Solar Power Case Study: An Old Idea With New Economics

During these wonderful sunny days in August, as I see my electric bills decline, I'm reminded of an article Whatcom Watch published for me last year. It is posted below for those who might want to consider using solar power themselves to save energy use and help protect the environment.

In late 2005, I attended a conference and exhibition at the Bellingham Ferry Terminal sponsored by Sustainable Connections and the Building Industry Association. One of the sessions focused on Solar Energy systems for homeowners as a means of saving on electric power costs and protecting the environment. A presentation by a local expert on renewable energy, Dana Brandt, particularly attracted my attention. Later, I contacted him for advice on the feasibility of installing a small Photovoltaic [PV] Solar Power generating system at my home.

Dana surveyed my home for potential sites that capture sunlight most of the day, and confirmed that my garage roof was a really good choice. The garage faces south and has a flat roof that gently slopes to the north, giving it a relatively unimpeded solar exposure during most of the day. This site also has the advantage of not significantly impacting views from any direction - an important consideration in maintaining good relationships with neighbors. Dana used a special instrument that allowed him to determine the maximum percentage of potentially available direct sunlight that could access a properly placed and angled array of solar panels, during all seasons of the year.

Costs & Feasibility

Based on this survey and the schematic he developed, Dana estimated the costs associated with a roof-mounted PV system with 1.52 kW generating capacity, assuming that all the generated DC power would be converted to AC power and fed back into the PSE grid through my electric meter. The system included 8 Sanyo PV Panels -each 3-feet by 4-feet, 4-inches- mounted side by side on adjustable aluminum frames, an assembly designed to withstand 200 mph winds. The total solar array surface area is 104 square feet and its length is 24 feet. The system uses a power inverter to convert DC power from the PV array to AC power, and a separate output meter to track both the total energy generated and instantaneous readouts. The entire system is hard-wired through my household electrical circuit breaker panel into my electric meter, a special type provided free by PSE [Puget Sound Energy] that is designed to track their net-metering system.

Based on my specific system design, Dana's proposal [December 2005] for the total installed cost of my PV system was $13,685 excluding any incentives. Using conservative estimating techniques to calculate payback, these were the results:

Taking into account the added resale value of my home, the PV system will payback in about 16 years. If I choose to ignore the increased value of the home as part of the payback, the payback becomes 25 years. The estimated life of the PV system itself is 30 years. Substantial increases in the cost of power will shorten this payback period.

The payback calculations included these incentives, tax credits and energy saving calculations that helped me to justify making this investment:

One-Time Incentives

Federal Income Tax Credit for Renewable Energy: $2,000
PSE Rebate [based on 1.52kW installed capacity]: $874
Washington State Sales Taxes are also waived as an additional incentive

Ongoing incentives:

PSE Net Metering [increases in proportion to rates]: $0.067807 per kWh
Washington State Production Incentive [9 years total]: $0.150 per kWh
Green Tags Certification Credits: $0.050 per kWh

For my historic rate of electrical usage, the PV system is expected to generate about 22% of my annual consumption, or about 1642 kWh per year. At peak production about 33% of my average needs will be produced. When I am not consuming power at the usual rate, my PV generated power sold to PSE may exceed the amount I buy from them.

Projected Annual Savings from Ongoing Incentives

PSE Net Metering: 1642 kWh/year X $0.007807/kWh = $111.34 per year
Washington State Incentive: 1642 kWh/year X $0.15/kWh = $246.30 per year
Green Tags Credits: 1642 kWh/year X $0.05/kWh = $82 per year
Total Estimated Savings from Ongoing Incentives [at current rates] = $439.64 per year

Because PSE charges more for power usage above 600 kWh per month, I will also almost always avoid having to pay for this more expensive power [$0.08484 per kWh]. This amounts to "peak shaving", which in this case saves me from having to use power that is 25% more expensive.

