A friend asked me to explain how we financed our photovoltaic system that we put on our home last September. That is the purpose of this post.

System Description

First the specs. Our grid-tie system uses 26 Schuco panels (German manufacture), rated 230 watt, racked on the roof in two arrays, 8 panels east, 18 south. We opted for a single Power-One inverter instead of the increasingly popular micro inverters because it was less expensive, because we had no shading issues, and because I don't think the installer I chose had that option available in the suitable panels. Our system size is 5.98 kW. Estimated annual production -- 8,066 kWh.  Given our power needs for our relatively energy efficient home (because it's me we're talking about) 83 percent of our usage should be supplied by solar.  I expect us to do better than that because I'm continually tweaking our conservation on the margins.  In a typical year, though, through the months of June through September when the AC is running heavily we'll draw more power from the grid than the system produces. For the rest of the year, excepting perhaps January, expectations are for the system to cover our monthly usage.

We own our system. We are not leasing it. Segue to the financials.

Cost Breakdown

Gross system cost: $26,910 ($4.50/watt DC)

Austin Energy – Solar PV

Rebate Program (Residential) ($17,312)

Installer Contract Cost $9,598 ($1.61/watt DC)

(amount I paid upon installation)

Federal Tax Credit/Tax Impact ($2,879)

Net Cost (year of installation) $6,719 ($1.12/watt DC)

System Resale Value: $ 13,180.

My Story

One way to tells this story is that I'm extremely lucky to live in Austin, TX. Now most folks in Austin will find this statement entirely unremarkable. But, in addition to being advantaged by all that's terrific about this city, most Austinites, and some living near to town, are fortunate to be electricity customers of Austin Energy. Austin Energy has aggressive power conservation and green power programs in place. I've taken advantage of both, first in 2009 with energy efficiency upgrades, mostly attic insulation, and then last year with Austin Energy's solar rebate program.  Thanks to the Obama administration there are also federal subsidies in place that further incentivize home energy upgrades.  Though when it comes to rooftop subsidies of p.v. (photovoltaic) the federal credit in Austin, Texas is dwarfed by the rebate figure provide by my local utility.  This typifies solar throughout the U. S. but is atypical of solar in the state of Texas.  More about that in a moment.  

In 2011, as it has done for most years since the Austin city council adopted a Climate Protection Plan in 2007, Austin Energy offered a per watt system rebate for a direct credit to subsidize residential solar to its customers. Last year that figure started at the standard $2.50 per system watt.  Later in the year, mid-summer I think, the utility announced it was boosting that figure to $3 / watt.  For a 6 kWh that additional .50 cents amounts to, approximately, an additional $3,000 credit.

I looked into solar three years ago in a serious way but at that time it was beyond unaffordable. A system that was perhaps a little less robust cost about $32,000 gross. With the local utility rebate the payback period was still around 17-18 years. Solar in 2009 was a lifestyle choice beyond our reach. Last year panels prices plummeted. The reporting I've read explains that this is because China has an industrial policy for renewable energy and the U. S., really, does not. In a play to dominate the global market in the sector, Chinese panel manufactures began dumping panels onto the market near to cost or below cost, depending on who you read. For N. American and European manufactures this has been nothing short of devastating. But for solar installers and consumers this is a boon. The new solar economics halve the payback at current electric rates and electricity prices in Austin are already slated to jump significantly for residential customers. Because I follow energy news I was aware of all this and the existing utility program. With some unexpected cash on hand in the spring, I sold Sharon on solar for the house during the summer and began getting bids in August.

I got three bids, two from local installers and one from out of Houston. I went with Longhorn Solar, a locally owned and upstart installer because they offered the best system at the least price, because they could meet the September 15^th utility deadline to be eligible for the full $3 / watt credit (one other installer realized they could not), because I could get panels warranted by a German as opposed to a Chinese manufacturer (warranty concerns), and because I was satisfied that the contractor on point new his stuff and had the personal integrity to do our job right. I've not been disappointed. As the graphs show the system is performing exactly as it's supposed to. I've not sat down to crunch the numbers but, in the winter months, I'd estimate it's saving us between $75 and $90 a month by paying for our entire electric bill with a nominal credit carried over to apply to our other city utility services.

Impressions so Far

Solar is more affordable than ever. Having said that, most Texans can't afford the option because most Texas utilities do not offer solar rebates (Or, if you prefer, market parity for clean power is still five or so years away from price-parity with dirty electric power).  Seventy-five percent of Texas is served by privately run utilities intent on only one goal -- cheap and reliable electric power.  Clearly, without the $17k and change from the local utility program that we received most Texans still can't afford distributive power generation.  I'm fortunate because my electric utility is community owned and, in addition to affordable electricity today, my community expects it's power to reflect multiple scales of value.

I'd still be years away from the satisfaction of producing electricity that doesn't poison my local environment with mercury, heavy metals, SO2 and all the other crap associated with dirty coal power if the city council of Austin had not in 2007 made it a priority to set some targets for mitigating against climate change, for growing a local tech sector in future-power generation, and, quite frankly, for making Austin a healthier place to live. And even though I grant James Hansen's unassailable point that rooftop solar doesn't today amount to a credible response to global climate change, for people like myself, who genuinely dread the implications of an atmosphere enriched by carbon dioxide, getting off coal-fired electricity, even in this limited way, feels good. It's like living up to a moral imperative.

I'll stop there. In a future post, near future I hope, I'll talk about the lay of the land with electricity generally in Texas. It's never been more interesting than now. Also, how Austin is about to change the way it's investing in green power, the upshot of which is that the residential rebate program that was indispensable in my case is, it appears, about to come to an end.