Really: Solar Is Actually Cheaper than PG&E
I am finding a strange thing as I sign up solar neighborhoods with 1 Block off the Grid - which is a great community organizing tool for getting more solar on more roofs more economically – because if everyone interested in solar can go ahead at the same time as their neighbors they can all get a better rate than if they were all approaching different solar installers and installing at different times.
I had expected that the people who haven’t learned much about solar would be the more difficult to reach. Instead, I am finding that some of the people who have gone to the trouble to get an estimate are the worst candidates for solar.
They tell me that a solar salesperson has told them that solar just doesn’t pencil out for them. What!!!?
Now, it’s true that solar saves more for people with higher bills. But solar is cheaper, even if you have the tiniest bill. For example:
Come to think of it; maybe solar maybe just doesn’t pencil out for that salesperson. A small system, enough to knock out a small usage of electricity, is going to bring a very miniscule commission, yet take the same amount of work to close as a larger system.
But here in Northern California, with the CSI-PG&E rebate, and the 30% tax credit, and the reduction in panel prices since the silicon glut, solar pencils out for everybody!
Here’s how to do your own solar comparison.
1. Look at your PG&E electricity bill, (don’t count the gas portion) to find your monthly payment.
2. Look at the chart below to find what you will pay for the next 25 years of PG&E. While 40 years is the full life of a solar array (so far- the first ones from the 1970’s are still going) but after 25 years they will operate at about 80% of the original capacity. (Also, most solar loans are for 25 years.) So lets compare the cost of a solar system with the cost of just the next 25 years of PG&E, and consider the remaining life of the solar appliance as a bonus.
PG&E rates have risen over a period of 40 years 6.7%. More during crises like when we were extorted by Enron in 2000, and it’s gone up and down, but the long-term average has been 6.7%.
(Actually that PG&E inflation rate average is more likely to go even higher than 6.7% in the future for two reasons:
- Climate change is causing earlier snow melt, so our hydropower supplies (of snow melt) are available for a shorter portion of the year. This will require new sources to replace the hydropower we have had available previously. (New investments always will cost more than continuing to tap into old ones.)
- In addition, mandated new investments in cleaner electricity also cost more to build from scratch – just like any new power stations would.)
But calculated at the previous average 6.7% rates rise
Chart: what you will pay over 25 years to PG&E if your bill now is:
$20 = $14,646
$40 = $29,292
$60 = $43,624
$80 = $58,166
$100 = $72,708
$200 = $145,416
$300 = $218,124
$400 = $290,832
$500 = $363,540
$600 = $436,248
$700 = $508,956
$800 = $585,833
This amount is your 25 year energy budget. You will spend this if you do nothing; but just keep paying your monthly utility electricity bills. Next:
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July 12th, 2009 at 2:58 pm
Well done Susan!
July 13th, 2009 at 3:15 pm
While I fully support renewable energy, this article completely ignores the time value of money. One dollar 20 years from now does not equal one dollar today. Since there is a cost to using people’s money, you need to discount future cash flows at an appropriate rate. For example, using a 6.7% cost of capital, which is equal to the annual increase in PG+E’s rate, the $14,646 amount described by the author for a 20 year period is reduced to $6,000. This makes solar $3,137 MORE EXPENSIVE, not cheaper.
If the author wants to show that solar is cheaper than the utility rate, than she should incorporate the externalized costs (C02, coal ash, tailing ponds, etc.) to determine a “true cost”. This would be more effective. Using elementary and misleading financial information only further provides ammunition for renewable energy opponents.
July 13th, 2009 at 5:21 pm
Bringing in investment concepts like the “time value of money” clouds the fact that energy is not an investment; it is not optional like investing in stocks – you ARE going to HAVE to pay a utility (or a solar loan) to get your energy for the next 25 years.
And a set payment of $100 mth to a solar loan company for 25 years (to supply about 500 kwh mth) will still be $100 in year 25.
But a constantly increasing 6.7% rate for utility power that costs you $100 mth this year will be $480 mth in year 25.
Here’s your monthly PG&E from year 2 to year 25 with your utility rates rising 6.7% a year:
$100
$107
$114
$122
$130
$139
$148
$158
$169
$180
$192
$205
$219
$234
$250
$266
$284
$304
$324
$346
$369
$394
$421
$449
$480
As you see, by year 25, you are paying considerably more than the solar loan payment of $100 a month.
Most of the savings are in the later years, but in 25 years you’ll be older too, maybe entering your Walmart Greeter years, and will really appreciate a lower bill even more than now.
(And yes, I do agree that the real costs of dirty energy are completely overwhelming – but I find that everyone who gets an estimate is already factoring that in – but solar is cheaper dollar for dollar even without factoring those harder to quantify costs)
July 13th, 2009 at 5:32 pm
BTW – The reason I didn’t include the cost of capital (the interest you pay for your loan), is that you deduct the entire interest payment from your taxes each following year – assuming you use a second on your mortgage; in the US homeowners can deduct interest on a mortgage loan.
