Could this be Considered a Financial Investment?
You bet! A different way to look at this whole equation is as a decent financial investment. According to my calculations, the return on our investment will be 8.6% for 25 years, 9.8% for 30 years, or 13.1% for 40 years, depending on how long everything lasts. This is more than our credit union pays. Plus we have to pay tax on interest we earn at the CU, but not on energy we generate. Unlike a traditional investment where we'd have to wait until it matures before we get anything, we'll get money back every month because there's no electric bill to pay. That's money we can invest elsewhere.
If we had benefited from the removal of the federal tax cap, these returns become 13.1%, 15.0%, 20.1% (25, 30, 40 years).
There are some exciting changes coming: higher efficiencies and lower prices are almost a certainty. This might tempt me to wait a few years before taking the solar plunge, but there are a few things that made me want to dive in right away.
If we can break even with PV, that's good enough for me. That means that overnight our greenhouse gas contribution will drop dramatically. But what's remarkable is that PV can not only pay for itself, it will actually save a substantial amount of money in the long run.
If we keep waiting for the next best thing, we'll never buy anything because it's always going to be improving. PV, like consumer electronics, will always get better and/or cheaper. However, as PV becomes more affordable, rebates will likely drop, making the net cost the same.
Labor will go up, and the price of panels may actually rise from time-to-time due to high demand. In fact, our cost ended up being $1000 more than when I started researching it six months earlier.
This is somewhat of a tangent, but an important one. I'm really eager for battery electric cars or at least plug-in hybrids to appear on the market (Mother Earth News article). (PUH cars run on batteries for the first 40 miles, but do have a gas engine for longer trips.) Solar charging an electric vehicle is a technological marriage made in heaven. This could dramatically reduce pollution in this country and increase our energy independence.
In a largely symbolic move, President Reagan had the solar panels removed from the White House when he moved in, signaling a national mood swing away from renewable energy. If he had embraced PV instead, we might be driving solar charged electric cars today instead of being engaged in an unpopular war over oil.
To help decide if solar is right for you in Wisconsin, check out the Focus on Energy website or give them a call at 800-762-7077. They'll help pay for a solar assessment of your house if your contractor doesn't provide it for free. If you're inclined to do your own research, here are some helpful resources.
You can check out a watt meter from the library and measure power consumption of appliances in your home; search the library for the title keywords "watts energy meter" (it's called "Watt's Up?").
energystar.gov helps you pick out the most efficient appliances.
MG&E's website www.mge.com makes it easy to look at your past electricity usage. To use it you'll need a recent paper MG&E bill the first time.
The cost of going solar is proportional to how much electricity you use. If you find you're using a lot of electricity, compact fluorescent light bulbs are cheap and help tremendously (and have a much longer life). You only need to buy enough to replace your frequently used lights. New refrigerators use less than half the electricity of old ones built before 1993 (footnote 1). Fans use much less energy than an air conditioner. Al Gore has some other excellent suggestions in the October, 2006 Mother Earth News.
If the up-front costs are too high, here are two solutions:
Finance the project through a Home Equity loan. Think of it like this: instead of paying the electric bill every month, you'll make a monthly payment for the loan. (There are of course two differences: overnight you'll be generating much less pollution than using utility power, and you'll have free electricity after the loan is paid off.) This could result in a much quicker payback period, but the total saved over time will be less.
There's no law that says you have to go 100% solar; it's good to meet even part of your electricity needs with renewable energy. In fact, it might be better to aim lower; our utility pays dramatically less for electricity if we generate more than we use over the course of a year (yes, this happened to us).
To help decide between traditional panels and solar shingles, here are five differences:
Panels lose efficiency from the summer heat; these calculations assume panels, so numbers will be somewhat better for shingles (the vendor claims up to 20% better);
Solar shingles tolerate partial shading much better than panels;
Panels take up less roof space, since they generate more energy per square foot;
For the moment, solar shingles are more expensive because of the extra labor involved (each seven foot shingle needs its own wiring);
Some people find solar shingles more attractive than panels, which may raise the value of your home more if you're thinking of selling.
If you're in the process of buying a house, that's a perfect time to convert to solar. If you can build this into your mortgage, then you can write it off on your taxes.
Going solar is a win-win situation: we'll save money in the long run and we'll dramatically reduce our pollution contribution immediately. The payback period is currently around nine years for those living in Madison.
Here are some other little details all mushed together in one paragraph. There are plenty of sunny days here in the upper-Midwest for PV; these calculations are based on actual solar data collected over many years. The loss from snow cover is minimal since the snow slides off (2% loss for a roof at a 45 degree angle). There's almost no maintenance to PV, and it all runs automatically. What with the sun moving around the sky all day and all year, the angle towards the sun doesn't matter much; it's the amount of light hitting the panels that matters. (In fact, on a day with diffuse clouds the optimal position is not perpendicular to the sun, but rather parallel to the sky.) We have pretty much full sun exposure. Homes with solar sell for more. Squirrels chewed through and broke our wires; make sure installers prevent this by wrapping the wires, routing wires through conduit, or placing screening around the panels. If you have a medium or high income and/or have a lot of tax deductions, make sure the Alternative Minimum Tax doesn't affect your ability to claim the full federal tax credit.
Here is the spreadsheet I created so you can verify the numbers for yourself. You are welcome to use this for personal use only.
Footnote
We bought a Kenmore Elite fridge, Sears item #04674902000 (search for model 74952; it is 18.8 cubic feet). According to energystar.gov, this is the most energy-efficient regular-sized refrigerator available in the US, using even less energy (387 kWh per year) than many smaller units. We lucked out... in August, 2006, it was on "double" sale: $280 off, and then another 12% off during a two-day sales event.
Thanks for reading; please let me know if it was helpful!
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