Why We Went Solar: The Economics, The Environment, and The Energy Produced

Solar panels + woodshed!

This is the post you’ve all been waiting for. This is the answer to your prayers and the deliverer of miracles. That’s right, I’m finally writing about our solar panels. I know you’re thrilled. Actually, I think ten of you are, in fact, thrilled and the rest of you will read along just to see hot panel pics. I know I would.

As everyone in the world knows (or at least, everyone who follows along with Frugalwoods on Instagram), we decided to have solar panels installed on our barn roof last November. I admit this date to you and I admit it took me a year to write this post. I’m an embarrassment to my profession. I mean seriously… I could list my excuses, but I won’t. Ok actually I will: I had a baby, I have a toddler, we run a homestead (“run” is too intense a word, “limp along” might be more appropriate), and I published my first book! Alright enough with the excuses, you’re thinking, give us the dirt on those panels!!!!! And include pictures!!

Upon further reflection, I MEANT to wait a year to write about our solar panels because now I have a year’s worth of data to share with you! See? I am strategic in my procrastination. In truth, it is nice to have a full year of records to share since our seasons vary so wildly here in Vermont.

A disclaimer that Mr. Frugalwoods was instrumental in providing a lot of the data for this post (last May… ), and so to him, we owe a debt of gratitude.

Solar Panel Basics: Array Size

Our solar array

We had 22 panels installed on the metal roof of our barn in November 2017. These panels generate 280 watts each, which means we have a total of 6,160 installed watts (this is also known as the nameplate production). Our installer predicted that the annual yield for our array would be 5,667 Kilowatt-hours (kWh). Lo and behold, this past year we’ve produced 5,690 kWh, which is fantastically close to our installer’s estimate!

Our barn roof ended up being the best location to install the panels because:

  • It faces southeast and gets mostly full sun (there are no trees or structures shading it)
  • It is a simple, pitched, standing seam metal roof (unlike the roof of our house, which has skylights, dormers, and a ton of angles)
  • There is plenty of room leftover for us to–possibly–install more panels in the future, should we choose to expand our solar capacity.

We considered a ground array, but the barn is so well sited and the roof so unused that it seemed ideal.

Solar Panel Basics: Cost

Snowy solar

We paid cash in full for our solar panels, as opposed to financing them with an interest rate. Here’s what we paid:

$18,603 was the total price, including the panels and their installation

– $5,580.90 in federal tax credit (30%, this is what was available in 2018)
= $13,022.10 was net of tax credit (our actual outlay after receiving the federal tax credit)

This breaks down to:

  • $2.11 per nameplate watt
  • $2.30 per annual kWh

Mr. Frugalwoods modified a spreadsheet he found online (unfortunately, he can’t find the source now… a casualty of me waiting a year to write this up… ) to calculate the long term return on investment (ROI) of going solar. He took into account that:

  • Electric rates rise over time
  • Solar panels can decrease their output
  • The possibility of replacing the inverters every 10 years

Projecting these out for the future, he came up with the following Internal Rate of Return (IRR) numbers:

-4.41% 10 year IRR

8.41%  25 year IRR

This IRR illustrates that the payback on solar is good over the long term, but not so great in the short term. We plan to stay in this house for a long time, and thus hope to fully realize that 25 year IRR. (IRR, by the way, is a method of evaluating an investment over a period of time).

Personally, we view solar as a risk-reducing investment, not unlike longterm bonds (which typically have a lower rate of return, but less volatility, than our more aggressive index funds, for example). The greatest risk with solar is the long time horizon for the return and the potential for regulatory changes.

In Vermont, there’s an established history of grandfathering in solar rate plans, so we’re hopeful that our regulatory risk is small. Again, it’s a longterm proposition and these are all projections that could be proven wrong in the future.

DIY (per usual) Would Be Cheaper

The financial returns would be more of a slam dunk if you designed and installed a solar system yourself, which we did not do (and yes, I realize I just said ‘solar system’). More than half the cost of our system was in labor for the installation. However, given the changing regulatory frameworks both nationally and locally, we thought it prudent for our situation to go ahead and pay a premium to have it done professionally. Plus, neither Mr. FW nor I is a fan of heights or working on roofs, which is kind of necessary in order to instal panels on a roof. And yes, we considered getting a ground array to negate this roof situation, but in the end, the roof of our barn was the optimal site for the array.