So the net cost excludes the cost of capital: interest payments.
(These estimates also are the final installed costs minus the California PG&E rebate amount at (depending on design)about $1,550 per KW installed, and the 30% Federal tax credit on the cost of a solar installation, passed this year)
July 14th, 2009 at 6:10 am
Susan,
I like to hear from real people that actually went all the way to install a photovoltaic residential “power plant”.
One idea that might appeal to you and the readers is to go solar (or wind as the case may be) on a community scale. It is tough to organize but with a leadership and vision – the community will benefit.
See my page on community wind turbines in Canada to get the picture
http://www.solar-energy-for-home.com/community-wind-turbine.html
Best wishes, Jacob
July 14th, 2009 at 8:05 pm
One issue here in Los Angeles (LADWP) is that we can’t actually zero out our electricity bill. As I understand it, DWP insists on charging about $7.00 a month for electricity even if you use no power at all. AND they’ve been able to finagle out of annualized net metering…they only do net metering on a short term (weekly or monthly, not sure which) basis, which can’t help summer generation to balance out winter usage.
So for someone (like me) who already has a fairly low electricity bill, the economics make less sense.
But I’m looking at it anyway, from an environmental perspective. I want my daughter to live in a clean world.
July 15th, 2009 at 7:59 pm
This is encouraging, Susan, but I live in the woods – my home and property are in the shade most of the time, and my roof, to make it worse, faces east and west.
Even if I could be convinced that it would pay to cut down trees, many of those shading my roof are on others’ property (and I live in North Carolina). I’ve been waiting for the full-spectrum film to hit the market, but haven’t heard that it has.
Is solar power viable for me now?
Thank you for what you’re doing.
July 15th, 2009 at 8:18 pm
Fritzi – sadly, no.
I was originally looking for a picture of a house like yours, because, this actually is the one case where solar won’t pay.
July 23rd, 2009 at 5:26 am
Thank you, Susan.
And I’ve got good news: I can get a geothermal heat pump – I didn’t know they could be retrofitted! (found it at http://www.waterfurnace.com). I needed a new system anyway, and there’s the 30 percent federal tax credit (cap’s been removed), so this will cut my heating, water-heating & cooling costs massively for a comparatively small investment.
My remaining usage may well be manageable by solar once it becomes optimally efficient, since my roof does get some sun.
Another thing I googled & got nothing on: is it possible to make the existing driveway white (I heard DOE Secretary Tsui say we should have white pavement and roofs to reflect back the sun – the amount of CO2 he said would be eliminated if it were done everywhere was astonishing.
If there’s a cost-efficient way to do it to the roof prior to roof replacement, I’d do that (but I’d be surprised). But I did come upon a couple of vague references to painting driveways white, just no further info. (what paint holds up under walking, wildlife, weather and driving?)
It’s exciting, this is really happening.
peace,
Fritzi
July 29th, 2009 at 10:57 pm
[...] is perfectly possible to 100% power a house with a solar array that’s about the size of your living room an… put together on your roof. But with wind power? Not [...]
August 27th, 2009 at 11:45 pm
[...] really: it’s just a swap. But seeing that upfront cost can be prohibitive, even if you know how much cheaper it is than sticking with your utility over [...]
September 23rd, 2009 at 6:44 am
We went to solar PV during 2008, before the full 30% tax credit without limits. Our home system is rated at 3.7 kW (dc) installed as an awning off the south facing roof of our 2 story home. It has reduced our annual TOTAL to P G & E to ZERO for the year of actual use. We still pay the monthly connect fee of around $13 but….before PV installation our monthly bills averaged $250/month. We eagerly got bids and installed the PV system (and a solar water heater system) after our 3rd month utility bills in this new house served fully by P G & E, as our previous 24 years of electric service was from Sacramento’s SMUD. Our last month in the old, SMUD served house, was virtually the same kW total as our first month in the new house (PG & E) and the PG & E electric total was FOUR TIMES what our SMUD monthly charge was in the old house ! Even without today’s wonderful Federal tax credit, we are happy to be “free” of PG & E tiered charges.
November 15th, 2009 at 9:27 am
[...] Really – Solar is Cheaper than PG&E [...]
December 8th, 2009 at 5:50 pm
[...] electric bills you really never notice this sort of creeping inflation – yet it can really add up. What I found was that someone who will spend about $100,000 on utility electricity for 25 years, [...]
December 8th, 2009 at 9:29 pm
Solar and other renewable energy solution, for space or water heating is definitely a future.
I have seen numerous comments regarding the best solution for water heating, gas, electric, condensation, fuel cells, solar… and it all depends how much money you want to spend. Everything spins around your budget.
