(Continued from Part 3. This concludes the article.)
Question: Will I have power when the grid is down?
Question: Can I get net metering with a solar-only system, or do I need storage?
Battery size
With all the information above, you will be better situated to properly size your storage system. Just be aware that (unless you’re in a totally different socioeconomic class than I) you probably won’t get all the storage you want. I started off with the idea that I wanted to be three-days independent of the grid. When I found the cost of that, I scaled back. I couldn’t do it within my financial constraints. So I had to determine if it still made sense to go solar, or if another solution would be better for me. A whole-home generator would have allowed me to have the backup capability for less overall cost of equipment and installation. However, I would then have had the cost of that system as well as my usual electric bill, plus the upkeep, maintenance and associated fuel costs. For me, solar still made the most sense. However, it is important to step back from the excitement of ‘doing something’ to check whether your ‘doing the right thing’.
Question: Now that I know what I know, is this still the right decision to meet my goals?
Charge Profile
There are so many different systems with so many different options that I can’t discuss even a fraction of them. I’ll focus on a couple of items that I think most reading this would be interested in.
First, let’s focus on how the battery is charged. Again, I am using the offset from my electric bill to pay for the system. This means reducing my draw from the grid as much as possible. In the early days, I saw that my batteries were drawing from the grid to recharge when there wasn’t enough solar to do the job – such as overnight. This is great for backup as it helps ensure that you always have ‘juice’ in the batteries, but it is not great when trying to reduce your draw from the grid. Check to make sure your charge profile is working to meet your goals. I only want solar to charge my batteries and not the grid.
Remember when we were talking about inverters above? Inverting DC into AC comes with a loss. So does changing AC into DC. So, when the grid charges the batteries, you lose power that you’re paying for and then when the batteries discharge the DC and convert it back into AC for the house to use, you’re losing power again. For me, that ended up be about 50 watts in both stages during prime usage periods. So it was like having a 100-watt light bulb going all the time. Not a huge draw, but if you can allow the grid to go straight to the house, then why waste any power on the conversion?
Question: Is the way the batteries are recharged optimized for my goals?
Second, think about how your batteries are discharged. This really will heavily depend on your goals. If you want the batteries set up as a standby system, so you always have emergency backup even in the early morning after a long dark day, you may not want your system to power your home at night. You may want to switch over to grid power at night and use your daily produced credits to offset the cost. Then you have to think about the cost of that backup system sitting there and not helping with cost savings during other periods.
You may want to let the system do its thing at all times, powering the house as much as possible even during low-production periods. This will give you the best cost-offset but will also result in the likelihood of having less-than-optimal charge if you have an emergency situation.
Question: Is the way the batteries are discharged optimized for my goals?
Consumption efficiencies
I don’t personally know anyone who doesn’t have some constraints of some sort. Even if I had the system that I wanted for three days of grid independence, I’d still have the constraint of four or more days of low production. It just so happens that my budgetary constraints kicked in first, so I have less than what I thought was ‘ideal’, but much better than I was.
Taking that to the next level of thinking means considering how I can help to expand the time my system works within its constraints. You may remember at the beginning of the article, I stated I had an old air conditioner that isn’t all that efficient. One of the biggest impacts I could probably have is changing that out to a more efficient heat pump. If I can reduce the largest load in my house, I can extend the usable time of my batteries. Then there are things we can all do to reduce consumption like make sure that fans and lights are turned off in rooms that are unoccupied. I’m considering a radiant barrier for the attic. This is something I can do myself as well as do it incrementally so that it isn’t a budget buster all at once; adding more attic insulation, ensuring seals around doors and windows, and all that kind of thing. Mine is an older house. It will never be a ‘net-zero’ house, but it can get better than it is and in the process make a difference in how long my batteries last.
Question: What I can I do make my house more energy efficient? Should I do this now, while in the planning phase of solar?
Tax Credits
I’ll wrap up with the tax credits for the system. Currently, the federal government is offering a 30% tax credit for ‘green energy’. I hate the term, but will take the credits for something I was going to do anyway. Notice that it is a credit and not a refund. There is a difference.
