Sunday, June 19, 2011

Thinking about going solar

I answered an ad by an outfit called One Block Off the Grid (1BOG) which organizes the installation of solar panels on people's roofs. When I say "organize", I mean not only that they take care of various complex logistical issues including lining up a NABCEP-certified installer, but also that they try to consolidate system purchases to bring costs down. Over the past couple of years this has become big business in the U.S. because of state and federal government incentives encouraging installation.

The 1BOG folks sent me a proposal with numbers in it, and I have 30 days to make a decision during which the proposed price is guaranteed. I also spoke briefly with SolarFlair, a similar outfit here in my town, that does the same sort of purchase consolidation and does the installation themselves. Since my 30 days is nearly expired, I'm hoping to drop into the SolarFlair office some time this week and talk numbers with them.

In my own state of Massachusetts, the situation is that people with solar panels produce SRECs (wikipedia, explanatory video) worth around $500 each time the solar panels produce a megawatt-hour.
Massachusetts' renewables portfolio standard (RPS) requires each regulated electricity supplier/provider serving retail customers in the state to include in the electricity it sells 15% qualifying renewables by December 31, 2020... Solar Renewable Energy Certificates (SRECs) represent the renewable attributes of solar generation, bundled in minimum denominations of one megawatt-hour (MWh) of production. Massachusetts' Solar Carve-Out provides a means for SRECs to be created and verified, and allows electric suppliers to buy these certificates in order to meet their solar RPS requirements. All electric suppliers must use SRECs to demonstrate compliance with the RPS. The price of SRECs is determined primarily by market availability, although the DOER has created a certain amount of market stability by establishing a state Solar Credit Clearinghouse Auction (where prices are fixed at $300/MWh), as well as the Solar Alternative Compliance Payment (SACP) for the state RPS (set at $550/MWh for 2011). The Solar Credit Clearinghouse will only be utilized if or when SREC generators cannot sell their SRECs on the open market; the fixed price of $300/MWh effectively acts as price floor. The SACP, on the other hand acts, acts as a ceiling on the value of SRECs because it is the per-MWh payment that electricity suppliers must make if they fail to obtain enough SRECs to cover their RPS obligation.
There is a federal tax credit of 30% on the cost of installation. I don't know if that's factored into the prices I've been quoted, and maybe I'd need to pay that myself upfront until I get the following year's federal tax rebate.

The 1BOG proposal offers options either to lease the system from 1BOG, or to pay for it outright at a cost of about $25K. I went to the credit union and applied for a 5-year fixed rate $25K home equity loan, with monthly payments of about $450. 1BOG proposes a system to create about 5.5 kW peak, and they are guessing that averages out to about 700 watts continuous, which is about 6 megawatts per year, for a yearly SREC income of $3200. The systems saves me about $100 per month on the electric bill, and when all the dust settles, my monthly expense is about the same as it is currently.

Five years later, the loan is paid off, the solar panels are my property free and clear, SREC income is reduced but not zero, and my electric bill is still substantially reduced or absent. And I will have set a good example for friends and neighbors that one can reduce one's carbon footprint without unreasonable financial hardship.


arronbond said...

Sun is very powerful energy source. Many smart costumers are looking to install solar panel. Once it installed there is no any future charge to renew source energy.

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Caezar poulin said...

Good read! I truly believe that solar energy is better for the economy and every living being on this planet.

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yayi pabon said...

Solar is definitely moving forward with huge advancements in technology. Installing solar on our home is a good way to help slow global warming.

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