During a recent Q&A session on Facebook we were asked about our opinion on solar. We love renewable energy sources, but can we afford them? The answer is YES, but note that that could be changing in the next months:
Timing and Incentives: Chinese production has driven the cost down to $2.50 for large installations, and less than $4 for small supplemental installations. Incentives have been going down, and the biggest one, a 30% federal tax credit, is scheduled to expire 2016. As a result some people even predict an increase in cost due to a sudden increase in demand over the next year.
Side note: Consider the remaining expected lifetime of your roof. The federal tax credit can potentially be applied to the whole system including re-roofing. If you have to un-install and re-install the PV system for future re-roofing, budget additional $3,000 for that work to be done. On the upside, metal roofs currently seem to bid competitively with asphalt roofs, and have a significant life expectancy.
Northwestern Energy (NWE) currently provides an incentive of $2,000 for a 2k (or more) Watt system (depending on local availability – Bozeman and Missoula have very limited allocations). When I talked to NWE today they mentioned that due to USDA’s public purpose funding re-allocations, this may be lowered down the road.
The State of Montana currently offers $500 per resident or $1,000 per household in tax credits for installing non-fossil forms of generation. There are low-interest loans available through the DEQ for up to $40,000 (3.25% , 10 years). Property taxes will not increase for the portion of the installation during the first ten years, while the lifespan should be 25 to 40 years. The Montana Renewable Energy Association provides further up-to-date information about various incentives, detailed project case studies including cost data, as well as detailed information by the Montana Energy and Telecommunications Interim Committee citing average cost data. The calculations below factor in electrical cost at current rates. Historically there has been a steady climb in electricity rates which if continued would make the scenarios below significantly more favorable towards Photovoltaics (PV).
In our latitude, it is possible to yield approximate 1,500 to 2,400 kWh annually from a 1k Watt PV system, subject to local variations in weather and terrain. A less than optimal angle or solar orientation will decrease this number. PVWatts offers a quick online calculator that factors in location, angle, and available roof space.
Scenario 1: “Power my home”: The average American household consumes just under 11,000 kWh annually, while Northwestern Energy states an average of 8,000 kWh. To simplify we’ll assume an annual consumption of 10,000 kWh and assuming a $.11 for combined delivery and supply rate through NWE for a total of $1,100/year, or $84/month. Based on local yield rates, a 5k Watt PV system can potentially offset the entire home’s energy use. Citing actual average cost from 24 Montana installations with a conservative estimate of $3.65 /per Watt installed, the cost would be around $18,250. Applying the incentives mentioned above, the cost drops to $11,499, or a financed monthly payment of $112. You may end up paying up to $30 more a month for the first ten years. If electricity costs continue to rise, that number may become zero, or even result in actual monthly savings. After these ten years you’re all set with energy for the remaining lifetime of your system (15-30 years, a value of $16,500 to $33,000 at current energy prices). Nice investment!
Scenario 2: “Energy Supplement”
Following the same assumptions from the example above, we’re looking at a 2k system with a potential 4,000 kWh production. This will save $400/year, or $33.33 a month. We’ll assume a higher cost of $4/Watt, or $8,000 before incentives and $3,500 after maxing out all current incentives. Financed, we’re looking at $34/month for ten years. A wash from day one! If you’re a long-term thinker, the remaining lifetime value after the pay-back is limited to $6,000 to 12,000 compared to the earlier example.
Side note: Most of this energy will be exported to the grid due to the difference between peak solar production (midday) and peak residential energy use hours (mornings and evenings/nights when people are home), with weekends and holidays being the exception, which makes Northwestern net-metering system an attractive offer, allowing your system to “deposit” excess power into the grid, and “withdraw” it when you actually need it. If you are off the grid, you would have to invest in additional battery storage to make your system work.
Ideally a home is designed around the use of solar power, therefore the loads are calculated and metered to ensure that the smallest PV system possible is required to meet annual loads. A stand-alone system the design needs to be geared towards peak loads, which can be influenced by time-of-day energy use, and will be different for a home that is occupied during the day (i.e. home office, stay-at home Mom), versus a home that sits empty during the day. For an existing home, such a system may be a less efficient due to limited space, obstructions, and orientation of the array. Before installing a PV system in an existing home, it is recommend that home owners first reduce the energy load. It is helpful to understand how energy is actually used within the home, as this may point to easy (“free”) ways to reduce the overall load. Further energy savings with shorter payback periods may be found by installing more efficient appliances (i.e.high efficiency freezer), and improving insulation and weatherization by sealing air leaks (see www.energystar.gov for more ideas, $100 invested in weatherstripping may pay off in under a year!).
When you’re ready to move forward with your PV system, a quick calculation by a reputable solar installation company will confirm how long it will take for the array to pay for itself in energy saved, with all current incentives applied.
At the time of this writing incentives and pricing make the purchase of a PV system an attractive and economical option. Great Falls is blessed with sun and wind, and I encourage installation of a residential photovoltaic system as an opportunity for clean energy. In my architectural practice to design homes and communities I embrace opportunities that minimize the dependence on nonrenewable energy sources and instead incorporate smart design strategies and onsite generated energy as much as possible.
Sophia Sparklin, AIA, LEED AP with Spark Architecture;
James Erickson, MArch, PhD with Architecture :⇔ design ∩ research ∩ environment
Additional Technical Details:
The ideal orientation is “true solar south”, which is around 167 degrees. The ideal tilt angle is 40 degrees. A typical panel is 39″ wide by 65″ high, and weighs 2.5 to 3 pounds per SF. If you have lots of space poly-crystalline panels will be more economical, with limited space mono-crystalline panels will be more efficient on a smaller footprint. Last, pay close attention to the inverter. Most come with a warranty of 10 years, although some come with up to 25 years warranty. Inverters can impact the efficiency of your system significantly, especially in situations of partial shading. Some systems can be upgraded to serve as emergency power during grid failures, but the solution will look a lot different if you just need some light and a charger, or if you need to run several freezers. Thanks to Conor Darby at Onsite Energy in Bozeman for these additional tips!