Let’s say you install a system that costs $50,000. This means you will be eligible for a credit of $7,500. What this means is that if you would have paid taxes of at least $7,500 this will be deducted from the amount you owe. In the case that you would have gotten a tax refund, this will be added to your refund (but maybe not all at once). If you are a person who very carefully ensures that you break even with your taxes, or someone who pays as little as possible, and intend that you will be paying the IRS at the end of the year, you might not get anything back because there is no credit to be given. If you are someone on a low fixed income and don’t owe taxes, you may not get anything back. I am so far away from a CPA that I can barely spell it, so please talk to someone knowledgeable before you make a decision with the tax credits in mind. I know there have been a couple of solar companies selling systems to retirees in my area who actually pay more for the solar system than they did for their electric costs, got PV-only so the system went down when the grid went down, and were counting on refunds that never came because they didn’t have enough income for the credits to do anything for them. This is a public forum, so I won’t say what I think should happen to the people who sold these systems…so just think about what is appropriate – and then double it.
Question: Is my tax situation such that I will get a credit?
The other aspect of tax credits is in how they are used. Many people get the thought of a large lump sum and want to take a nice vacation, or whatever. If you qualify for the credits, there are a couple of things to consider.
If you took out a loan for the system, you may want to think about that loan. All the contracts I saw gave your initial payments and then the payments after month 18. Those additional payments were significantly higher. However, if you take the credits and apply them to your loan, you keep the same (lower) payment rate for the term of the loan. See, these credit companies are more familiar with these government credits than you are and they have found a way to ensure that they get them. After the initial 18 month period, your loan is re-amortized and your new rate is calculated. If you gave them your credits, you keep the same rate for the duration of the loan. If you take your credits and go on vacation, then your loan rate will increase (significantly) after the initial 18 months. Imagine those people who thought they would get credits and didn’t…and then the loan amount goes up. Not good.
Finally, the federal government hates giving money back to the people. I mean, we might spend it on something frivolous like food, shelter, or maybe even some slight piece of comfort. They don’t want that to catch on. So it is likely that they won’t give it back to you all at once. It will depend on your specific situation, but my understanding is that the rule of thumb is you can expect no more than about $15k per tax year back for these credits. So if you get a large system and, say, are expecting $30k in credits it will most likely be spread over two or more years.
This is an important consideration in how you file taxes compared to when the 18 month period for your loan hits. If you buy a system in January, the credit won’t be available until the next tax year – so the earliest you can expect your credit is May of the next year. Well, in June your 18 months is up. You’ve already been re-amortized and your loan payments will likely rise because you didn’t have the other half of the credits to apply. With this in mind, you may want to consider holding off until later in the year to make the purchase so that you have two tax cycles to get as much of your credits as possible and send them to the loan company before the loan re-amortization. Some finance companies will only re-amortize once. You can over-pay, give them the second credit when it comes in, etc., but you’ll still have the same payments – the duration of the loan will just decrease.
With all that in mind, just make sure you are setting correct expectations about the credits and how you can use them.
Question: When is the best time to purchase the system?
Question: Can I re-amortize the loan if I miss the 18 month deadline?
Question: What other terms are a part of the loan that I didn’t understand before this?
As a final note on the loan, assuming you take one out, check the contract with your seller/installer before signing the loan. Before you commit to taking out the loan, make sure you know exactly what you are paying for and any limitations associated with the installed system before you put your name on the line. The first seller I talked to never discussed that a system with no batteries would go offline during a power outage despite the fact that providing during an outage was a topic discussion priority for me and he stated repeatedly that he ‘has me covered’.
This is a major life decision. Treat it as such. For most people their house is their largest expense and their car is their second largest. A solar generation system could likely fall somewhere in between.
My hope is that this article and the related ‘extra’ questions help you with getting the system that you need to meet your goals as well as understand how it can be afforded. There are just a lot of unknown-unknows until you’ve gone through the process. I know a list like this would have drastically increased my comfort level even after having researched solar for years.