Solar Intro

After 20 years working in Electrical Contracting, we are branching out into the Solar Field. It is a natural expansion for after all, Solar Photovoltaics is electricity. Join the Green Business movement and find out what a great and affordable investment a photovoltaic system is. If you could pay the same amount every month that you spend on your electric bill, but instead have that payment go towards financing a system that generates electricity, wouldn’t you jump on it? Electric rates are only going to rise. Why would you want to pay them when they could be paying you? There are some attractive incentives available from PG&E and the State of California ($1.10 per watt) while 30% of your entire system cost is deductible form your Federal Taxes! There’s valuable information on this site, Have a look and give me a call to schedule a system analysis for your very own home.

Sizing Your Photovoltaic (PV) System

To size your solar photovoltaic (PV) system you need to take a look at your roof and your electricity bills. For your PV system to work best, your system should face south or southwest. PV systems work most efficiently when they are sloped at about 38°, but they also work well on flat roofs and any sloped roof that faces south/south-west. In addition to roofs, parking lots or other open spaces make good locations for PV systems. Your roof should have minimal to no shading from trees, mechanical equipment, and other buildings. The shade-free area of your roof will limit how large a PV system you can install, and your electricity usage (as measured by your electricity bill) will dictate how much solar power you need. Once you know your electricity usag and your available roof area, you can size your PV system.

System Cost

Our solar systems cost between $8-9 per watt installed including sales tax. The exact system cost will depend upon the ease of the installation and roof access. A 3 kW system that would power a typical California residence with good southern exposure will cost between $24,000 and $27,000 installed. After taking into account the California Cash Rebate of $1,900/kW and the Federal Solar Tax Credit of $2,000, the net cost of these systems ranges from approximately $16,300 to 19,300. The biggest savings from installing a solar electric system will be realized in future years. The graph shown below is based upon rate data from the California Public Utility Commission. As you can see, average electric rates have increased from approximately $0.02/kilowatt-hour in 1970 to $0.16/kilowatt-hour in 2001. That is an average rate of increase of 6% per year. By investing in a solar system, you can stabilize your electricity costs and shield yourself from such utility rate hikes.

The Cost of Electricity in California – The Penalty Zones

The utility companies in California have adopted a complex tiered electric rate structure. This rate schedule establishes a ‘baseline’ rate for all usage each month. Usage up to the baseline amount is charged one rate, and usage above baseline is charged at a series of increasing tiered rates. Residential customers who exceed their baseline quantities face steep penalty rates. 

Net Metering measures the difference between the electricity you buy from the utility and the electricity you generate with your solar electric system.

When you are making more electricity than you are using, like typical summer days, your extra electricity automatically gets metered back out (sold) to the utility grid. You receive credit for this power at the same rate they sell it to you. Net Metering allows you to use the electric utility grid like a bank account. You can put electricity into it that you don’t use immediately and you can withdraw the same amount later on, at no net cost to you.

Financing a Sol-Gen Power System

Below is an example of how you could finance a 3 kW Sol-Gen system that would power an average-sized California home. 
PV System (kW-AC) 3kW Installed Cost (estimated) $25,500
CA Cash Rebate ($1,900/kW) $5,700
Net Cost After Rebate and Tax Credit $17,800
Monthly Payment on a financed system $131
Monthly Payment after interest tax deduction $105
Monthly Payment to PG&E for same number of kWh $208

Rate of Inflation in California:

The Really Big Savings
1 Actual price will depend upon cost of installation and type of panel mount.
2 Average payment of loan financed with 8.0% fixed rate mortgage loan with 30 year term.
3 Average over 30 years. Assumes homeowner is paying average rate of 16.5 cents per kWh
today, with 6% annual rate inflation. This homeowner is barely in the penalty zone.

California Solar Initiative (CSI) Rebate

The State of California is presently offering a $1.10* per kilowatt cash rebate for solar electric systems that are connected to the utility grid.  Upon signing a sales agreement, we will submit a reservation for you after receiving a deposit on your solar system. Once your system has been permitted, installed and operational, the claim form and your final inspection approval will be submitted to the utility for payment. Within 30-60 days, the utility will send you or the installer the rebate check, depending on your contract. The incentive level does drop over time as more customers take advantage of it, so if you are considering solar, the best time to do it is now.

 
*Incentive may be adjusted depending on orientation and shading of the installed system.

The Bottom Line

For a typical 3kW residential solar system with financing, the homeowner would not need to spend any cash upfront to pay for the system, and would get a tax benefit in the first year equal to $2,000. Over the life of the system, the homeowner would save nearly $34,000 in after-tax monthly payments. 
Solar is one of the best investments you will ever make.
Natural gas shortages have also pushed electric rates higher. The majority of all new power plants to come online in the US in the last 5 years use natural gas. The wholesale price of natural gas to the utilities has increased over 300% during the last 10 years from 1995-2005. This does not include the price spikes realized in late 2005-2006 as a result of disruptions in supply from Hurricane Katrina. Natural gas prices and electricity rates will continue to increase in the near future.
As electric rates continue to increase, the greatest benefit of a solar electric system emerges. Solar allows homeowners to lock-in low electricity rates for 30 years. If rates increase as they have historically, the price of electricity from the utility in 30 years will be $0.75/kilowatt-hour! 
 
Rising Electric Rates
Tier #Percent of Baseline Consumption Price
Tier 1Up to the baseline amount 11.5 cent/kWh
Tier 2Electric Usage from 101% to 130% 13.0 cent/kWh
Tier 3Electric Usage from 131% to 200% 23.0 cent/kWh
Tier 4Electric Usage from 201% to 300% 32.0 cent/kWh
Tier 5Electric Use exceeding 300% 36.0 cent/kWh