Many people still question if solar power is a cost-effective solution for families and businesses, but in Massachusetts the question has been definitively answered with a resounding “YES!”. Consider this:
A 5,000 watt system (20 panels generating 250 watts each) at $4.00 per watt* will carry a total purchase price of $20,000. All homeowners and many businesses will qualify for $2,000 in rebates from the Clean Energy Center, and some homeowners will qualify for and additional $2,000 in rebate money. If your home was hit by the tornadoes a few years back, another $5,000 of rebate money is available for you. Federal and state tax credits will reduce that cost further – on a $4,000 rebate, your final cost is $9,000**, and the final cost with a $2,000 rebate is $11,000**.
Over the next 25 years (the period during which the power production warranty is in effect), this system will produce between 110,000 kWH and 140,000 kWH of power, depending on the orientation, tilt and shading characteristics of the rooftop where it’s installed. In the worst case scenario (output of 110,000 kWH at the $11,000 price tag), the cost per kWH is $0.100 – the best case (output of 140,000 kWH at the $9,000 price tag), the cost per kWH is $0.064 per kWH. The lowest priced municipal electric company in MA hovers around $0.11 per kWH, with National Grid and NStar running anywhere from $0.13 to $0.22 per kWH.
Many companies will try to sell the consumer a leased system with a power purchase agreement, or PPA. Typically there is a up front lump sum payment and an agreement to purchase the power at some discount from the current rate, usually 15%. The leasing company keeps the rebates, the tax credits and the income generated from the sale of solar renewable energy certificates (SRECs), and they get to depreciate the entire system in the first five years of operation. Over 25 years, the consumer will pay the leasing company between $14,000 (for a poor performing system) and $18,000 (for a system with optimal performance). If the lump sum payment was $5,000, the consumer will pay between $19,000 and $23,000 for electricity from a system that should have cost only $9,000 or $11,000!
Clearly, this demonstrates that ownership is a better option, but how much better is it? Dramatically better: assuming an energy inflation rate of 3.5%, the avoided cost of electricity from a poor performing system will be around $25,600, and optimal performance will be around $32,700. Also, for the first ten years that you own the system, it will generate an income stream from the sale of solar renewable energy certificates – between $9,600 and $12,300 will add to the system owner’s bank account during this time period at today’s rates for SRECs on the Massachusetts market.
Lastly, if you lease a system and then decide to sell your house, things can get very sticky – you will either have to purchase the system from the leasing company, or get the new owners to agree to assume the lease, and both of these options can be problematic. If you already own the system, you don’t have these issues, and the fact that the home is solar powered will mean a higher asking price and a faster sale. And while your home’ value goes up, your tax bill doesn’t – solar power systems are exempt from property tax assessment for the first 20 years of operation.
What do you need in order to go solar? A relatively shade free roof without a lot of dormers or other obstructions, facing anywhere from southeast to southwest. The more directly south it faces, the more shade can be tolerated. If you’d like a free, no obligation assessment of your property’s solar potential, please email me: jtehan@nuwattenergy.com
* – panel prices are currently below $4.00 per watt, so the numbers are actually a good deal better
** – this calculation assumes the 30% federal tax credit on the full purchase price before rebates – this is not tax advice, consult with your accountant or tax attorney
