Why Solar electric and solar hot water are cheaper than buying from the electric company

Solar power has long been seen as a technology for the future. Many people have heard that "someday" solar prices will come down to make it cost competitive with electricity from the grid. Well, due to a number of developments, that day is NOW. Buying and installing solar power will lead to CHEAPER electricity and CHEAPER hot water than if you use power from PSNH, NHEC or even a local propane or Natural Gas supplier. Here is how: Suppose you buy a 3kW solar PV electric system. It will cost you about $30,000 for the system and installation. That is certainly a lot. But....there are now rebates available up to $18,500 on that $30,000 system! The Federal rebate, off your taxes (not your taxable income) is 30% or $9,000. If you do not have $9,000 in taxes a year, you can carry your rebate over year-to-year until you have reduced your taxes by the entire 30%, in this case $9,000. The State of NH passed a law last August offering a rebate of up to $6,000, based on wattage. A 2kW and above system qualifies for the full rebate, which comes in the form of a check for the amount. Additionally, New Hampshire Electric Coop (NHEC) customers are eligible for up to $3,500 in rebates - making NHEC customers eligible for $18,500 back on a $30,000 purchase. Not a bad deal! Non-NHEC customers are limited to $15,000 in rebates - which is still 50% of the entire system price! Now that's now all. If the system cost you $15,000 and only gave you $5,000 worth of electricity, you would still be paying more for solar electricity. Estimating the value of electricity you will get is hard, as we don't know future prices of electricity from the power company. So lets start with the assumption the price of electricity holds steady over the next 40 years - the lifetime of the solar system. In that case, a 3kW system should produce 3kW * 4.6 hours of sunlight * .77 (the standard factor for energy loss between collection in the solar cells and usable electricity)* .16 a kW (today's rate) * 365 days * 40 years = $24,822 of electricity generated. So using this scenario, the system would generate around $10,000 more electricity than it costs (including rebates). But is this scenario fair, given that electric rates have doubled in the past 10 years, that PSNH asked for a 10% increase this last year, and that fossil fuels are going to become more expensive in the future due to the effects of peak oil. (The Wall Street Journal predicted in an article several months ago that in 5 years, oil would cost $300 a barrel (it is $50 now) which would translate to around $12 a gallon at the pump.) So lets just imagine the price of electricity cumulatively doubles in the next 40 years. That would mean that your system would produce the equivalent of around $50,000 of electricity - for a $15,000 investment (after rebates). This is why I say solar electricity is now cheaper than the electricity you buy from the power company. The equation for solar hot water is even better - the payback time for a solar hot water system is around 10-12 years rather than the 20-25 year payback for a solar electric system. If you have more questions, please come in and ask Malik Haig, Ph.D., the owner of Sustain Ability. He is happy to explain all this until you understand the great benefit - both to you financially, and to the environment, of switching to solar power - whether electricity or hot water.

Posted on May 1, 2009 by Malik Haig