Most single-family homes use electric power at levels averaging between 15 kWh/day and 50 kWh/day, depending upon the number of people, appliances, lights and the intensity of use. My electric power use has averaged just over 20 kWh/day during the past 2 years [7347 kWh/year].

Installation and Commissioning

Based on the estimated economics, I decided to go ahead with the project and wrote Dana a check to procure the equipment and materials. These were delivered directly to my home and stored in the garage until the weather improved enough to begin installation. This relatively simple installation required 3 days, with most of the work done by Dana, with help from an experienced and licensed electrician he hired for one day. After completion, the PV system was tested, turned on and began to immediately generate power. Inspections by the City and PSE proved routine, and I first entered the power generation business during a sunny break!

Each step of this installation was recorded by digital camera, and the supporting paperwork and documentation was handled quickly. I was pleased to pay Dana the balance due and ask for his assistance in writing up the project for publication. Four PSE personnel came for a final inspection and short tour of the system with Dana. Look for this PV installation to be a stop on the 2006 Sustainable Connections tour.

Pollution Avoidance: A Hidden Benefit

Another great benefit from using PV solar power is avoiding greenhouse gas emissions and other pollutants from conventional power plants that burn fossil fuels. Dana estimates that a 1.52 KW PV system like mine typically saves the following pollution from occurring:

Carbon Dioxide [CO2]: 465.90 lbs/year or 13,977.0 lbs over 30 years

Nitrogen Oxides [NOX]: 0.90 lbs/yr or 27.03 lbs/30 yrs

Sulfur Dioxide [SO2]: 2.56 lb/yr or 76.75 lbs/30 yrs

Mercury [Hg]: 3.96 mg/yr or 118.8 mg/30 yrs

The actual pollution avoidance benefits we realize here in the Northwest are higher than these standard estimates because 80% of our energy normally comes from hydropower, which doesn't require burning fossil fuels. Therefore, only about 20% of these amounts derive from local power generation. But, because Bonneville Power doesn't scale back its hydropower generating ability, this avoids having to import energy produced from fossil fuels elsewhere, which means the actual pollution avoidance we experience in Washington is about 3.75 times the above the standard calculations above.

Conclusion: The New Energy Economics

The pollution avoidance realities outlined above have always been in existence, but were obscured by the benefits of low energy costs and an almost tacit acceptance of incremental environmental degradation. How easy it has been to ignore these impacts; almost like a frog in a pot of water, slowly being brought to a boil. Now that energy costs are rising rapidly, global warming is visibly happening and the economic gap between personal/family incomes and necessities is growing, we are suddenly able to see more clearly the impacts of continuing a 'business as usual' attitude toward how we live and use energy.

These national and global trends have directly led to some new economic realities that are now beginning to make sustainable practices more feasible and attractive. When an investment in a small PV energy system begins to pencil out, people will begin to notice, and some will be inclined to make similar investments. For example, the trend toward energy efficient appliances and vehicles is becoming more and more of a 'no-brainer'. Even with slightly higher first costs, these high efficiency machines and systems easily pay for themselves very quickly in reduced energy costs. More important, they continue to pay large dividends in avoided energy and pollution costs. Hopefully, these new economics will translate into more sustainable lifestyles as the preferred choice of many, not just a few.

Coupled with the new economics, more new high-tech and high efficiency devices are being developed to help curtail energy waste, but these are not -in themselves- the answer. There are no good substitutes for personal awareness, accepting responsibility and taking action. Consumption has its own limits, and its expensive consequences.

As Dana Brandt suggests, a great new 'take-away' message to offer is: "All you who care for the environment, and/or wish to be less dependent on foreign oil - the time has come that you can afford to do something about it. The confluence of an array of incentives and high energy prices makes solar power -and other highly energy efficient systems- accessible to nearly all of us"

Footnote: Two neighbors noticed the PV System installation and inquired what was happening. Both have subsequently asked Dana for proposals! Are there any others out there?