodity costs, makes predicting short- and long-term cost savings speculative. Second, the impacts of technological developments and obsolescence are unknown and indeterminate. Third, inevitable changes in evolving energy and climate public policy, including federal and state regulatory risks (some brought on by partisan politics), create uncertainty over governments’ long-term commitment to policies supportive of clean energy.
Clearly, both state and federal governments are expecting much of residential consumers to invest their substantial capital to implement evolving public energy policies and prerogatives. Yet, there is also a keen citizen responsibility to support the use of clean energy sources that minimize harmful impacts on the environment.
Recognizing that this is a complex decision with various risks, I recommend as a “best practice” soliciting bids from several contractors before making final decisions, requesting a copy of the contract early on, and carefully examining the fine print. The provider’s interests are well protected; are yours? Also, consulting legal and tax experts, as necessary, is prudent before signing purchase, lease or purchase power agreement contracts. In my experience, a solar contractor’s reluctance, or unwillingness, to provide that contract early in the process may well indicate a lack of transparency and should raise red flags about your ability to fully assess the provisions contained in the agreement– recognizing that the commitments you are making, one way or another, are going to be with you for decades.
Fortunately for us, our selected provider demonstrated transparency and obtained answers to all questions, and as well agreed to contract revisions to address any concerns raised. This further reinforced our confidence in this top-rated provider, and that we had made the right choice, after carefully weighing the many risks and opportunities, as best as we were able. In sum, at this one-year mark, we are cautiously optimistic that our first year’s favorable experience will prove predictive of future years’ experience as well– but only time will tell whether some different choices could have or should have been made, with the undeniable luxury and benefit of hindsight.
Christopher Corbett is an engineer and was employed in the rate and policy regulation of public utilities in New York State from 1974 to 2006.