Solar Energy Question

I was reading about solar energy in Germany and it got me thinking. When I lived in California it made sense to install solar panels since electricity was relatively expensive and sunshine was relatively plentiful. Germany uses a lot of solar energy, relative to other countries, so perhaps it might make sense to investigate it where I live now.

Six years ago I moved to Northwest Montana (47 degrees, 59 minutes, 54 seconds North and 113 degrees, 56 minutes, and 3 seconds West) about 100 miles from the Canadian border were electricity is relatively cheap (but has been increasing lately) and sunshine is plentiful only 5 months out of the year.

I am currently using 1880 KWH/month, although it can go up to 3250 KWH/month in January and February. We have a ground source geothermal system which helps keep our energy costs down compared to what they could be. It costs about 7 cents/kWh which is far less than I was paying in California.

With our short winter days, assuming I could keep the panels free of snow, and our reasonable cost of electricity I don’t think having solar panels could possibly pay for themselves, but I figure there must be a calculator where I plug in all the variables and see if it might make sense for me. I don’t want to call a local installer since I don’t trust them to tell me whether the numbers add up or not.

Any thoughts?

Basic Charge (Single Phase Service): $22.13/mo.
Energy Charge: 5.936 cents/kWh (for first 600 kWh/mo.)
7.301 cents/kWh (for 601-3,500 kWh/mo.)
10.660 cents/kWh (for 3,501 and over kWh/mo.)

There’s a number of calculators available. Here’s one.

Couple things to consider. One is whether you want an “off-grid” array, or a “grid-tie” array. Off-grid is just what it sounds like: how big of a system do you need to keep the lights on during the worst solar day of the year. Grid-tie gives you more flexibility because you produce X kwh and buy additional from the power company, or sell them the surplus (likely at much less than the $.07 you pay them).

Some calculators are really neat because they actually let you pick what brand and model of solar panel you want to work with. Another thing just to add a layer of complexity–consider what adding something like a Tesla house battery to the mix does for you. You can charge it during ‘off-peak’ hours when electricity is cheaper.

Thanks Jester. I think I want a ‘grid-tie’ array and I don’t think I need a battery since I have a large propane generator I can use should we lose power completely, which usually happens a few times during the year. The generator doesn’t supply the entire house, but it does supply enough of it so that it’s really not a big deal if we lose power for a day or two.

Any such calculations will have to make a huge number of assumptions, including the future cost of electricity, the life span of the solar panels, and the future value of money you’re spending now (which is determined by the rate of inflation). We can make educated guesses about these factors, but we can’t know them for sure. I would make a spreadsheet with each year over the next 30 years having a line in the spreadsheet. Put columns in for the price of electricity as you predict it will go up in the future. Put in factors for inflation, and allow for the fact that you may have to borrow the money up front to buy the panels.

But, when you say “pay for themselves”, you are implying that the lower cost in the long term might outweigh the higher cost in the short term. Don’t forget that it’s quite possible for the answer to be “it never pays for itself” and yet the “it” could still be worth doing. Case in point: Suppose I enjoy making my own cheese at home, as a hobby. It costs money for me to buy equipment and ingredients. Suppose that ten years down the road I add up all the money I’ve spent and find that I could have just bought cheese at the grocery store for less money. Does that mean I made the wrong choice? I didn’t just do it to save money. I did it because I enjoyed it.

So, even if it turns out that, over the life span of your solar panels, you end up paying 12 cents per kWh when you could have bought the electricity from your local power station for 11 cents per kWh, that still leaves the question of how happy it makes you feel. I’m sure one of the reasons Germany has so much solar power is so they can enjoy the bragging rights. How much pride will you feel when you look at your solar panels? FWIW, Germany gets about the same amount of sunshine per year as Northwest Montana does.

Greetings, dolphinboy, from the central part of your former state where, thanks to PG+E, we get to pay about 30 cents per kwh (in a natural gas heated house) for usage above about 400 kwh per month. At that rate, payback for installing a solar system is 15-20 years. Other than for houses that use a LOT of electricity (there are many), it really doesn’t pay other than with political or philosophical motiviations.

For the prices you pay, there may be no payback at all, although you do use a massive amount of electricity. I suspect in your area the utility sources electricity mostly from coal and hydro, two of the cheapest sources.

One approach that’s popular here is the so-called power purchase agreement where a company like Solar City pays for the panels and installation, and the homeowner agrees to a 20 year contract to pay them for electricity at a rate slightly below what the utility charges. But with the low cost you’re paying in Montana, it could be that these companies don’t offer such plans in your area.

Germany has a lot of installed solar power because the government provided generous grants to do so. The Euopean Union and member states adopted greenhouse gas emission targets, which is why not so sunny places like Germany jumped into the solar energy pool feet first. Other countries have also done so and as with solar, are also exploiting wind power much more than we are here.

Thanks TallTrees, I checked out SolarCity before I posted this thread and no, they don’t service Montana, perhaps for the very reasons you stated.

I didn’t think we used that much energy, but compared to national average it appears we do. I have no appetite to spend a bunch of money and not save more than that much money in a 5 or 10 year period. I don’t think that’s possible given the current cost for electricity where we live.

And there are two sides to that equation. the price of solar panels has dropped dramatically in recent years.

(Disclaimer: I work for an online solar retailer, but I’m new there and cannot speak in an official capacity.)

Based on your max usage of 3250 kWh/mo and the sunshine where you live, you’ll need an approximately 25 kW array. That’s huge. The components will cost around $40,000, although the federal tax credit will take 30% off that and your state might have other incentives, including possibly another 35% credit, but you should double check that. Let’s just use the for-sure federal 30% for now: That’s $28,000 for parts. You can choose to self-install and just hire an electrician for the final hookup; it’s entirely possible and there are videos on YouTube and elsewhere.

