Go Solar!

by Jim Winkle (updated 7-Oct-2007)

The hailstorm that bombarded the south side of Madison in the spring of 2006 contained golf-ball sized hail and damaged many roofs. Our roof was totaled, and it got me thinking about roofing alternatives like solar shingles.

Solar shingles use sunlight to generate electricity for your home very much like traditional photovoltaic (PV) solar panels. This article is about both solar shingles and solar panels. Even if you've already re-shingled, it's a perfect time to think about solar panels. You could save many thousands of dollars in energy bills, and help stop global warming!

We converted to solar in April, 2007.

Why Go Solar?

Historically, converting to solar electricity was not financially beneficial; people usually lost money. One reason they did it anyway is that they wanted to reduce their contribution to pollution. Electricity seems like a clean energy, but it's actually one of the dirtiest. Greenhouse gases -- which lead to global warming -- and mercury both result from coal-fired power plants, which are collectively the largest source of these pollutants in the U.S.

If you're reading this, I probably don't have to sell you on the idea that global warming is coming. But did you know it's already here? Global warming is dramatically affecting people who live on Baffin Island in Canada today, not some ambiguous futuristic date. In 2007, a team of seven explorers took a four month dogsled journey across the island to document the changes taking place. For example, the Inuit get most of their food from hunting, and the season has been reduced by 40-50% because of loss of ice. The 11,000 native people of Baffin Island are the canaries in the coal mine of global warming.

Jean Bahr, chair of the Geology and Geophysics at UW-Madison, had solar shingles installed in late 2000. Solar prices were higher and financial incentives were less readily available then. She was the first in Madison to stay on the grid (rather than use batteries) under a process called net metering, where the utility purchases any excess energy at current market rates. I spoke with Jean, who also got hit by the hailstorm, and her system is running great! She said "My solar shingles fared better than the traditional shingles on my roof, which were installed at the same time."

But How Much Does it Cost?

Today, there are a couple of financial incentives which make this is an excellent time to go solar! They are:

• Focus on Energy (Wisconsin program): Cash back for up to 25% of the purchase price
• Federal Tax Incentive: 30% of the purchase price, up to $2000

We asked for two estimates from H&H Electric: one for solar shingles, and one for solar panels. Using the incentives, we saved $5200, and can cover 100% of our electricity usage for an investment of either:

• $12,600 for solar shingles (insurance money will reduce this to about $11,600), 103 Uni-Solar SHR-17 (17 watts each).
• $9400 for solar panels, 10 Kyocera KC 175 (175 watts each). See their catalog for more info.

That's a Lot of Money; Is There a Payback?

If you're like me when I first heard how expensive it was to go solar, you're probably thinking "that's a huge amount of money". Going solar is a lot like owning a house; it's a large expense, but cheaper than renting in the long run. Once you hit the payback period, you have free electricity.

The payback period is difficult to calculate because there are so many variables, but worst case it looks like about 18 years for solar shingles and 15 years for solar panels. The solar shingles are guaranteed for 20 years and the solar panels are guaranteed for 25 years, so we went with panels.

We'll actually save money in the long run since we'll have ten years of free electricity while they're under warranty, and likely several more years (they're not going to stop producing overnight). By then, electricity will cost about three times what it does now, so this is not an insignificant amount of money; I'll be more specific in the Payback Wrap-up below.

The payback period will be shorter and the system will cost less if a new federal bill passes (important footnote). The Securing America's Energy Independence Act of 2007 will remove the $2000 cap on residential solar tax credits (businesses have no cap), and improve the formula somewhat. We would receive $5200 in federal tax credits instead of $2000. This brings the price down to $6200; less than half the original price! This would cut the payback period to 11 years.

A new solar buy-back program that Madison Gas & Electric (MG&E) will announce soon will also shorten the payback period (I'm guessing by a couple of years). They will purchase all of the electricity that a PV customer generates -- and pay them more than what they normally charge -- and sell it to others. This program will be put into place in 2008.

I don't know all the details yet, but it's likely that they will pay 25 cents/kWh, and initially charge about 14 cents/kWh. If we can get into the program (it's intended to inspire new people to go solar), we will sell all of our electricity to MG&E and they'll get the "green tags". (Some people may naturally balk at this, wanting to use their own energy. But ironically, our neighbors are already using most of the electricity we generate since we don't use much during the day.) The rate they charge will rise over time but the rate they pay will remain flat, so eventually it will make sense to leave the program.

The payback calculations assume:

• Electric rates rise 5.6% per year (this is based on actual rate changes during a recent eleven year period);
• The productivity of the shingles and panels drops 1% per year;
• There is one component that is likely to need replacement (around year 25): the inverter. The cost will be about $3000;
• We have bad karma, and the federal bill fails and we can't get into the solar buy-back program;
• We stay connected to the grid but switch to time-of-use metering and shift some of our load to off-peak (more on that below).

