We’ve Taken the Plunge!

After a lot of thought, number crunching an sleepless nights, we decided to bite the bullet and hop on the solar panel bandwagon. While it seems like a no brainer to get “free” electricity from a renewable resource, it requires a significant upfront investment. It is often said that to make money you have to spend money. Apparently, in some cases, to save money, you also have to spend money.




As much as we have tried to cut down on our electric usage (turning the lights of when we aren’t in the room, turning off the HVAC when we’re at work, and maximizing our use of the dishwasher,) we can only do so much. The refrigerators have to keep running, we use an electric boiler to heat the house, and living in the northeast means we can’t air dry our clothes for 8 of the 12 months of the year and we are forced to use the energy sucker known as the clothes dryer. According to the US Energy Information Administration, the national monthly average for electricity consumption was 911 kWh in 2014. Over the past couple of months, we’ve used an average of 870 kWh or $195 a month. While it may seem like a lot, I want to point out that we buy food in bulk when they’re on sale, and as a result we have 2 refrigerators. We have no gas line in our town, so we have an electric range, which we use almost every day since we don’t eat out often. Yet, despite the fact that our house is bigger than the average house in this country (3,100 sqft v. 2,600 sqft), we’re still using less than the national average. When the summer comes around and we aren’t using the boiler or the dryer as much, I anticipate much lower numbers.


I know you’re wondering what my laundry habits have to do with the solar panels. The installer who provides a quote for the project will try to maximize your roof space to eliminate as much of your bill as possible. They can’t do that unless they have a solid idea what you use over the course of the month. In our case, we happen to live in a house that faces north, meaning that the movement of the sun from east to west gives the roof continuous exposure to the sun until sunset. In other words, if we load up our roof with enough solar panels, we can cover 100% of our use annually. I say annually because in the winter months when the days are shorter, the sun doesn’t shine enough to cover a day’s usage. And in the summer months, you produce more electricity than you need as a result of 12-hour days. The average energy produced over the course of the year ends up being equal to your total energy use.


How is it measured, how does it work?

Part of the solar installation involves adding a 2-way meter. A regular meter only tells the electric company how much energy you’re using so they can send you a bill. A 2-way solar meter not only tells the company how much electricity you use, it goes a step further by telling the company how much electricity your panels are producing. During sunny July months, you will be producing more electricity than you will use. The company will keep track of those numbers (which should be reflected on your bill) and, on dark December days, will allow you to use those excess credits (read about net metering here). Once the credit runs out, you are now back to paying for electricity. Our plan will be to minimize our use in the summer to increase our credits and use them on shorter days. That should be easy since I’ll be air drying clothes and the house will not be heated. This should reduce our electric bill from approximately $2,000 to less than $300 a year.


How much does it cost and is it worth it?

If you’re looking for a bargain, this is not the project for you. It’s not cheap. My system, which is intended to cover 100% of my use for the year, and has a 20-year warranty, is going to cost $39,500. “EEEEKKK!!!” was the same sound I made when the company rep gave me the quote. I’m sure her ears are still ringing. I hope her insurance covers hearing aids. But, fret not because Uncle Sam has my back.

We will get a tax credit equal to 30% of the cost of the project next year when we file our federal taxes (this incentive is in place until 2019). In addition, our state will give us up to $1,000 credit on our state taxes. If you’re keeping track, the number should be $12,850. Note that these are credits, not deductions. I bet it sounds pretty good. But, it doesn’t end there. Have you ever heard of SREC? It stands for Solar Renewable Energy Certificate (read more here). It’s a program that pays you a certain amount of money per 1,000 kWh produced, quarterly. The amount of money depends on your location, in our state it’s between $200-250. You can go on their website to find out the prices for different states. Based on our system size and capacity, we are estimating our quarterly payments will average to about $200/month.


It doesn’t get any better… unless it does! Since I’m no Mrs. Moneybags, I have to fund this some other way besides writing a nearly $40,000 check to the contractor. Mr. Government man swoops in to rescue the damsel in distress once again. We have a program called Solar Loan * that is subsidized by the Massachusetts clean energy commission. Not only does it allow people to get the loan at a lower rate from local lenders by subsidizing the difference, it also allows the borrower to re-amortize the debt once over the life of the loan at no charge within the first 18 months. The purpose of that policy is to give people enough time to file their taxes, get a nice check, courtesy of the IRS, which they can use to pay the debt and recalculate the loan. Now, I know that some people will go out and buy a nice car or get a new tattoo and some gold grills with their tax return check. But the rest of us financially savvy people know that the money will be best used paying off debt and will take advantage of our 18-month window.

*You have to use an approved lender and an approved solar installer to get the loan at the preferred rate.

While it may seem like I’m replacing one payment with another (electric bill with loan payment), the long term financial benefits are undeniable. My loan payment will be fixed over the life of the loan until I restructure the debt, which will lower it, not increase it. That’s more than I can say about what the electric company will charge. Furthermore, part of the initial cost is subsidized by state and federal governments. The loan will also be for a shorter period than the life of the panels, meaning that they will give me nearly free electricity for longer than I have to make loan payments.


I am looking forward to instant savings and the chance to earmark what used to be the electric bill money to other areas that will be more beneficial to our family. We are scheduled to be installed before the end of summer, so be sure to come back for updates!


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