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Clean Power Photovoltaic solar panels mounted on roof of 2415 Prospect Street in Berkeley, CA - Photo taken by Alfred Twu, released into Public Domain

Published on September 1st, 2014 | by Guest Contributor

26

How Much Do You Really Spend On Energy?

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September 1st, 2014 by  

By Michał Bacia

How your day-to-day decisions affect the climate is hard to access and measure. How your day-to-day decisions impact your finances is significant, direct, and can be measured precisely. Our focus will now be on money, your money.

Photovoltaic solar panels mounted on roof of 2415 Prospect Street in Berkeley, CA – Photo taken by Alfred Twu, released into Public Domain

If you are connected to the grid, each month you pay a bill for the consumed energy. The prices might be more or less volatile, but long term they tend to increase. As long as you consume energy from the grid, you will to pay for it.

Let’s asses how much money you really spend on energy, starting with electricity. Each month you send money to a utility company for your electricity bill. Then, there is the energy used for heating water, to keep your place warm or cool (space heating and/or cooling) and heat used for cooking. Finally, there is transportation. The fuel you buy to drive a car.

Add the amount of your electric bill, natural gas/propane bill, and estimate the money you pay for gasoline/petrol. Here is an example:

  • Electricity: $100.
  • Natural gas: $150.
  • Car fuel: $200.
  • Total per month: $450.

Now, multiply this by 12, for annual expenses. Then by 20, for 20 years:

$450 x 12 = $5,400.
$5,400x 20 = $108,000.

This is the amount leaking out of your pocket, assuming energy prices would be fixed. Let’s assume energy prices increase by 2% each year and the amount out of your pocket just jumped to $131,205. In 2013, energy prices rose by at least 3% depending on the fuel type and country.

Now do the math for your home or your business. Did you expect that result? Now imagine never having to pay for energy again. What would you do with that money? Pay off the mortgage? Go on holiday? Expand your business? Start a business?

It is possible. Even with today’s technology. Solar panels can generate electricity to power, heat, and cool your house and provide energy to drive your electric car. Now, imagine generating more energy than you consume and selling the surplus. Provided you have enough space for the panels and enough sunshine, you could become a solar farmer and live off the solar energy.

The above excerpt is from “How to choose the best solar system and financing offer for you,” a solar energy book explaining the ins and outs to the every day user. It is a step-by-step guide showing people how solar is beneficial for them, the process of going solar, and the key aspects of solar financing.

The ebook is available on Amazon. More information, including reviews and a free chapter, can be found here.

Full Disclosure: this post is not sponsored in any way. Sales of Michał’s ebook do not benefit CleanTechnica beyond the broader benefits to society that offers.

About the Author: Michał Bacia is a solar energy project manager and consultant as well as an author. He recently completed 3 solar sites in the UK (20MWp in total) and published this book about solar energy for anyone who uses electricity.

Keep up to date with all the hottest cleantech news by subscribing to our (free) cleantech newsletter, or keep an eye on sector-specific news by getting our (also free) solar energy newsletter, electric vehicle newsletter, or wind energy newsletter.

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  • Vensonata

    This suddenly, has turned fun. Thanks commenters for your household estimates. Now here is mine. And it is quite accurate since I have been off grid for 14 years.
    House is 10,000 sq ft. (yes, you read that right, but average residents 12)..The location is Zone 6. 4200ft elevation in Canada latitude 51. Cold brothers, cold. We have all the conveniences: 4 computers, Led lighting, propane cooking, microwaves, toasters, electric coffee makers. And 300ft deep well, and septic field. All electric pumps.
    Domestic hot water, 95% efficient on demand propane.
    Heating 5 cords wood per year at 16 million btu per cord = 80Mbtu.
    4 kw pv array, 75 kwh battery storage maintenance free AGM.
    Total of all energy required per year: 37,000kwh. That is extraordinarily low, by the way, because of super insulation, super insulated window panels etc. etc. etc. But it can be done.

    Production of solar electricity about 6000 kw/year. Supplemented by Diesel generator total 165 hour run time per year. High efficiency Kubota 12 kw at 1800 rpm (this is important…the efficiency is 38% because it runs at optimal into the battery bank which is better than a gas car. Diesel used, 375 liters year. $450.
    Wood cost free, but labor. If purchased, $200 cord =$1000 year.

    propane $1100 year but expensive: per litre $1. So 1100 litres per year.