After watching our solar crew install the panels (which, by the way, took several people and several days), we were both VERY glad we hadn’t tried to install them ourselves. In addition to the fact that the installers were balanced on our roof, they were hefting enormous solar panels to and fro and uh, neither of us wanted to do that. Bonus is that the installation provided excellent toddler entertainment and Babywoods and I had great fun watching the “people on the roof!” while they worked.

Though I’m usually a proponent of doing projects ourselves, I also think it’s important to know one’s limits in terms of expertise and physical safety. Installing solar was pretty far outside both of these limits for us.

Our Electrical Utility + Our Solar Array

Before going any farther, I want to point out that your individual experience with solar will differ from ours based on a number of factors, including how your utility company interfaces with solar, the state you live in, and of course your roof and your weather. Please be aware that my experience is really only applicable if you are also a Washington Electric Co-op customer (and even then, there will likely be discrepancies since we installed in 2017).

We Are Net Metered

What’s that? It’s when you toss a butterfly net over a parking meter. Very avant-garde, you understand.

Net metering in THIS context means “a system in which solar panels or other renewable energy generators are connected to a public-utility power grid and surplus power is transferred onto the grid, allowing customers to offset the cost of power drawn from the utility.”

Since we are net metered, we are still on the power grid and are still electric co-op customers. We made this decision for several reasons:

  • We didn’t want to have to own batteries to power us when the sun isn’t shining. Batteries are expensive, tend to need a lot of maintence, and are more cumbersome than simply using grid power (meaning the power from the electric utility company).
  • Vermont has decent net metering rules: we get paid $0.26 / kWh in generation credit for each kWh we sell to our electric co-op, while we only pay $0.11 / kWh for the first 200 kWh we use each month and $0.23 / kWh after that (net of any solar production that month).

Wait, Doesn’t It Snow A Lot In Vermont?

Why yes! Yes it does. However, it also suns a lot! What this means in practical terms is that we produce more solar than we use during the summer (when we enjoy 14 hour days, plenty of sunshine, and snow-free panels). Then, we use up those credits during the winter when we have 7 hour days, lots of clouds, and sometimes snow takes up residence on the panels (although we’ve been pleased with how quickly the snow melts and/or slides off the panels since the barn roof has a decent pitch).

Through net metering, we’re able to bank our summer sunshine for use in the wintertime, which keeps our electric bill low year-round, even when the sun isn’t shining.

True to our expectations, we produced a dismal amount of solar during the winter months and an astronomical amount during the summer months. Since we’re able to bank that summer sun, it has–thus far–evened out. See the above graph to illustrate the seasonal nature of our solar production.

We aren’t paid cash by our electric co-op for our excess solar, but we offset our usage during non-sunny times. These generation credits expire 12 months after generation, so for example, excess solar banked in June 2018 will expire if not used by June 2019. In light of this, there’s no incentive for us to produce more solar than we use. Furthermore, our co-op doesn’t allow us to offset the fixed charges on our electric bill, so our bill isn’t $0, rather it’s around $17 per month. See a recent electric bill below:

Our electric bill these days

Frugalwoods Family Electricity Usage

We sized our solar array to meet our annual usage, including the conversion of our hot water heating from propane to a heat pump hot water system. Propane is super expensive, and solar energy is cheap (plus better for the environment) so this made the economics nice.

Our Heat Pump Hybrid Electric Water Heater

Water heater, installed by Mr. FW

In July 2018, we converted to a heat pump hybrid electric water heater (HPHW) that eliminates our need for propane (for hot water) and allows us to leverage our solar power. It’s 3.5 times more efficient than a standard electric water heater and, due to its energy-efficiency, it qualified for two massive rebates:

  • $500 from Efficiency Vermont
  • $250 from our electric company (Washington Electric)

The water heater was $1,299 from Home Depot and these two rebates brought our cost down to a mere $549. Mr. Frugalwoods installed the water heater himself, which saved us several hundred (a thousand?) dollars on the cost of installation. This was no easy feat since we were going from propane to electric and so he had to install a new 220 circuit. He also did all the plumbing for it using PEX and added ball valve shut-offs. The water heater technically requires a condensate drain, but we’re just using a 5 gallon bucket right now since it doesn’t actually drain very much water. If it turns out to be an issue, we’ll put in a condensate pump.

