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FINANCING |
Maine has a net metering law in place that credits the customer the full
retail value of the electricity they export to the grid. So if we were
to install a system that generated all of the electricity that we need
then our annual bill would be reduced to the minimum connection fee of
around $12.00/month. In fact it is more prudent to undersize the system
so that we would not be giving away any surplus - the utility does not
pay for a surplus, just credits for the excess generated power generated
in any given month.
Below is my bill from Central Maine Power for March/April 2012 - using
26 panels (about 4.0kW peak AC power):
Note that since all net metering bills are hand processed, they actually
highlighted my credit for me!
I looked up the last 12 months of our electric bills and then
calculated the
anticipated energy production for a system comprising 21 175-Watt
panels and from this determined what our electric bill would be on a
monthly basis. As you can see below our average bill will be much
lower.
The way that net metering works is that we would bank any surplus credit
in the summer and use it in the winter. As we eventually add more
panels, the credit will be greater.
(You can see how my installation is performing compared to the
estimated solar power on the Real Time
Stats page of this blog.)
My (now ex-wife) and I began by looking into re-financing our house to lock in a low rate
during the "economic downturn" (depression) in March 2009. We had an
ARM mortgage with a MegaBank that would go from the fixed to adjustable
rate next year (2010) and we figured that it was a good time to lock in
a 20 year fixed mortgage. We also decided to go to our local bank for
the re-fi to keep the money in the local economy. I watched the
economic indicators and published mortgage rates carefully and then
locked in the loan rate at the lowest point in the cycle in late May.
We originally budgeted $26,000 for 27 panels that would fill the roof,
but decided to reduce our initial overhead and scale the design back to
a more prudent 21 panels. (Panel prices have dropped significantly
since 2009 and in 2015 are over 50% lower due to the Chinese jumping
into the market with massive government subsidies and decimating the US
manufacturing capacity by dumping their cheaper products). By asking
for an additional $21,000 on the re-financing we were able to lock in a
very attractive rate that works out better than an equity loan or line
of credit.
We determined that the added $21K on our loan would cost us about $180
more per month over 20 years than what we were currently paying. When
we account for the fact that our electric bill will drop from an average
of $100/month (for Clean Power at 18cents/kWh) to about an average of
$58.00/month, so I estimated that our monthly budget would only increase
by an average of $122 ($89 to $146 depending on the seasonal solar gain
-- see below). This is not an undue burden for us. After the loan is
paid off it's all positive cash flow!
(after adding more panels our net bill
in the spring of 2012 was negative - until we purchased a
Chevy Volt electric vehicle.)
The Federal Residential
Energy Efficient Property Credit (form
5695) allows us to deduct 30% of the cost of the system from our
taxes, so we will avoid paying around $7000 in taxes.
Click here for more info on how to file this form. And
click here to learn more about the tax credit.
Maine's
Efficiency Maine program had a
Solar Rebate program, Solar PV systems qualify for rebates of
$2.00/watt for the first 1,000 watts, capped at $2,000. Check the
DSIRE database of
state incentives to learn what you can expect in your state.
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Update on tax breaks:
We got our taxes done by our accountant in 2010, and got a nasty
surprise. I had thought we would get the full $6185 off our taxes
(on form 5695 - Residential Energy Efficient Property Credit) which
gives a 30% tax credit, but all we got was $1772 with a carry forward
credit of $4413 that applies for 5 years. This is because we are both
self employed (filing jointly) and have to pay a lot of self-employment
tax. So this may not be an issue for "regular wage earners".
Click here to learn more about the 30% tax break.
However we did get the full $2000 Maine Solar rebate. That program
had run out of funds just before we committed to our system, but then it
was re-funded by the Federal Stimulus deal - just in time for me to be
the first to file for the refund!
So here's how our net system cost works out to date:
| Estimated system cost |
$20,615 |
| 30% Federal Tax break
(2009) |
-$1,772 |
| 30% Federal Tax break
(2010) |
-$3,684 |
| 30% Federal Tax break
(2011) |
-$1,582 |
| 30% Federal Tax break
(2012) |
-$287 |
| Maine Solar Rebate |
-$2,000 |
| Net system cost |
$11,290* |
*Note that our total federal tax break add up to $7038 because we
continued to
add panels to the system and got credits each year we added
panels. |
October 2016 Update:
Costs of the equipment have dropped significantly and the break even
point is within 10 years - assuming 100% financing at less than 5%. My
original panels cost $3.29/Watt, but the 245Watt panel I added in
October 2016 cost $0.41/Watt (thanks to a special deal from a friend) - much more affordable.
This tool from
SolarEstimate.org
can help you look at costs and return on investments. Below is my
panel purchase history - I always looked for the very best deal I could
find within reasonable driving distance (to save on shipping costs)
while also staying with US made components as much as practical.
You can use this
Free Solar Panel Price Survey to research the lowest currently
available panel prices.
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