There were a few requirements for going solar:
- a solid roof (ours is only about 4 years old)
- decent solar orientation (south is best, east is good, west can work, too.)
- not a lot of shade/big trees around your house/shading your roof
Lease or Buy?
It was solar leases (also called as PPAs: Power Purchase Agreements) that caught our attention. Here in Colorado, many of them are constructed to be so simple, so hassle-free, and so affordable that signing up feels like a no-brainer. They were no money down, no lien against your house, and no home-owner maintenance required since the panels would be owned by a solar company. Our first quote averaged our electricity usage over the last year (about $100/month) and offered us a flat fee ($97/month) for the next twenty years. Yup: no rising cost for our electricity for TWENTY YEARS, no matter how much electricity we used! Essentially, we would lease the roof space to the solar company, they would maintain the panels, and we would agree to buy back our electricity from the solar company for a flat fee. The system would be about 2.7kW DC produce 3,850 kWh a year. The whole set up was transferable, should we sell our house. At first glance, we were ready to sign.
But then there were some things nagging us to look further. Regarding environmental responsibility, it felt wrong to know that we could use as much electricity as we wanted (for 20 years) and never 'pay' a cent extra for it. To put a finer point on it: what would stop us from turning our house in a giant grow house? (Because we could, legally and financially, at a flat rate of $97/month for solar electricity in Colorado!) As a matter of principle: we didn't want to go solar AND become more wasteful and negligent about our consumption. (Although we could have done this! Heck, maybe we're too honest and not entrepreneurial enough.) It would be pretty easy to be wasteful of electricity, knowing that the amount we pay was fixed for 20 years with a PPA.
Then there was the matter of selling our house. We don't plan to move. But we know that sometimes things don't go as planned. *I* think $97/month for electricity is good, but what if a future owner thinks it's lousy? I'm home in this house all day with kids, but what if nobody was here during the day? What if a future owner was rarely here and never turned on lights? What if the future owner was my friend who spends only $25/month on electricity? With a PPA, a future owner would have to assume the credit liability for the solar, as well as buy our house. If a future owner was uninterested in taking over our leased solar system, we might have to pay to remove it, and pay for the remainder of the lease, at our expense. Would I want to buy a house with a leased system, based on someone else's consumption? I'm not sure....
What if something unexpected happens and electricity rates fall? (Unlikely!)
Then, we spent a good amount of time second-guessing the business plan of the solar companies doing PPAs. How were they making money? (Because, of course, they were somehow making money off us in this arrangement!) Would they be selling a solar tax credit from the system on our roof to some big, corporate player? Were they raking in short term profits at the expense of long term profits? What if they aren't around in 2018, because the federal solar tax credits they get to take advantage of expire in 2016? What good would they be as an owner if they weren't around to take care of the equipment? Were leasing companies intentionally under-reporting the amount of solar that our roof could produce? Were they using the cheapest panels possible and marking them up to maximize their rebate? How would these things affect us if they went out of business? (Twenty years is a long commitment!)
Maybe we shouldn't care about a company's business plan, but we do. We believe we voice our priorities and values with our dollars spent. So we want to spend our money with that in mind.
It seemed like maybe a PPA was not the right fit for our situation and goals at this point in time. So we started talking about purchasing solar panels.
Some things became clear as soon as we started looking into purchasing solar panels. We were looking for an option with little to no upfront costs, so financing was important. Also, our focus shifted from the service to the product. Here is the quick version of our next few findings and considerations:
- In the beginning, we would be paying more money each month to cover financing for a 12 year loan at 1.9%, but not a huge amount more. ($120/month to purchase versus $97/month to lease)
- This window during which we would be paying more for solar panels (versus utility grid electricity) lasted about 5 years, assuming electricity rates continued to rise at a steady pace while our consumption remained about the same. After 5 years, we would be paying less. That meant, if we were planning to move in less than 5 years, purchasing solar panels made less sense.
- Assuming our electricity usage remains constant, we would see a much higher return on investment over 20 years with a purchase versus a lease. ($13K on purchased system versus $6K on leased system)
- Production ability of the solar panels mattered more to us with a purchase than with a PPA.
- Quality and installation of the solar panels mattered more to us with a purchase than with a PPA.
Also, the more we looked into solar panels themselves, the more convinced we were that they were really low maintenance. This was important in our decision to walk away from a PPA. Our worries about the "hassles" of the panels seemed unfounded.* The ability of the installer to install the panels properly and most efficiently and to walk us through all the bureaucracy was important. Finding the right installer meant we talked to several, compared them to each other, asked them to explain the differences in their approach and systems. This is one of my favorite parts of shopping for any big expense: you discover a lot about companies and their character when you ask them to explain why they do such-and-such this way and another company does it that way. I always learn tons while whittling down my list of prospectives.
The other factor that we really started thinking about more seriously when we decided to purchase was the quality of the panels. There are characteristics of solar panels that vary by brand: the degradation (panel production weakens over time), the warranty of the panels, production capabilities (some panels are more efficient per sf than others), and the durability. Through our searching process, we became huge fans of the SunPower solar panels that Namasté included in their proposal. They rank far above every other brand in all the considerations I just mentioned. More production capability in less square feet with less degradation over time, plus a full 25 year warranty, with the likelihood that they will last as long as 40 years.
After we had a quote for power production using SunPower panels with Namasté we asked a competitor to match the production using their alternative brand. Seeing the competitor's panels, scattered across more of the roof, using 25% more panels to match the production capabilities, at a greater financial cost to us, was a literal illustration of why the SunPower panels were our preferred panels.
We ended up with 18 panels at 327 watts each, a 5.886 kW DC solar PV system. That will produce about 8,352 kWh in the first year. (This is much bigger than the PPA system we would have received from the leasing company!) If we use more electricity than the system produces, we'll be paying to get that electricity from the utility company, unlike the PPA. But owning our own system means we're highly motivated to use LESS. What if we produce more power than we use? Well, in Colorado we have option of either carrying those kWh forward OR being paid by the utilities company for the extra power we produce. Honestly, I don't expect that our electricity consumption will change too much in the next few years. But if we were to produce more power than we used, it might make sense to heat the house with electric heaters, thus reducing our gas bill, or buy an electric car, thus reducing our gasoline consumption. (It probably doesn't make as much sense to let the utility company pay for the extra energy production, because they pay less for the energy than they charge. Still.) Pretty cool, right? It's really exciting to start thinking about your house as a power plant.
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| Our newly installed bi-directional meter - running "backwards" from 00,000! Fritz hopes the utility company won't mistakenly charge us for 99,977 kWh in the week since the meter was installed. |
Or, I can think of our house as a giant counterweight to all the CO2 pollution our society does. In one year we will reduce CO2 emissions by:
- 17,100 pounds (OR)
- the equivalent of reducing vehicle miles by 18,705 miles (OR)
- the equivalent of planting 658 trees
That's huge! To think I was previously proud of the fact that we've planted 6 trees in the 4 years since moving into this house!
*The lack of hassle proved to be true in at least one regard sooner than expected. About a week after the panels were installed we were hit by a severe hailstorm. Our asphalt roof was damaged so badly that the insurance will replace the whole roof, including gutters and vents. The solar panels, however, were completely undamaged. Our insurance-recommended-roofer plans to subcontract this work to the original installer, making it much less of a hassle and risk than I even anticipated. (Seeing the damage to the asphalt shingles kind of made me wish the whole roof was solar panels.)