Here’s a breakdown of our previous propane costs:

  • Annual propane usage for hot water (estimate): 200 gallons
  • Price per gallon of propane: $2.66
  • Annual propane cost: $532

We estimated how much electricity we thought the HPHW would add to our annual electricity usage, based on the amount of propane we used in a year. We were assuming we’d end up using about 100 kWh per month, but it turns out we’re averaging more like 60 kWh per month, which is great!

We’ll have to see if it remains as efficient through the winter, however, with a colder basement. Without solar, those 60 kWh a month of water heating electricity would almost certainly be at our marginal cost of $0.23 / kWh, which comes to $13.80 a month or $165.60 annually, which is still a win compared to propane! But it’s an even better deal since that electricity is coming from our solar. Plus, it’s really nice to reduce our dependence on imported fossil fuels, whose prices have historically been very volatile.

The HPHW project is turning out to be a win of epic proportions. Even if we were paying the highest tier price for electricity ($0.23 / kWh) the cost of running it is only (60 * 0.23 = 13.80 * 12 ) $165.60 annually vs. $532 for propane. And propane is currently quite cheap by historical standards. Thus, we’re saving $366.40 a year, which means our payback period will be just 1.5 years for our new water heater!!

Other Uses Of Electricity

Mr. FW demonstrating our energy use monitor

As you can see, our primary electricity usage is for our hot water heater. But of course we also use electricity in our:

  • Lights: we have high-efficiency LED lightbulbs, which utilize a modicum of energy.
  • Well pump: for pumping water from our well. It doesn’t use all that much electricity but the bummer is that when the power is out, we don’t have water either.
  • Pump for our oil-fired baseboard heating system: we don’t use our oil heat very often, but if we did it might be a significant drain.
  • Air conditioning window units: we don’t have central air, but we did use several window units during our unusually hot and humid summer. For many people, AC is their #1 energy hog.
  • Appliances: these have the potential to be mega energy sucks. I’ve talked with folks who are baffled by their energy bill because they have LED lightbulbs and are cognizant of how much electricity they’re using and yet, they have enormous bills. Often, the culprits are old, inefficient appliances. Refrigerators, freezers, washers, dryers, and their ilk. In our previous home, we discovered that the ancient fridge/freezer in our basement (which was there when we moved in) was a massive energy hog and that we would save money by purchasing a new, Energy Star certified efficient chest freezer. More on that here: Why Buying A Chest Freezer Is Saving Us Serious Money. For this reason, I often advise against buying appliances used. Even though a used appliance will be cheaper than a new one at the outset, your longterm energy costs are likely to be much greater.

If you think you might have energy hog appliances (or just can’t figure out why you’re using so much electricity), I recommend you get (or borrow) an energy use monitor, which measures the amount of electricity a given device uses over time (affiliate link). The beauty of this gadget is that it averages energy usage over time and thus isn’t merely measuring what the appliance utilizes in a given moment.

Behold our kitchen

This averaging capability is crucial for things like refrigerators since they cycle through higher and lower periods of energy consumption. The monitor translates this usage into cold, hard cash–you type in how much you pay per kilowatt hour (printed on your handy dandy electricity bill) and it displays how many dollars per month, kilowatt hours, and pounds of C02 the device in question consumes/emits. We have this monitor because we like the interface, which has an external display–much easier to employ with an appliance such as a fridge that’s difficult to snake behind in order to read an outlet-mounted monitor (affiliate link).

Currently, our appliances are fairly efficient. We have a high-efficiency washer and dryer (and try to hang dry a fair number of clothes to cut down on dryer usage). We have an elderly flat-panel TV that doesn’t use too much electricity (it’s not a smart TV, which means it doesn’t use electricity when it’s turned off), the fridge/freezer in our kitchen is OK, and we still have that Energy Star certified chest freezer in our basement. We plan to redo our kitchen at some point and would like to get a more efficient fridge/freezer at that time.

