Solar Panels Help Save on Power Bills

Harnessing electricity from the sun will help cut utility costs.

Jeff Wilson is giving his 70-year-old Cape Cod home the ultimate efficiency treatment: a Deep Energy Retrofit (DER) that involves everything from beefing up insulation to upgrading systems and installing solar panels. Step by step, he's bringing an antiquated house up to today's highest standards for energy efficiency.


Solar Panel Installation
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Jeff is adding solar panels to his home and he wants to set the record straight about solar energy and its practicality as an energy source. "I'm not a solar addict," he says, half joking. "I'm not someone who would do solar at all costs. I only put the panels on my roof after fixing other efficiency problems first."

Jeff argues that solar energy only makes sense after taking key energy retrofit measures: air-sealing, upgrading mechanicals like the HVAC unit and taking all steps to "tighten" the house so it won't lose energy. Basically, you need to reduce the amount of energy lost through air leaks and poor insulation before you begin to produce your own power. Reduce before you produce.

Jeff's solar goals were to knock back electric use and position himself to sell energy credits back to the utilities so his bills would be zero.

Meanwhile, his home wasn't exactly the perfect candidate for solar — at first. "My house faces the wrong way — east to west," he says. He told his friends who own a solar company, Third Sun Solar in Athens, Ohio, "As soon as I reorient my house to face south, I'll call you."

Jeff didn't need to go that far to be a candidate for solar energy. It just couldn't be his only power source. "We have natural gas coming out of the ground in our neck of the woods, and it's the most efficient way to heat a space, heat water or dry your clothes," Jeff says pragmatically.

"At this point, (natural gas) is our best option, even better than solar water heating," he says. Solar would serve as a power complement to the new HVAC unit. Together, these systems would help Jeff meet his goal of achieving net-zero energy.

Configuring the System

The first step to setting up solar power involved an analysis of how efficient the technology would run given the home's positioning, weather and other variables that could block sun exposure to the roof, such as trees. Next, contractors explained the technology and how it would work to generate energy for the Wilson household. Finally, numbers were crunched to figure out how much the system would cost given tax credits and incentives.

Analysis: "My house has some minor obstructions — trees on the far west and east sides," Jeff says, adding that his house faces west rather than south.

Based on this, contractors determined that Jeff's solar system would be 89 percent efficient. "Losing 11 percent efficiency is worth it because the majority of systems installed are between 85 and 95 percent efficient," Jeff relates.

Contractors reviewed Jeff's electric bills so they could calculate how much he might save by adding a solar system. (This analysis occurred before the HERS energy rating). With all of Jeff's other energy retrofits, they figured once the system was paid off in 10 years, he would be saving and generating enough energy to avoid electric bills.

Technology: A big turnoff about solar systems is the misconception that they require a battery to convert direct current (DC) energy to alternative current (AC) energy, the type of electricity we use in our homes. This is no longer the case. Newer grid-tied systems do not require battery backup, making them all-around cleaner.

Jeff explains today's solar technology like this: Solar panels collect energy from the sun. These panels are wired down to an inverter that converts DC energy to AC so it can be used in the home. ("The inverter is a big, expensive part of the system," Jeff notes.) That inverter — Jeff's is located in his garage — is tied to a meter that his utility company installs.

The meter spins both ways. "When I'm not making enough solar energy, say at night or on a cloudy day, I get to pull energy from the grid," Jeff explains. "When I'm making too much energy on a sunny, spring day, I can sell that energy back to the grid (utility company)."

If Jeff pays 9 cents/kilowatt for energy, he gets the same in return when his solar panels "give back" to the utilities. His bill reflects this, so he sees two columns every month: one for energy use and another for energy sell-back. A digital meter in his home lets him know how much energy he used and sold back at any given time. Also, he can log on to a monitoring website and view his solar energy production history. "You'll see long, flat lines where we had snow 6 and 8 inches deep for two weeks," he explains.

Cost: Another misconception about solar systems is that they are unaffordable. But with state and federal tax credits (check out the Database of State Incentives for Renewables and Efficiency), plus the ability to sell back and earn yearly income from Solar Renewable Energy Credits (SRECs), the real cost of a system is much lower than the initial price tag.

Take Jeff's system, original cost: $32,000. He immediately earned a tax credit from the state of Ohio for $11,000, which came from a $3/watt grant. (The state deducts dollars for efficiency loss, so Jeff missed out on about $1,000 because his system is 89 percent efficient.) Next, Jeff got a $7,000 federal tax credit he can take over a two-year period. Those two incentives brought the system cost down to $14,000.

Jeff contracts with a third-party broker to sell SRECs back to the utility company. Because Ohio's goal is to increase its portfolio of renewable energy from 9 to 12.5 percent by 2025, the state can buy the energy Jeff produces to help reach that goal. One SREC equals 1,000 kilowatt hours. Jeff's system can earn 4 or 5 SRECs per year, and each SREC earns him $250. Overall, he'll make $1,000 to $1,250 per year for the five-year contract with the possibility of extending that contract.

This brings the total cost of Jeff's system down to $9,000. That's $23,000 less than the original price tag. Jeff figures the system will last 25 to 30 years, and within 10 years, he could be making money from the system because of SRECs.

Planning for Solar Power

If you're thinking about solar energy as a companion to your HVAC system, do your homework by considering these key points:

  • Retrofit first. Solar energy will not make your home more efficient. It will create energy — but it will only pay off once you've taken steps to air-seal your home. Get a home energy rating to find out where the energy problems are. Solar is not a fix; it's an alternative power source to your power company's coal-fired plant.
  • Ask for an analysis. Find out how efficiently a solar system would operate on your home. A solar contractor will figure in variables like sun exposure, obstacles (trees), roof incline and a number of other factors. Collect past electric bills and ask the contractor to estimate how much solar energy might offset these bills.
  • Calculate the real cost. Don't shudder when you see the price tag on a system. Research available tax credits and ask the solar contractor to help you figure out the real cost of the system after these incentives and rebates.

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