Time-of-Use Details

Something that helps shorten the payback period is the little-known fact that MG&E offers time-of-use (TOU) metering (you can get this whether or not you have PV). Choosing this, we'll pay about twice as much for electricity used during the week between 10am and 9pm (11 on-peak hours), but only about half as much the other 13 hours (off-peak). Weekends and holidays are at the off-peak rate. This works out to about 32% of the hours in a year are on-peak, and 68% are off-peak.

Financially, this will benefit us in two ways:

1. We will save money compared to normal rates because we will shift some of our usage (dehumidifier, freezer, and electric clothes dryer) off-peak. Let's call this "buying low". (Also, constant energy-sucking appliances, like the fridge, will cost 10% less to run since so many of the hours are off-peak.)
2. We will earn more money because we'll sell at the higher rate during the week; most of the electricity will be generated in the peak period. Let's call this "selling high".

The October, 2007 rates (in cents, including the distribution charge) are:

	Summer	Winter
Normal:	12.64/kWh	11.64/kWh
Solar buy-back (tentative):	25.00/kWh	25.00/kWh
TOU on-peak:	22.54/kWh	20.15/kWh
TOU off-peak:	6.00/kWh	6.00/kWh

Be careful, TOU metering can work against you, especially if you use air conditioning during the day. We'll win big in the summer since we use fans to draw in cool night air (off-peak) instead of air conditioning (on-peak), and we're generally gone from 9am - 3pm. We may lose some in winter mostly because there's less available solar energy, but also because the furnace fan uses a lot of juice and will kick in during on-peak afternoon hours.

Payback Wrap-up - Free Electricity!

In the worst case scenario (the Securing America's Energy Independence Act fails and we can't enroll in MG&E's solar buy-back program), things look like this. After 15 years, we will generate $7867 from selling high and save $1422 from buying low for a total of $9289, almost our $9400 investment. Everything after that is gravy, and according to my calculations we will save $10,700 in the subsequent ten years while they're still under warranty. They'll likely last longer; assuming they survive only another five years, this is a total of $15,400 saved. (It's entirely in the realm of possibility that they'll make it to 40 years, in which case we'd get $37,200 worth of free electricity!)

If the federal bill passes, and/or we get into the solar buy-back program, it will shorten the payback period (by 4 years in the case of the former).

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 the federal bill passes, these returns become 13.1%, 15.0%, 20.1% (25, 30, 40 years).

Solar Futures (and Past)

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.

Is Solar Right for You?

To help decide if solar is right for you, 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.
• PVwatts.org (I use version 1) is helpful for estimating how much PV electricity you can generate.
• 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). 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:

1. 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 will slow down the payback period, so be sure to do the math.

2. 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. Because of the current federal $2000 cap, there's a "sweet spot" around half the size of our system where you get the most power for the dollars spent.

To help decide between traditional panels and solar shingles, here are five differences:

1. 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);
2. Solar shingles tolerate partial shading much better than panels;
3. Panels take up less roof space, since they generate more energy per square foot;
4. For the moment, solar shingles are more expensive because of the extra labor involved (each seven foot shingle needs its own wiring);
5. 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.

In Closing

Going solar is a win-win situation: we'll save money in the long run and we'll dramatically reduce our pollution contribution immediately.

Here are some other little details. 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.) Homes with solar sell for more. 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.

I'm happy to make (free) presentations to small or large groups in the Madison area. Are you associated with a group (work, neighborhood, church, or friends) that would be interested in this? Give me a jingle at 259-1812. I'm also curious what you think of all this.

Here is the spreadsheet I created so you can verify the numbers for yourself. You are welcome to use this for personal use only.

I will likely learn more and add it to this article. Let me know if you'd like to be notified of major updates. Thanks so much for reading to the end! (be sure to read the first footnote, too! :-)

Footnotes

1. IMPORTANT: The feds are considering legislation that will make an enormous difference in making solar electricity affordable! If it passes, the Securing America's Energy Independence Act will remove the $2000 cap on residential solar tax credits (businesses have no cap). Combined with state financial incentives, this will be like a 50% off sale for solar!

   There are two bills -- one in the Senate and one in the House -- both called Securing America's Energy Independence Act (S. 590 and H.R. 550). Please contact your federal Senator and Congressperson to encourage them to co-sponsor and support the bills, or thank them for their sponsorship. In Madison, this is:

   • Senators Herb Kohl (264-5338) and Russ Feingold (828-1200)
   • Congresswoman Tammy Baldwin, who is a co-sponsor (258-9800)

   Perhaps more importantly, you might also want to have your friends and relatives in other areas of the country contact their elected representatives.

2. 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.

© 2007 Jim Winkle. All rights reserved.