Switching to Solar Energy

Should you install solar panels if you’re living in Texas? The short answer​ is – it depends. For us, after doing our due diligence, we decided to go for it and​ at the end of the hottest month of the year (June-July 2018), we generated the following output:

Solar Production in June-July 2018

Continue reading if you too are interested in going solar and saving not only on your electric bill but also earning karma points from the environment.

A few​ months ago, while looking for a toggle bolt at Home Depot we were approached by a salesperson from Tesla. He wasn’t looking to sell us a car that’s experiencing production delays but instead,​ he asked us if we had considered installing solar panels on our roof. Instead of brushing him off like we do usually to hapless salespeople, we decided to give him our attention. He asked for our address that we gave hesitatingly but it was necessary to determine whether our house was even facing the right direction to make using solar panels feasible.

A few​ days later, a Tesla representative visited us and actually made a compelling argument for installing solar. In the process, we learned that everyone’s solar needs are different and dependent on not only the location of their home and its surroundings but also on their usage. So when people ask me, should we go solar and how much would the whole thing cost me? My answer usually is, it depends. Mostly because the cost can vary greatly depending on what type of solar panel you select, how many you end up installing, and how much power you are consuming on an average.

Estimating Your Need

First, before you even think about installing solar panels, you have to ask yourself: How old is your roof? It better be fewer than 2 years old because you don’t want to install panels and then have to uninstall them just to change out your roof. It can be done but taking them off and putting them back on doesn’t cost nothing. Also, it helps to know whether you plan on living in your home for the next 5-7 years. I’ll explain later why.

Second, get at least 2-3 quotes from various solar vendors. Ask on NextDoor or check Yelp. We ultimately did not go with Tesla and instead chose Freedom Solar, a local Austin-based company that has installed for UT Austin and Whole Foods. Also, these vendors will first ask for your past annual consumption based on your most recent electric bill and accordingly propose a system to generate as much as possible based on the direction your roof faces.

Another factor that usually people don’t think of is aesthetics. One of the primary reasons we even considered Tesla was due to its pleasing look – clean black lines with no mounting showing. The other company promised us a similar look but with their latest but slightly more expensive panels. Looks admittedly are important to me and I hate those haphazardly placed panels in a jigsaw-like manner with silver linings and exposed aluminum mounting racks.

Selecting Your Vendor and System

After doing these initial checks, be ready to analyze and consider tradeoffs as you compare various quotes. Some vendors will offer you a lower price quote but it may cover only 75% of your power consumption. But if you want to maximize your solar production, you have to get as close to 100% as possible but that may entail installing a larger system with more panels or more efficient but expensive panels. Ultimately, there’s no right or wrong solution but simply the one that you can afford and live with.

Financing

Now the price of solar panels also depends on several factors so don’t be shocked by the sticker price. At least as of now, the federal government will give you one-third the price of the system you install in form of a tax credit. Note that it’s a credit and not deducted from your taxable income. So if you decide to go with a $21,000 system, you’ll get back $7,000 next time you file taxes so effectively it will cost you $14,000. The city or jurisdiction you live in may also offer rebates. For example, the ​City of Austin when we decided to buy was offering a flat $2,500 credit provided it met their standards upon inspection (the vendors will make sure it does). The vendors also may offer more discounts. For e.g., since I work for UT Austin, they offered a $1,000 credit on top of all other credits.

For the remainder of the amount, you can finance it directly with the vendor for a 10 or a 20-year loan with interest ranging from 3-5% depending on your credit history. They even structure the loans so that the first half of the loan is not due until you get the federal tax credit. As long as you can make your peace with the monthly payments, you are good to go. Again, the total price will depend on the factors I listed above i.e. size of the system, type and number of panels, and the ​amount of consumption you want to produce.

Understanding Net Metering

Texas uses net metering. In short, that means, Texas utilities will not pay you in cash for any extra solar production. You first use whatever you generate and if you fall short, you pull from the grid. If you generate more, you feed into the grid. You receive credit for any extra power you generate. This credit is applied to the months you use more than you generate. Credits may expire in the fall i.e. usually after the hottest part of the year. The city inspection relies a lot on checking if you are not, on an annual average, generating more than you use because that is illegal. This is primarily aimed to sustain the grid infrastructure because if everyone starts producing more than they use and feed it back​ into the grid, it’ll be unsustainable to maintain the grid. Eventually as solar gets more popular, I’m sure they’ll have to revise the incentives and redesign the system but for now, those are the rules.

Reaping Environmental Rewards

I’m sure you will crunch numbers to check if it makes financial sense to even install solar panels, just like I did. But at the core, you’re also planning for the future and reaping environmental karma points that are​ intended at reducing your carbon footprint. If you’re even considering going solar, you’re financially well-off and environmental-conscious at heart. This was my result after that first month of use. It also approximates your electric bill savings.

IMG_1892

You have to rationalize to yourself if your ideals match your wallet. I did the math and turns out, my monthly loan payments and any residual electric bill may come out to the same amount every month compared to before I went solar. But I’ll end up paying for the system in about 10 years (solar panels are warranted for 25 years) after which I may be producing as high as 95% of my overall consumption. To sweeten the deal, a house in Austin is worth at least $12-14K more after you install solar panels. This may be different in other cities. So think of it as a kitchen or a bathroom upgrade that not only betters your living experience but also raises the value of your home when you want to sell it. Ideally, you want to stay in your home for at least 5-7 more years to make the economics work.

Ultimately, it’s a mix of economic sense and wanting to do right by the environment. The solar power industry is well established by now and prices may not reduce as drastically in the future although it will always get cheaper and more efficient as time passes. The science and the political climate in terms of incentivizing solar is also settled. It depends when you want to, so as to say, pull the plug.

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