    Total, $450 plus $1100 plus $1000 plus (solar plus battery est. 25 cents kwh $1500) Grand total $4050/year total energy.

    Vehicle 7 passenger toyota Sienna AWD. Gas $2500.

    So about $6500 year all systems.

    This month I am installing 8 more kw solar. This will give a total 12 kwh array which will produce 18000kw year. It cancels diesel ($450 plus depreciation on generator $400= $800 year)

    Cancels 80% propane ($900)

    Ev cancels 70% of gas ($1750)
    Cancels a cord of firewood for shoulder season heat ($200)
    Savings $3650 year.
    So that is what you get if you radically reduce and upgrade your house.

    total remaining cost $400 year.
    Cost of 8kw array addition approx. $13,000 (partially self installed so some labor not included)

    Savings 3650 x thirty years =$109,500
    Yes, there are other considerations. But the main thing in this picture is:
    Off grid. Zero generator, can be done.

    A small amount of propane is required at 95% efficiency, heat is biofuel but in the city you will need gas perhaps. But very little. We are talking about super efficient everything though. The extra cost of super efficiency? I have to say minimal, from my direct experience.
    PS notice I don’t use heat pumps for heat estimate…if one had access to grid electricity, the heat portion goes down by at least 65%!

    • Vensonata

      Correction total remaining cost $2900/year. But the $13,000investment reduces expense by $3650/year. 4year Roi.

  • rockyredneck

    First things first. Make your home as efficient as possible by reducing space that you need to heat or cool. Insulate more and correct all sources of uncontrolled air exchange. replace all your light bulbs with LED. Use the most efficient appliances less. Use clothes lines and walk or cycle more. When your car is in need of replacement, buy a plug in electric car of the smallest most efficient type practical and use it only when absolutely necessary. Plant a garden and quit mowing your lawn with power mowers.
    After all this, calculate your energy cost.
    Then calculate the cost of a stand alone system as you may find that your energy costs are less than your grid costs. Both costs can vary greatly depending on your location and current legislation.
    By the time you finish these changes, your utility company might be producing mostly green energy. That would leave only cost and convenience to fit into the equation.
    In the meantime you will be doing your part to reduce carbon emissions.

  • http://www.michaeljberndtson.com/ Michael Berndtson

    Awesome stuff.

    Based on the energy use listed above, I calculated the following on a per month basis:

    Electricity: $0.1/kwr —> 1,000 kwh

    Natural gas: $0.9/therm —> 170 terms —> 5,000 kwh

    Gasoline: $3.5/gal at 120,000 BTU/gal —> 2,000 Kwh

    Total monthly energy: 8,000 kwh, assume 20% inefficiency and factor of safety —> 10,000 kwh per month total. Or 120,000 kwh per year.

    From the NREL there’s a new PV watts calculated for your address:

    http://pvwatts.nrel.gov/index.php

    Given my house and Chicagoland’s intensity, I can at best produce a total of 11,346 kwh of energy with solar PV in one year. This ranges from 680 kwh/mo in January to 1,185 kwh/mo in July.

    So me as an average guy would be short 120,000 – 11,346 —> 108,654 Kwh.

    I assumed a fixed mount array on the south side of my house and the detached garage for a total of 10 KW DC system.

    That PV watt calculator is cool. I need more sunshine and a larger house.

    • globi

      This well insulated house in Germany has a heat pump and artificial ventilation to provide the house with heat, conditioned air, hot water and requires 4024 kWh per year for it: http://www.solarserver.de/solarmagazin/anlagefebruar2009.html
      The rest of the appliances can be run on less than 2000 kWh (efficient fridge, LED lighting etc.).

      An electric car requires about 0.2 kWh/km. So if you need to drive 20’000 km per year you need about 4000 kWh.

      In principle running a house and electric car on 11346 kWh per year is feasible.

      (Growing enough corn-ethanol on top of the roof to run a gasoline powered car year-round is not.)

      • http://www.michaeljberndtson.com/ Michael Berndtson

        That’s wonderful. The corn thing isn’t funny. There’s more corn grown in Illinois than pretty much the entire planet, plus any earthlike planet in another multiverse. If you have political skills, by all means, please volunteer to work the system.