Your acceptance of a new (read green/renewable) technology is directly related to how much money you want to spend. Thinking long term… today with money shortage… it is tough.
But, people like to experiment, spend minimum or use parts found in the garage to build a solar water heater for example. I like ideas and designs of cheap and functional heating systems.
Some ideas can be found here, http://www.hot-water-heaters-reviews.com/build-solar-water-heater.html, and many more to come.
Cheers,
Zee
December 15th, 2009 at 5:03 pm
[...] each home that can cut its use of utility-bought energy to zero by buying a solar array instead, can save $72,000 to $300,000 over 25 years. After that they have no energy costs. Multiply that by everyone in the state and [...]
December 20th, 2009 at 6:06 pm
Susan,
SHAME ON YOU!
If you were on Wall Street, people would be saying you should be put in jail for that kind of misleading advertising.
You obviously mention, but totally ignore the interest cost in your calculations, and you build in an inflation rate that is totally ridiculous in this economic environment. [SK: The inflation rate in electric prices is a matter of public record for each state: CA 6.7%. I agree it is ridiculous, and has no relation to the larger economy, but it is factual ]
It is deceptive to say the time value of money clouds the issue because you are going to have to pay for energy. You also ARE going to have to pay interest, or forego the interest you could have earned.
[SK: ?? I included the interest for a 20 year loan ]
I hope you are not one of the people excoriating the prime-loan brokers. You have become one of them!
SHAME ON YOU.
Mark
December 21st, 2009 at 1:52 am
I see quotes for solar PV for typical houses in Mass upwards to $80K for the whole job, at that rate the loan interest would be many times the electric bill.
On Ebay there are many suppliers of the PV tiles that you solder together and build into frames. These sheets (3″x6″) sell for close to a $1/Watt. With the frames and some batteries and converter it looks feasible to build a 1KW trial system for $2K or so in parts. Getting it on the roof is another matter. No my time isn’t worth much these days (thanks to EE out sourcing).
I would only take half the house off grid, mostly the predictable electronics load by adding a few “solar” AC outlets. Going fully off grid for peaky loads like the washer or fridge probably isn’t worth it for now, but half off would half the bill. Then again replacing some high power appliances with newer lower power ones would give similar savings.
December 30th, 2009 at 11:24 am
JJ, yes, you are correct that DIY is cheaper. Half the cost of solar is getting guys on your roof. Its like any roofing job.
And in PG&E territory, yes it can be very cost effective taking just a portion off the grid,because as George Parrott (up-thread) notes: the tiered pricing means that a modest baseline usage in PG&E territory costs much less per kwh than high usage.
Our base is around 11 cents per kwh for the first 260 or so (varies by neighborhood) kwhs.
December 30th, 2009 at 11:31 am
JJ – re: “I see quotes for solar PV for typical houses in Mass upwards to $80K for the whole job, at that rate the loan interest would be many times the electric bill.”
Yes, it might be, in MA.
In CA where total quotes are lower (because our insolation is better), and our utility rate rise is 6.7%,then if you can get an interest rate of under 6.7% (AND because you get the interest back next year as a tax deduction on a second mortgage loan), it does cost less than PG&E over the 25 year loan life.
But each state is different. You should get a solar quote in your state.
January 3rd, 2010 at 10:35 am
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January 4th, 2010 at 4:25 am
[...] Bank is being stiffed by Shell Oil for a measly few hundred thousand dollars to repair its shoddy solar panels left dangling in the developing world with no aftermarket [...]
February 18th, 2010 at 8:56 am
In October of 2009, we added another 1.4 kW to our roof system via an additional 7 panels and second inverter. Though our initial 3.7kW system zeroed out our annual actual use cost for electricity from P G & E, I wanted to be ready for going to electric and plug-in electric hybrid cars…and to take advantage of the full 30% Federal Tax Credit for 2009 onwards AND the California passed requirement that utilities PAY BACK IN CASH for excess production from home-based systems. I anticipate that our additional 1.4 kW will produce around a $300 or so annual payback for the first year, before the electric cars arrive, and after the vehicle transition our gasoline bills will drop about $100/month with that new vehicle drive systems. With the addition of the second inverter, both systems are tied together and now upload output records 4X per hour to a inside home monitor AND to a corporate website that I can access from anywhere in the world. This monitoring even records the separate production from each of my systems, so I can compare the “per panel” output for the slight differences in how the two systems are configured on my roof.
February 18th, 2010 at 9:24 am
That is really great, George. You are saving yourself a tremendous amount of money in the long run. If only more people would get a solar estimate! Solar estimates ARE free. It is so nuts that so many people simply do not know just how beneficial to their OWN bottom line solar is, specially in states with any sun, and high electricity prices – over 12 cents a kwh.