economics of solar panels?

[littleboss]

I am building a vacation home in Colorado. The electric company has a $36 fee before you even use any electricity. Then electricity is .13 per kWh

I am thinking about a grid tied 3k system with no batteries.

The electric company lets you bank electricity that you generate and then use it from the bank when you need it. At the end of the year they pay you for any excess BUT they only pay 2.5 cents per kWh.

They also require a $300,000 liability policy.

My future plans are to be in Colorado from June to the middle of October. I plan on very little air conditioning during this time. I would expect elec bills to be 500kWh or under per month as the hot water heater, stove and dryer will be propane.


I figure that the electricity that I bank from Jan to May 31 (maybe 1800 kWh), I will use when I am there. Then from mid October to December it will be banked and I figure it will produce 900kW during that time. That means they will pay me about $22 for my surplus electricity.

Electricity there cost .13 per kWh So the 1800 kWh that I generate and use during the summer is worth $234

So the 234 + 22= about $250 worth of saving each year. I figure a 3kW system will cost $8000 installed. This comes to 32 years to break even.

If I went with a 5kW system it would cost me even more up front and since I don't expect to have high utility bill when there it would go in the bank. At their 2.5 cents price that doesn't pan out either.

Looks like the only way to come out would be going completely off grid to save the $36 month fee but there are several problems with that. For one I have some power tools that take lots of power, second with the price of batteries I would never make out.

Sounds like I should just use what money I was going to use for solar and put it in better insulation for the house. Thoughts?

[NCmountainsOffgrid]

while I understand your calculations to try to make this work, in order to avoid the low '36 minimum fee' for the utility, but it also seems like a large upfront cost/financial investment for relatively little use, and with a power company with a relatively low 'min' monthly bill... you'd have to really generator a large amount of the 'extra' in order to make a 2.5cent per kwh buyback give you any type of relative return, as compared to the cost, installation, and maintenance, not to mention the 'insurance' that you must maintain, even 'if' the numbers don't wind up working in your favor, and 'if' you can procure it.

but, it also sounds like you want to jump into the solar game, so you may be going more by what makes you feel good, in this situation, rather than what 'really' is the most economical...

I wonder what the wife thinks? : )

[khanh dam]

economics of a part time home are always bad to begin with. Any insulation you improve is only going to be used 5 out of 12 months. Seems like renting it during the time you are gone would be the most economical thing to do to generate income. Having a lot of insulation never hurts either. Solar is probabaly not a good investment for part time homes.

[J.P.M.]

OP: do what you write of in your last sentence of your opening post and include sealing the building envelope first as that's about the most cost effective measure to take.

[azdave]

Doesn't sound like a great return on the investment. I would not go solar in your situation. If you do proceed, be sure of the date of when your POCO zeros your banked energy. My utility has a fiscal year that ends on April 30th and that is when my account gets settled each year. Just when I've built a nice reserve for summer A/C use, it zeros out. I don't want the $100 account credit but they won't let you carry it over to the next cycle.

[littleboss]

Thanks for the responses. I guess I am better off putting in solar here in Texas as they pay the full rate. At .13 kWH that's 4 times better than they pay in Colorado.

[J.P.M.]

Thanks for the responses. I guess I am better off putting in solar here in Texas as they pay the full rate. At .13 kWH that's 4 times better than they pay in Colorado.

You might be, but that doesn't mean PV is cost effective, or at least more cost effective than use reduction and conservation measures. Unless you can buy very sharp and do all the work yourself, $0.13/kW is a tough number for PV to compete with in the cost effective. dept.

[littleboss]

You might be, but that doesn't mean PV is cost effective, or at least more cost effective than use reduction and conservation measures. Unless you can buy very sharp and do all the work yourself, $0.13/kW is a tough number for PV to compete with in the cost effective. dept.

I can do all of the work here which is a big advantage. What is an average figure per kWh that you would have to pay for electricity for PV to pay? Heck I thought .13 was high!

[J.P.M.]

What is an average figure per kWh that you would have to pay for electricity for PV to pay? Heck I thought .13 was high!

Good question that does not have one answer. That number, if it exists at all is always an estimate and is also subject to a lot of opinions, areas, gov. regs., subsidies, how long you can wait for a positive cash flow, and lots of other stuff

Very, very basic to the point of oversimplicity: Say you live in an area where safe, well designed and well installed PV will generate 1.5 kWh/yr. for every PV watt installed. Now, ask yourself or determine how long you'll wait to "break even" by simplistically dividing the cost of installing that 1W of PV by what you'll avoid paying per year by doing so - that is, the cost of 1.5 kWh of electricity from your POCO.

So, say you can get a turnkey system installed for $ 2.75/watt. at $0.13/kWh, doing so will avoid 1.5kWh/yr * $0.13/kWh = $0.195/yr. ---- >>>> $2.75/watt/$0.195/yr. = 14 years.

Or, if you're a sharp buyer, know PV and can install a safe efficient and well put together system for, say, %1.50/W: ---->>>> $1.50/watt/$0.195/ = 7.7 years.

The above takes no account of any things that will affect cost effectiveness like system (over)sizing which most homeowners do and impair cost effectiveness, or a lot of other things that may lengthen or shorten the time to payback or change the rate of return on the system as mentioned above. More knowledge about the time value of money and solar economics and a bit number crunching done correctly will likely help you achieve a more cost effective system.

[khanh dam]

J.P.M's math is a good way to thing about it, but as he says it does not take into account govt subsidies, ultiity rebates, etc. I'm currently working on a 10kw install and with a $6000 utility rebate and $4000 fed tax credit the out of pocket cost will be only a few thousand with 2 year estimated break even.

[Elemental101]

Don't tell JPM you just really want to crank up the A/C 24/7. :P

[Markyrocks69]

Based off what pvwatts says a 3kw system in Colorado should produce around 5000kwh a year. Obviously theres many factors can effect this.

If you're saying 8000$ to start, (is that after incentives?)
5000kwh= around 650$ (@13c per kwh)
8000/650=12.3 years.

That's not taking into account the added cost of insurance.

For a system so small you could probably cut the cost in half just by sourcing your own equipment and doing a diy install. Probably make it bigger for not a huge amount more.

Is it possible to do a ground mount? If you can you might not need the liability insurance if the panels aren't on the building. Might be worth looking into. Most people insure their homes, is this 300k liability insurance an additional thing outside of the standard policy? Or is that just like the minimum coverage. Like if the building only needed 100k of insurance otherwise but with solar it needs 300k?