You Can Continue To Pay Your Utility Bill Forever, Or You May Choose To Become Your Own Utility With Solar PV… Instead!
Electricity generated by solar panels is referred to as PHOTOVOLTAIC energy. This tongue twisting word is often shortened to “PV,” and thus we refer to a solar system that generates electricity as a PV system.
Q. What is a PV system?
A. PV technology produces electricity directly from electrons freed by the interaction of sunlight with a solar panel made of semiconductor material. The power provided is direct current (DC) electricity. The basic building block is known as a cell. Many cells put together are known as a module, and many modules assembled together form an array. A PV system will consist of an array of modules generating DC electricity, an inverter, and sometimes battery storage back up with charge controller.
Q. What is an inverter?
A. There are two kinds of electricity, DC and AC. Homes that are connected to utility power use AC electricity. Flashlights, small radios and automobiles use DC electricity. In order for you to be able to use solar to operate the appliances in your home, an inverter will convert PV power from DC to AC. Inverters can be further classified as units that use batteries (UPS) and those that use the utility grid as power storage (Grid-tied). Inverters are now required to possess meters that will indicate their performance and some manufacturer’s supply remote display units that can be mounted inside the home. It is important to check on your inverter regularly to become acquainted with its operation and performance.
Q. How much electricity will a system produce?
A. The amount of power produced will depend upon how large the system is. In California the average residential customer purchases 6,500 kilowatt-hours (kWh) per year. There is enough sunshine falling upon on the average home to produce this and a system can be designed to offset all electrical needs. The cost to accomplish a 100% system may be prohibitive and sometimes it makes more sense to simply reduce or ‘shave’ your consumption. Some utilities use tiered rates when they charge for consumption which means that the more energy you use the higher is the cost per kilo-watt-hour. The most economically feasible size is usually between 50% and 75% of your annual household needs.
Q. What about blackouts?
A. A solar system using batteries for storage can “ride-out” utility blackouts. Batteries add significantly to the expense of a system while providing no payback, need weekly maintenance, are hazardous and will need replacing every five to ten years. For this reason most city dwellers are opting for a “grid-tie” system.
Q. What is a “grid-tie” PV system?
A. Today in California you may connect your solar system directly into the wires of your utility. Since the “Net Metering Law” allows you to do this you will actually be spinning your meter backwards when your system is generating more power than you are consuming. When you generate excess electricity (more power than you are using) it will enter the grid and be used by your neighbors. Your meter will tally the excess and give credit your account. After a year the excess credits are eliminated and you balance is adjusted back to zero again. In effect, if there are any unused energy credits at the end of the year, the utility received this solar power for free.
Q. What is Net Metering?
A. Because of the Net Energy Metering (NEM) law, Californians are allowed to “sell” clean solar generated electricity to the utility at the same price at which it was purchased. This is fundamental to the economics of generating your own power and has been instrumental in the development of Distributed Generation (DG) of power. Without Net Metering, the utility would, as it has in the past, sell energy to you at retail but buy any energy from you at wholesale pricing. This is a huge benefit to anybody owning the property now and in the future as there are only a limited of Net Metered systems being allowed in any utility’s territory. The current statewide cap of 5.0% of any utility’s customer base is quickly being achieved. When this limit has been reached, no more NEM solar will be allowed. The comparison to the HOV yellow stickers awarded to buyers of qualified hybrid vehicles would apply here. Only 60,000 of these stickers were issued and cars with the privileges of the “fast lane” commute are worth more than even newer versions without the stickers.
Q. Just how big is a typical system?
A. Typical residential Solar PV systems range in size from fifty to six hundred square feet. A system composed of the very highest efficiency monocrystalline cells will produce 1kW per hour for every 60 square feet. Less efficient polycrystalline cells will require 90 to 130 square feet while thin-film systems need the largest area of all – sometimes as much as 300 square feet to generate 1 kilowatt.
Q. What is the California Solar Initiative (CSI)?
A. The State of California will help you buy a solar electric system. The California Public Utilities Commission will pay you a lump sum rebate up front or monthly for five years based upon the actual performance of the system. The amount of the lump sum rebate is calculated by using an online tool (http://www.csi-epbb.com/) created to take into account module and inverter efficiencies, tilt and orientation, shading and local weather to produce an Expected Performance Based Buydown (EPBB). The rebate was administered by the California Energy Commission (it was called the Emerging Renewables Program or ERP) but the program was extended and altered on January 1, 2007 (it is now called the California Solar Initiative or CSI). In prior years the rebate had been as high as $4.50 a watt but was summarily reduced to $2.50 in 2007. In September of 2011, the rebate level for residential Edison customers has dropped down to a maximum $0.65 per watt. The rebate paid is now reduced by the degree of shade measured on the panel’s surface, the tilt and orientation as well as the inverter efficiency.
