Evaluating feasibility of solar panels in site rated at 895 (or 65% TSRF)
Just got a quote from solar panel install company and thinking I may skip solar and redirect funds to doing more insulation work on the house. But before I do that, I wanted to run some thoughts by here.
1. I am calculating that per kW I will be at $4.25 installed (I am in Boston area). Considering article I just saw today on GBA pegging average installed price $0.80 less per kW I am discouraged.
2. Installers felt they could only guarantee output based on 65% TSR. Only roof that is most usable can accomodate max of 27X Suniva 275W panels with output that will cover only 47% of my electrical usage.
3. SRECs in Massachusetts are getting a bad rep. After large tumble in price in May of 2012, we just don’t know where they will be in price, even though utilities are mandated to buy them. So I feel that I can’t include SRECs in my ROI, because I may be able to predict what I would see this year, but next year it is a crapshoot.
4. Winter per kWh rate is now about 24 cents, but consensus I am discovering is that in June it will fall to around 18 cents. So when I am looking at the pay off model, that pegs price of utility provided electricity at 23 cents, ROI calcs just lose credibility with me.
With all those facts in hand, I feel instead I should be redirecting the budget in energy retrofit work.
Am I not seeing something I should be?
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Replies
Apollo,
If you know the cost of the system, and you have received an estimate of the system's annual production in kWh, and if you have a handle on what a kWh is worth, then you have the information you need.
Only you can decide whether the annual savings are large enough to justify the investment.
If you doubt the installers' estimates of the PV system's annual energy output, you can always double-check their calculations by visiting PVwatts.
Martin,
I am not doubting the output, since they guarantee it and would write the $ difference, if system does not meet the goals.
What I am doubting is modeling of what energy costs and will cost. 4% annual increase in energy cost seems bit iffy assumption in volatile MA. With winter large increases, but summer drops, I just don't see 23 cents being prudent average rate system payoff should be modeled on.
SRECs and their value is one area I can't seem to find unbiased analysis, since sources of info I found, once I dig into who sponsors them, I find heavy heavy bias on either side. Be it from solar companies or utilities.
But maybe question is more simple: with my site quality, does $20K reduce my monthly energy costs more with PV system or more insulation retrofit.
Apollo,
No one can predict future energy prices. Your guess is as good as mine.
The future value of SRECs is also uncertain.
The future value of General Motors stock or Apple stock is also uncertain. Almost every investment carries some type of risk.
To determine which investments in energy retrofit measures will yield the best return, you need to hire an energy rater or home performance specialist to conduct an energy audit. A good auditor can present you with a list of suggested retrofit measures, along with the estimated energy savings associated with each measure.
Any idea how much those cost these days? Ballpark $1K? $5K?
A couple of things- 8 cents isn't the installed price, 8 cents is the lifecycle per-kwh cost of the output over 20-25 years or something. But at $4.25/watt installed you're not going to come in that low for a lifecycle per-kwh cost without significant subsidy.
The value of the SRECs are determined at periodic auctions, and the prices ARE volatile, but also substantial. But predicting SREC futures more than a year out is crazier than Martin's stock price analogy- it's easily as crazy as predicting pork-belly futures or corn pricing that far in advance. Given the rate of PV installation in MA they'll probably be worth about $0 by 2025, but they'll still be worth something in the next 5 years. Changes in energy policy at the state & federal level can/will affect the SREC price volatitlity, as well the continuing decline in PV pricing.
The $4.25 number seems really high to me- I was seeing quotes that high last year at this time, and even then it was only for high-efficiency PV, not 15% efficiency commodity panels, which were (then) in the $3.60-3.80/watt range for 5-10kw rooftop systems. Current pricing should be lower, especially in aggressively pro-solar states like MA, which has higher volumes for distributing some of the soft costs over. The US average installed price for residential PV last year was about $3.80 for the year, but was about $3.50 in Q4 2014. See:
http://www.greentechmedia.com/articles/read/solar-pv-system-prices-continue-to-fall-during-a-record-breaking-2014
Dana,
What panels should I be looking for? I have been looking at large installers. Maybe I need to see if one or two smaller ones come up with something better.
Solar PV pricing is regional for sure. But $4.25 for a 7.4kw system seems high, like Dana says. Especially in a high volume area. Here in Ohio, not very high volume in comparison, we would look at $3.50ish for your standard install. Add some $$$ if you have a steep roof, really tall roof, or the array is broken into many smaller sub-arrays (common sense price adding variables). But it would be a tough job indeed for us to Charge $4.25. And with our average utility rates between $0.10-0.15/kWh we'd not likely get much interest in today's market. But maybe labor/permits/engineering are huge costs in your market, hard to say.
On the note of "which panels to look for?" Make sure the manufacturer is Reputable, US made (if that is important to you), then ask for the solar panel that gives you the lowest $/kWh installed. I've said this a lot in the Q&A section, look for cost efficiency, don't focus on the effeciency of the solar modules, unless you really have to produce more from a given roof. You will pay more for the high effeciency modules, and the quality is the same. We found the cost efficient point for us is the high end of the commodity modules. ( a 275w module system costs less per watt than a 250w module system, and also costs less than a 290w module system, assuming the same size solar module, there is usually a sweet spot where the increased cost for effeciency offsets the other fixed costs/module installed)