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:
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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:
Well done Susan!
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.
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)
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)
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
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.
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.
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.
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
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