Reducing Your Home Energy Costs with a Solar PV System

It's the new "in thing" ... solar panels on your roof. I'm talking about the ones that produce electricity, not the ones that make hot water. They're actually called "Photovoltaic" or PV. PV arrays are popping up all over and people are always asking me; " Are they worth it?" So, I'll spend the next few (many) paragraphs trying to answer that question.

Well ... let me start off with one of those headline statements, you know, the ones people spend the rest of the article trying to back away from? ... here goes...

Dollar for dollar, Photovoltaics are not a good way to spend your money.

And now here is where I back away from it ...... Unless...

Unless someone else is willing to pay for it! Then it's wonderful! Now who is going to pay for such a thing and why?

Who? The feds, your state, your town, maybe even your local utility company. Depending on where you live, there are incentive programs, rebates and tax credits. In reality, all these come out of everyones taxes, so you are really getting more than your fair share if you take them up on the offer.

That's the who, here is the why...

PV systems are one of the most promising technologies for meeting our energy needs in the future. Probably not in our future, but certainly in our children's. What the government is giving us this money is basically... Practical R and D.

The guys who spend their lives thinking about money call this "economy of scale". Kinda the "Henry Ford" version of alternative energy. The first few thousand panels may cost a fortune to build, but if you keep on building and the market for them keeps growing ... eventually all that money being reinvested starts bringing down the price. (Remember how much you paid for your first computer? And how slow it was? Look at the one you have now and you'll be looking at economy of scale in action.)

It's the government giving the industry a push along until it builds enough speed to balance and pedal for itself. Where do you fit into all this? You get a big discount on something that can literally pay your electric bills for you.

Now ... the how it works ...

The popular PV systems out there today don't use any batteries. You don't store the power you make ... instead, you sell it back to your utility company. And believe it or not ... they kinda like the idea. Saves them from having to make it AND ship it to you through the grid. And you make the most on sunny summer days when demand is at it's peak and their system is falling short.

It's done by what they call "net-metering". Here's the whole kittenkabootle in a nutshell. (is that actually a word?) The sun hits the panels and generates DC current (like a battery), The current is run through an "inverter". This inverter converts DC current into AC current which is what your house uses. It also synchronizes with the frequency of the power coming in from the utility company. (that whole 60 cycle thing). It connects right into your home electrical panel.

When you are using more power than the panels generate, the rest comes in through your electric meter and everything works as normal. When the PV panels are generating more than you need, the excess power flows backward through the electric meter, into the power lines and gets used by your neighbors. (Here is the cool part) Your electric meter turns backwards, and your bill starts going back down.

If your system is large enough, you may have no electric bill at all. However, depending on the laws where you live, the utility may or may not pay you for your excess if you make more than you use for the year. Much of the cost of electricity is in transmission, not in generation, so if you do get paid, it will be at a much lower rate than you are charged.

Here are some numbers for you to work with. They will be different for you depending on rates, labor costs, etc, but you'll get an idea of how it works.

Lets start with a one KW system (1000 watts per hour). Where I live one watt of PV will cost about 7 dollars to buy and install based on buying a complete system. So one KW will cost about $7,000.

A KW of electricity is usually worth about 10 cents. (19 cents on Long Island where I live). That means you'll make .10 for every hour it sits in the sun. If you live in a really sunny place and got an average of 8 hours of sun a day for 50 weeks out of the year (the government figures this as 1800 hours average rather than my 2800, I'm an optimist) ... you'll see a return of $280. per year. (like I said, I'm kinda winging the numbers ... yours will be different. There are websites that can tell you how many hours of sun to expect in your area) At this rate, the system will take 25 years to pay for itself. And that's just about how long the system will last ... if you are lucky.

lets add in the "unless" part from above

Now where I live, the utility will kick back a rebate of $3,750 and the feds will give you a tax credit for maybe another $1500 or so. Now it only cost you $2750. A few strokes on the calculator and ...now the system will pay for itself in under 10 years and the rest of the years you'll be making 280 bucks a year, free and clear.

Add to that the fact that my rates are almost double the average and electricity rates are going to keep climbing like crazy over the next 25 years? You could easily be making $1000. a year from it ten years from now. And your original outlay was only $2750. Suddenly this starts to look like a pretty good deal.

So, to wrap things up I'll say this ... Do your homework, run the numbers yourself using all the costs for your area. Don't always believe the hype your being fed. Remember, the guy trying to put PV on your roof is a salesmen. All of his numbers may be very optimistic. Trust your own or get numbers from someone who has been running PV for a few years.

But, on the other side of the coin, regardless of profit ... you'll be making the world a cleaner place for your kids, you'll be promoting a worthwhile industry, and you'll be sticking it to the Oil Companies. It might be worth it for that alone.

Tom