        I probably don’t use nearly as much energy as the US average. The fact of the matter, US has a consumption problem and little political will presently to change that. So a technical solution is wonderful, if it is feasible, given effectiveness, implementability and cost. I don’t have the money for all those retrofits. The government may start shutting off tax breaks for energy saving and renewable energy systems. So the most feasible solution is turn down the heat in winter, turn up the temperature in summer and drive less. Unless, German green technology companies are looking to give all those modifications for free. Simply moving to a new home isn’t the answer. I would be adding to sprawl, forcing more cornfields to be dug up and utilizing resources that probably should be left untouched. On the other hand, I could count on power companies to supply electricity from renewables or nuclear.

        • No way

          120 000 kWH per year? Every little energy efficiency improvement you will do then will save you lots of money. What you can’t afford is to keep spending that much money on an enormous amount of energy.
          Write a list on what you can do, insulation, changing to 3-panel windows, getting a heat pump, changing all lights to LED, buying energy efficient appliances (which are all electric, including stoves and such) etc.
          Then do them step by step when you can afford it and then use the money you will be saving every month to do the next thing on the list.
          And a thing like isolating the attic is something you can do yourself, if you want/need to save money, and then it’s just like the cost for the isolating material.

          • http://www.michaeljberndtson.com/ Michael Berndtson

            I just converted the average energy use from the post above to kwh. I may have erred and welcome any correction. That’s the US average energy use for electricity, heat and auto – and has nothing to do with efficiency and use reduction. US, Canada and Australia per capita energy use is about twice that as a European country like Germany and about 10 times that of India. Policy would help as would technical modifications.

          • No way

            Oh, I thought it was your personal numbers, especially when talking about that you don’t have the money for the retro-fits. That shows what an enormous potential for energy efficiency improvements there is in the US/Canada/Australia.

            And most of the solutions are simple and have been avaliable for decades, so no magic high tech green technology is really needed to get most of the improvements.

      • No way

        Our household is doing about 13 000 kWh for heating/warm water/household electricity + 6 000 kWh for 2 EV’s. But then it’s an old house with only so much you can do on it for improvements and it’s way further up north so long cold winters.

        My sister with husband and kid built a new house a few years back, keyturn-ready from a normal house building company and they are doing around 6 500 kWh per year without trying or really caring all that much. That is what improved building and energy standards do.
        No EV’s though, but if they changed one of the cars then it would be about 9 5000 kWh for the house + an EV (+one diesel car that runs on about 30% renewables and 70% fossil fuel)

    • GCO

      Thanks for furthermore illustrating how ridiculous Mr Bacia claims continue to be.

      Re gasoline, however, your figures are overly pessimistic, as a PEV uses electricity far more efficiently than an engine uses gasoline (hence those 100+ “MPG equivalent” numbers you see on Monroney stickers).
      See my own calculations above: http://cleantechnica.com/2014/09/01/much-really-spend-energy/#comment-1569976821

      Yes, replacing natural gas with electric heat from a PV array (like Mr Bacia suggests) makes no sense. Thermal collectors would work however, at least for hot water.
      Space heating needs more capacity and/or large amount of storage; better spend some serious money on insulation first.

      OTOH, a large but practical PV array could offset all of that electricity consumption. Now one would depend on the utility being nice enough to buy any temporary surplus at retail prices (aka, net metering), effectively making the grid a multi-MW⋅h battery.

  • GCO

    Here we go with the infomercial again!
    http://cleantechnica.com/2014/08/08/everyone-excited-solar/
    http://cleantechnica.com/2014/08/26/energy-assets-vs-liabilities-a-look-at-solar-financing/

    Same sales pitch, more outlandish claims!

    imagine never having to pay for energy again

    So surely this assumes not paying utilities for its storage either, meaning going off-grid, right?

    Solar panels can generate electricity to power, heat, and cool your house and provide energy to drive your electric car.

    Using solar this way goes beyond naïve, to patently stupid.