We’re toying with the idea of possibly, perhaps, one day getting an electric car, which would run off of our solar power. That purchasing decision is still many, many years away since we’re very happy right now with our 2010 Toyota Prius and 2010 Toyota Tundra. But, that possible future electric vehicle was one of the reasons we positioned our solar array as we did. There’s enough space on the barn roof for us to fully double the number of panels we have if we so choose in the future.

How We Chose Our Solar Company

There are several companies that do solar sales and installations in Vermont and so, we had options! As with anything else you purchase, I highly endorse shopping around and gathering quotes from a number of different companies. I do this with everything I buy–from spatulas to solar–and it always pays off. We ended up seriously considering two companies: Sun Common and Catamount Solar. Both companies sent a representative to our house to look at the site and gather data. Then, they each sent back estimates based on how many panels they thought we needed (and how many would fit on the barn) along with generation predictions and, of course, costs. We were transparent about shopping our bid around and were able to negotiate a better rate by offering to pay cash in full (and not finance).

Initially, Sun Common gave us a cheaper bid and so we went back to Catamount and asked if they could beat Sun Common’s price. And they did! As part of our contract, we paid half of the total prior to installation and the other half AFTER the electric company came to our house to certify the system. The reason to divide up payment this way is that the electric company can come in and nitpick the solar installation–which happened with us–and Catamount was very responsive in returning to make the changes required by our electric company. Our electric company took a long time (a very long time) to come out for this certification inspection and so both we and Catamount were aligned in following-up with the electric company since Catamount wanted to be paid the rest of their bill (and we wanted our solar up and running!).

Another factor in our choice of Catamount Solar is our desire to support local Vermont businesses who provide good jobs for Vermonters (we’re a state that needs jobs and employers!). Catamount Solar–in addition to having a stellar name–is a Vermont-based member-owned worker’s cooperative, a business model that we respect.

Funny story, when the rep from Catamount Solar came to our house, he gave us a strange look and said, “Are you the Frugalwoods by any chance?” Turns out, his wife is a reader and had tipped him off that it just might be us. We got a kick out of that and hey, how could we turn down a Frugalwoods reader?

More Than Just Money: The Environmental Angle

Another reason for our decision to get solar is our desire to make lifestyle choices that benefit the environment. By capitalizing on clean solar energy, we’re able to decrease our dependence on fossil fuels. In particular, we’ve been able to dramatically reduce our propane consumption, which is a financial and environmental win. Solar is a wonderful element of our desire to increase our homestead’s sustainability and decrease our overall carbon footprint.

A Year Of Solar In Review

Well, almost a year. Our panels weren’t connected to the grid and up and running until mid-November 2017, so we’re a few weeks shy of a year. But I could not put off writing this post any longer. Thus, the chart below includes an estimation of how much we’ll generate and use for the last few days of our current billing cycle.

Month Ending Solar Generation Energy Consumption With Annualized Water Heating
11/4/2017 0 229 289
12/4/2017 0 357 417
1/4/2018 13 397 457
2/5/2018 167 387 447
3/6/2018 302 363 423
4/4/2018 544 340 400
5/5/2018 574 382 442
6/5/2018 867 348 408
7/5/2018 811 418 418
8/5/2018 768 461 461
9/5/2018 725 554 554
10/5/2018 490 426 426
11/4/2018 302 401 401
Total: 5,563 5,063 5,543

What this chart shows is that in the last 12 months, we’ve generated about 500 kWh more than we’ve used. However, we didn’t install the heat pump hybrid electric water heater until July, so we’re missing six months worth of that data for an actual break even. If you add that in (we use about 60 kWh / month for the heat pump hybrid electric water heater) for the months before the install, we’d be ending the year within 100 kWh of our production, which is exactly where we want to be. We’ll keep an eye on our generation vs. consumption and it’ll be interesting to see how our banked credits are utilized throughout the year. I’ll let you know how it goes!

Do you have solar? Are you considering it?

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