19 May 2010

greenHILLhome: Solar Panels Investigated, Part 1

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As a recent new homeowner I’ve been trying to find ways to green our home.  There are lots of little things we’ve done or started doing to reduce our energy use, reduce our water use, and recycle more.  One of the “bigger steps” and certainly a financial commitment we have started looking into is how to generate electricity on-site, and the most effective way currently available to do that is through solar power and the use of photovoltaic (PV) panels.  Note that I say effective, not necessarily economical.

There is a lot of information out there on residential solar energy, and sorting through it can be time-consuming and daunting.  In the next couple of installments of greenHILLhome, some of the resources available to DC homeowners will be examined.

First and foremost in evaluating solar energy and your home, low-tech aspects of your property need to be studied to determine how efficient such a system can be.  Ideally a large, flat area of roof should be available for the system, and that space should have direct access to the sky to the south and southwest.  This evaluation is best done in summer when trees are all full so the local vegetation can be evaluated along with neighboring buildings.

Cost is a major factor in determining whether solar energy is right for your home.  While the price of PV panels is dropping, the up-front or initial cost needs to be considered.  In addition to reducing the amount of energy generated by coal or oil by the utility company (thus reducing pollution) that your home uses, a major benefit to renewable energy is the lowering of energy costs to the homeowner.  However, as the installation costs are still high, it takes a little math to figure out when the homeowner will truly see savings.  Fortunately there are solar panel companies and energy nonprofits that have free programs available for simplified estimates.

For example, I used the solar calculator at http://www.findsolar.com/ to come up with a quick estimate of first cost and payback in energy savings.  With a goal of generating 25% of my energy needs with solar energy, I would need 288 square feet of PV panels on my roof, costing me about $20,100 in materials and installation.  There are local and federal financial incentives that bring down that initial cost (to an estimated $8,077), but those have plusses and minuses to be discussed a little later.  The solar panel system would save me about $32 a month in energy costs, or $16,241 over 25 years.  That’s a return on investment of about 201%, which looks great on paper.  Other solar energy calculators are available online and free, including those at http://www.solar-estimate.org/ and the websites of BP Solar and Siemens.

Since the first costs for solar energy systems are high, there are programs available to the DC homeowner to lower the financial burden of installation.  The Federal Renewable Energy Tax Credit provides the owner a tax credit of 30% of the installation cost in the tax year the installation takes place, up to $1,500.  While not a direct reduction of cost, it is potential “money back” to the owner.  DC’s Renewable Energy Incentive Program (REIP) provides homeowners with a rebate of up to $33,000 for a solar energy system installation, based on the size and capacity of the system.  While this local rebate could significantly lower the cost of the system, homeowners should note the program requires significant documentation to participate, designated contractors must perform the installation, and the funding available for the program is limited annually so there is quite a waiting list of DC residents who have applied for their rebates.

In our next greenHILLhome, we’ll talk with some Hill residents who have installed photovoltaic panels on their homes and see if they are enjoying the benefits of generating their own energy…

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9 responses to “greenHILLhome: Solar Panels Investigated, Part 1”

  1. Rick says:

    I look forward to reading your updates on solar, and thanks for doing this series. Very interesting.

    It must be said, though, that for 95% of the people reading this, adding adequate insulation and caulking is a far more effective way to go green. Some of these Hill homes don’t have a stitch of insulation in their attics. Many people would probably only generate enough solar power to offset the energy lost through a leaky house.

    These “weatherization” improvements also usually pay for themselves over a year or two. The economics are great.

    Most people don’t weatherize because of barriers of inconvenience and ignorance.

    A future greenHILLhome column could make a big difference!

  2. Kate says:

    not sure how you wrote this without giving a shout out to the Capitol Hill Energy Co-op… there’s a lot of information on their website: http://sites.google.com/site/capitolhillenergycoop/ and even more if you join the google group

  3. Jon says:

    Thanks for the feedback. That’s a great suggestion (I’m all for column ideas). We actually added caulk and new weatherstripping to our addition and it made a difference on the colder nights this winter for sure.

  4. Marcus says:

    Thanks for writing about this. I agree that weatherizing, while less exciting, is often the first and most economic option to reducing energy costs. It’s usually better to look at ways to reduce use before looking for different sources of energy. And there are federal incentives for this as well, including the $1,500 tax credit for energy efficient improvements (e.g., windows). One last item, I assume the 200% rate of return is over 25 years so it’s closer to an annual rate of around 8% assuming you can get all the government aid.

  5. Jon says:

    Yes, the federal incentives can be put toward any energy efficiency improvement. The 200% rate of return compares the final estimated cost after the federal and DC rebates to the total energy savings. The model cited takes into account a modest increase in energy costs over time, which of course is hard to predict. Should energy prices spike, the savings could be greater and thus the payback accelerated.

  6. HM says:

    Hill Resources:

    Capitol Hill Energy Cooperative http://capitolhillenergycoop.org

    Solar Power in DC Blog

  7. goldfish says:

    “The solar panel system would save me about $32 a month in energy costs, or $16,241 over 25 years.”

    math error: $32/month * 12months/year * 25 years = $9600, not $16241 as was written. With an installation cost of $8077, payback period is 21 years and the 25-year ROI over this period is 1.19.

  8. Jon says:

    Goldfish…the math is oversimplified but hopefully not incorrect. I didn’t include all the calculations, but there is an inflation that has to be factored in when discussing energy costs.

  9. goldfish says:

    Ah, inflation.
    But this should not be included, because by that reasoning, you are paying back present dollars with future ones that are worth less.

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