Should you go solar? We asked an expert
The newly signed Inflation Reduction Act aims to boost the economy while transitioning the country to greener energy. The new law includes extended tax incentives for homeowners looking to convert to solar.
While the solar energy market isn’t new, prohibitive pricing has kept many Americans from getting solar panels. Dr. Daniel Kaffine, a professor of economics and a fellow at the Renewable and Sustainable Energy Institute at CU Boulder, says increased tax incentives and a substantial price decrease in the past 10 years is changing that.
He spoke with Alexis Kenyon about what homeowners need to think about when considering going solar.
AK: I know that you just got solar panels installed at your own personal home. Tell me about why you decided to do it and what the process was like.
DK: So when we were thinking about getting solar panels on our roof, our goal was really, can we produce power at a cheaper price than what we're paying for even if we bought it from the utility?
Even if we couldn't cover our entire energy usage, if we could just offset some of that at really expensive midday electricity, then that would be worthwhile.
And so first of all we checked to see do we have enough roof exposure to be able to even put up panels, to start where the trees were and other buildings.
And so once we cleared that, then we said, okay, it looks like we can put them up there. And that at that point we contacted three different installers.
AK: Since solar is a relatively new industry and a lot of people don't have prior experience, how should you know what company to go with?
DK: Which company to go with is a tricky one. I think after we had a first quote, we went to the second one and said, 'hey, we could get this, what can you do for me?' So cost is definitely a relevant consideration. We definitely played off the installers against each other. And the fact that the final installer we went with said 'wow, we're not making much money on this one.'
So if there are multiple retailers, it doesn't hurt to shop around and ask if they can do better or not.
So we asked them for a quote. We asked them to size the system. We said, 'how large of a system can we put up there?'
They tend to size the system to cover a hundred percent of your energy usage.
While it's an easy thing for them to calculate, I would encourage people to think of it more in economic terms.
Offsetting a hundred percent of your bill is not really the goal, it should be getting your electricity at the cheapest price you can get it.
But then the basic price per kilowatt of production was roughly the same across the three.
At the end we had three proposals from about $20,000 to $30,000 in terms of total installed cost. And so we selected the one that we liked.
Once the financial details are set up, they came out, the company installed the panels on our rooftop.
AK: Can you tell me what does your monthly payments look like? Paying for the solar panels in monthly installments, and then whatever leftover energy costs you may have, how does that compare to your energy bill before you got solar panels?
DK: So I think that our monthly payment right now is in the neighborhood of $150 a month, which is roughly equal to our monthly utility bill give or take.
Our system is a six kilowatt system that is very typical of residential rooftop, solar systems.
I should mention the other piece of the financial puzzle. There are the tax credits. So on our previous home, we filed our taxes. We said we installed this system, and at the time the federal tax credit was 30%.
If your system has an installation price of say $24,000, say that's the system cost, which I think is pretty typical of systems on single family homes, that's essentially a $6,000 check that you effectively get back at the end of the year on your taxes.
One of the neat things is that because they monitor your energy production, you also start paying a lot more attention to your energy consumption.
So I'm much more aware of, for example, how much energy my air conditioner uses or how much energy is being used to follow the lights around upstairs.
Or if I turn the thermostat up a little bit higher, what that means for my average energy consumption during the day. So they give you tools to sort of monitor both the production and consumption of energy, which I think is pretty neat.
AK: So, what are you using most energy on? Have you had any moments of clarity since you started paying more attention?
DK: The dryer. The dryer is a massive energy user. We had a power outage and it flipped over to our backup battery that we have. And the very first thing we did was sprint down the stairs to shut up the dryer, because that would've drained the battery in like 15 minutes or something like that.
So after that, air conditioning is the other major user. And then we have a little oven that we use to heat up the kids' chicken nuggets and that thing uses lots.
Those are sort of the three things that I can see on my app, that when those things are on we're using a lot of energy.
AK: How much energy does a dryer use? Like how much should I charge someone to use my dryer?
DK: Great question. So let me see. Six kilowatts is about what my dryer was using last I checked, and if I run it for an hour, that's six kilowatt hours. So it's like 75 cents, maybe be a buck.
AK: And what about air conditioning?
DK: Depends on the size of your air conditioning unit a lot, it varies a bit more I think, than the dryers do, but roughly on that order per hour, maybe 50 cents an hour to keep your air conditioner running.
AK: So I know also if you produce more energy from your solar panels, you can then sell that energy to other consumers. How much energy can solar panels on top of someone's house produce, if say the house is vacant and how would you sell that energy? What is that process like?
DK: So that's generally referred to as net metering. So we were on vacation, this was sort of an experiment that we ran as well to look at what we could produce and power when we were running with just the bare minimum of a refrigerator plugged in, basically.
So, we were producing about $6 of surplus electricity every day when we were gone on vacation. That's $180 a month of just electricity production.
AK: So, what is the bottom line when it comes to getting solar panels? What do you tell people when they're trying to make this decision?
DK: Part of the choices come down to things like you're making a decision between owning a home and renting a home, putting solar panels on your house versus buying electricity from the electricity company has a similar sort of own or rent flavor to it.
In one sense, the utility company, you give them a check every month for $130 or whatever it is. You don't really have to think about it too much. On the other hand, you can put solar panels on your roof. That's now something you own, that's an asset that you have to think about and have to maybe take care of over the long run, but also you own that asset. If you sell the house, the solar panels go with the house.
We sold our last house and the owners were really happy to not really have an electricity bill. That was something they factored in when they purchased the home. So it's a little bit like renting versus owning.
If they've got a good southern exposure with a good roof pitch, not a lot of obstructions. I know Colorado gets a lot of sun and with those tax credits, I think it makes sense for a lot of single family homes.
I would say there's one other offer that is becoming more popular, which is known as community solar gardens.
These are sort of solar co-op systems where individuals who maybe live in an apartment don't have a roof that they can put solar panels. Or are in a single family home that's shaded most of the time they can join these community based solar and essentially works like a co-op.
They pay into the co-op and they get a share of the production from the community solar. So sort of different models that work for different people.
I think a lot of people still have that mental model of solar being crazy expensive relative to other sources. But the fact of the matter is the cost of solar at the utility scale, and the rooftop scale, came down dramatically in this last decade.
And so what does it mean for homeowners? What's the bottom line?
In terms of air quality, which I think is something that people think a lot about when they think about environmental, especially here in Denver, where we have concerns about ozone and recent talk of EPA downgrading our status from an air quality standpoint, solar panels are pretty good.
They offset a lot of power that would've been generated primarily by natural gas plants.
Solar and wind for that matter have pretty substantial benefits in terms of improved air quality.
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