    Let’s demonstrate with the above example. Per month:
    Electricity: 100$ at 12c/kW⋅h = 833 kW⋅h
    NG: 150$ at 15$/MCF = 10’548 MJ = 2’930 kW⋅h
    Gasoline: 200$ at 3.75$/gallon and 25MPG = 1333 miles = 387 kW⋅h (2014 Leaf)
    Total ~4.15 MW⋅h/month. Huh…

    See http://pvwatts.nrel.gov/ to estimate how much PV would be needed to produce this year-long. December-January are the tricky months.
    Let’s take a relatively sunny spot, Sacramento California. Assuming perfect orientation, no shading, and 1 MW⋅h of batteries to cover for almost any variation within a month, a gigantic 60+ kW system would be needed.

    Even someone managing to buy this mega-system for less than half the current average installed price would still spend more than the 108k$ of the above example — and good luck financing the that monster.

    Thanks Michał Bacia for another round of “facts don’t matter, just buy my book, mm’kay?”.

    Now please go away.

    • Mike333

      You my have to bump up your home insulation for Solar/Heat to work. Triple pane windows, and Double-Wall 2*6 construction on an renovation.

      • Mike333

        But, Canada already requires double-wall 2*6 construction, right?

    • MrL0g1c

      Cheap Natural Gas will run out, it’s only a matter of time, judging by the way natural gas power stations are popping up all over the world, it probably won’t last 40 years.

      By your own calculation electric cars can easily be supplied by Solar PV with large savings (how much does 387kWh cost?).

      • GCO

        Yes of course, a plug-in/electric vehicle can easily be powered by PV. It makes a lot of sense. In California, half of their drivers already do so, or plan to => http://energycenter.org/clean-vehicle-rebate-project/vehicle-owner-survey/feb-2014-survey

        However, as PEVs are typically charged at home at night though, the electricity produced during by the PV system during the day is sold to the utility instead, and purchased back later.
        (Storing it in batteries can be done, but is expensive, in most cases more than buying from the grid. http://cleantechnica.com/2014/08/26/energy-assets-vs-liabilities-a-look-at-solar-financing/#comment-1569981015 )
        Net metering makes sale and purchase prices the same, but where (or when) it’s not in place, you’ll need to crunch the numbers.

        [OTOH, some utilities combine net metering with TOU: sell daytime PV surplus at peak rates, buy it back for your car at 2am super-off-peak. Jackpot!.. for now.]

        • MrL0g1c

          Solution is to encourage businesses and municipalities to install chargers and Solar PV or Solar thermal.

  • martin

    My house uses only 6 kw per day in the summer, but up to 50 kw in the winter, it is all electric, heat, hot water etc.

  • spec9

    I only spend on natural gas. And I’m hoping to reduce that one with lots of insulation and weatherstripping.

    • Vensonata

      Long live negawatts!

    • Will E

      you have to get an air to water heat pump for heating and warm water. I am disconnected from the natural gas and have my own Solar electricity and pay no more energy bill since 2 years. works better than natural gas and savings is 4000 dollar a year. very easy to do.

  • Vensonata

    Why not multiply by 35 years rather than 20 years? It is a more realistic estimate of the length of time your pv is likely to last.

    • Will E

      and what if you put the money saved from day one in an account and get 5 % interest.
      What are the figures after 35 years of interest on interest.
      first year
      5400 5% 270 5670
      second year
      5670 plus 5400 is 11070
      11070 5% 553 11623
      third year
      11623 plus 5400 is 17023
      17023 5% 851 17874
      fourth year
      17874 plus 5400 is 23274
      23274 5% 1163 24437
      fifth year
      24437 plus 5400 is 29837
      29837 5% 1491 31328

      do this for 35 years.
      What are your savings.

      • Mike333

        Don’t forget Risk.
        Solar on your roof, is a vastly more secure investment, assuming it’s covered by insurance.

        Stock market returns could be greater, but, stock market risk is also Much greater.

        • GCO

          If seen solely as a financial investment, solar PV is only as secure as the daytime/summer electricity prices… which solar itself has already sent tumbling down in Germany: http://cleantechnica.com/2014/08/26/energy-assets-vs-liabilities-a-look-at-solar-financing/#comment-1569981015

          So while I trust this won’t be an issue in the US for maybe the next 5 to 10 years, it won’t take 3+ decades for things to change in ways we probably don’t anticipate.

          Now, if you go solar for reasons other than just money, with typical environmental payback times of less than a year (some manufacturers, e.g. REC Group, are better than others), yes that’s a pretty damn secure move.

      • globi

        On what account do you currently get 5% interest rate?

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