Q. How can I get information on the State’s Rebate program?
A. You must be serviced by SCE, PG&E or SDG&E utilities to qualify for the state rebate. You may apply for the program yourself by going to their website, http://www.gosolarcalifornia.ca.gov. We can also provide the forms and do the necessary paperwork to make your reservation.
Q. Is there a program for residents of the City of Los Angeles, or other cities in Southern California?
A. Many cities such as Burbank, Anaheim, Glendale, Pasadena and Riverside (among others) have their own municipal rebate programs. Funding for the MUNIs is intermittent and rules change with little advance notice. The LADWP has a program for its customers and information can be found on the web at http://www.ladwp.com/ladwp/cms/ladwp000787.jsp. AMECO will prepare all of the forms and make the necessary submittals. LADWP had been funding systems with a rebate starting at about $4.18 per watt as a lump sum payment, but is was reduced to $2.20 a watt September 1, 2011. The program is also Performance Based and emulates the State’s own CSI. If you are serviced by a municipal utility, you can go to its web site and look for incentives to go solar.
Q. How much does a PV system cost?
A. As systems get larger, the cost per watt is lower. A two (2) kilowatt system may cost between $12,000 and $14,000 ($8.00 to $7.00 per watt), while a five (5) kilowatt system may be installed for as little as $30,000 to $25,000 ($6.00 to $5.00 per watt). All of these prices world be before the rebates or tax credits. The final cost may be as low as $2.50 per watt (or $12,500 for a 5 kW system) depending upon which incentives your utility may offer.
Q. Are there tax credits or any other incentives to go solar?
A. There is currently a federal tax credit of 30% for any qualifying residential or commercial solar system. This tax credit is slated to expire at the end of 2016. The Federal (MACRS) and State accelerated depreciation deductions can also significantly reduce the final cost of a system used for commercial applications.
Q. Will my property taxes go up if I install a solar energy system?
A. In California the value of your property may not be re-appraised by the County Assessor’s Office for solar related property improvements, at this time.
Q. Are there any other incentives or programs available to help me afford a solar energy system?
A. It depends upon where you live. Some municipally owned utilities have established their own programs and some credit unions and banks have special loan rates. For a comprehensive list of incentives, rules and regulations affecting solar energy go to http://www.dsireusa.org/index.cfm?EE=0&RE=1.
Q. Why is there such a variation in prices?
A. Although any solar component that qualifies for the CEC rebate must meet certain minimum criteria, there are wide variations in the way PV modules are made and assembled. Some of the modules recently entering the American market are made in Asia and are less expensive than European or US brands. Also, the cost of installation varies upon whether or not you hire a contractor that uses employees or temporary labor and subcontracts the installation. If you use a firm with an established reputation, one that has employees, carries workman’s compensation and liability insurance, you may pay a little more for “peace of mind.” Frequently, a firm that has just recently entered the solar arena may offer discounts to gain market share or experience. The California Energy Commission and the Public Utilities Commission do not check the history or background of its participant “contractors” before listing them. As long as its state license is valid a company will be “approved.” Although the solar equipment listed on its website is “approved,” the CEC & the PUC in no way endorses any of the vendors on its list. The old rule, “Caveat Emptor,” definitely applies when you select your installer and equipment.
Q. How much do I save?
A. The savings will depend on the size of your solar system and the amount of electricity you would normally have consumed. A 2kW PV system which is replacing electricity at 30 cents a kWh might save $1,125.00 per year (CEC Consumer Handbooks “Buying a Photovoltaic Solar Electric System,” p.7 or “A Guide to Photovoltaic System Design”, p. 8 and 9). Rates in California are increasing dramatically – so savings will also increase proportionally. The highest tier in Edison territory has reached 32 cents, not including state and local taxes.
Q. How long does it take for a PV system to pay for itself?
A. It is more instructive to think of solar as an investment that yields an annual return, much as a bank savings account provides interest. A solar PV system may generate savings that would equal an annual Return on Investment (ROI) of 7% to 15% per year at today’s electric rates. These savings is not taxed as would be the interest earned from a bank savings account. Thus you would have to find a bank account or investment yielding 14% to 28% to equal the return on a solar electric system. No matter what ROI your system would generate, this is ultimately a choice about how you will be buying your power – not whether or not you will be paying for it!