Based on that 3250 kWh/mo, you’re paying about $237/mo, or about 118 months (9 years) for the panels to pay that off (simple payback calc). You should definitely do the more advanced math that sbunny8 recommended before seriously purchasing, but this will get you in the ballpark. Panels are normally warrantied for about 25 years, though you’ll probably have to replace the inverters before that.

You probably do want a grid-tied system, because that’ll give you cheap electricity from the grid whenever you need it. Batteries are a significant expense, and if your grid is reliable enough most of the time, a backup generator for occasional use will be cheaper than a battery bank. If you go fully “off-grid”, that means you can’t tap into the grid on cloudy days, and you can’t feed exceed power back in to “roll back your meter”.


But how are you using that much power to begin with? Usually the cheapest and best thing to do is not to install as many panels as possible, but to start with conservation: How can you decrease household energy use? The low-hanging fruit: Convert all incandescents to CFL or LED bulbs, make sure electronics like your computer or Xbox or DVR are going to sleep, don’t leave lights on all the time, etc. If you’re doing indoor gardening, they make LED grow lights too. You can also consider more energy-efficient appliances or heating (geothermal or air-sourced heat pumps can get you much more therms per $ compared to resistive electric heating, if that’s what you’re using). You can perhaps insulate your windows and attics with thermal films, thermal curtains, or blown-in/squirt-in insulation, etc.

Consider all that and if you can decrease your energy use first, panels may seem a lot more affordable. Or you may find that the cheap grid electricity is fine once you’ve lowered your usage enough.


Hope that helps a bit.

It’s not a great economic investment for you. 6 cents/kwh energy is ridiculously cheap and as you noted the capacity factor will be extremely low. In short, it’s a long payback (which is not the same as a positive return) based on some extremely iffy assumptions about future prices and rate structures. The utility could change rate structures tomorrow and charge everyone with solar a distribution capacity fee and you’d be SOL. With your usage and prices, you should probably be the last person in the US to put up solar.
Here’s a quick and dirty 1 KW analysis

Upfront cost of $1,000 / kilowatt after incentives (as a guess, recently got a quote at $2/watt before incentives)

876 KWH/yr, (8760 hrs/yr generating 10% of the time, you can do some math here, but I’m guessing that’s about right, just remember about night time, cloudy days, and snow on the panels)

$52 saved/yr (876 KWH/yr x 6 cents/kwh)

20 year payback ($1000/52)

My local grocery store sells eggs for $1.99/dozen. They also have “cage free” eggs for $2.99/dozen. I buy the cage free eggs. How long will it take for this purchase to “pay for itself”?

If my neighbor buys a motorcycle for $6,000 and only rides it in the summer time… over the life of the motorcycle, the cost of ownership will probably be $2 per mile, compared to his car which only costs 57 cents per mile. How long will it take for that purchase to “pay for itself”?

I hope it’s obvious that those purchases NEVER pays for themselves, and yet plenty of people choose to spend the money.

Dolphinboy, even if the calculations were to show that your solar panels NEVER “pay for themselves”, it still might be a good choice for other reasons. You have to decide if the life you’ll have with it is better than the life you’ll have without it and whether it’s worth the money, in your opinion.

And if it turns out that something you enjoy actually DOES “pay for itself”, then that’s just icing on the cake. If you complain that the payback period is too long, that’s like complaining that your cake doesn’t have enough icing. You’re missing the fact that you got cake. You just have to look at the cake and decide if it’s the kind of cake you want.

Yeah, that COULD happen… but isn’t it just as likely (or even more likely) that the utility company would raise prices faster than inflation over the next 20 years? What if a carbon tax-and-rebate system goes into effect? IMHO, either of those events are more likely than the utility deciding to punish people with solar panels. Anything’s possible, but it makes sense to plan for the more likely outcomes rather than the less likely ones.

In situations like this, I often find it helpful to make three projections: pessimistic, optimistic, and realistic. Then see how much money you end up paying in all three scenarios and see if you think it’s worth it.

The ‘feelgood’ factor is not as simple as just looking up at the panels and congratulating yourself for saving the planet. If a lot of people do that, then the generating company have a problem. When the sun shines, demand drops and they take capacity offline. They still have to keep it available for when the sun doesn’t shine so their profit drops because they have less return on capital employed.

They will have to increase their charges to compensate (or the taxpayers will have to stump up the difference as here in the UK). This means that those people who cannot have solar panels are subsidising yours.

Adding solar panels, if I ever decide to do it, won’t be a ‘feel good’ thing for me. I’m not trying to save the planet, I’m trying to lower my energy costs.

Taking $30,000 out of my retirement account in order to save a few hundred or even a thousand dollars a year doesn’t make financial sense. I wouldn’t be saving the planet, I would just be helping the solar panel industry.

I think converting sunlight to electricity is a neat way to keep your cost of living down, but with the cheap electricity I currently have it probably doesn’t make sense for me to spend all that money.

Perhaps the equation will shift in 10 or 20 years time if residential energy costs skyrocket. I don’t see a lot of other people around here jumping on the bandwagon, and that says something.

I’m sure the acid rain issues in the Black Forest & other regions of Eastern Europe also drive that changeover. I’m always a little awestruck at Germany’s ability to get stuff done–good & bad. It’s like they see an obstacle and, rather than see it as a barrier they just work it into the plan to attain a long-term goal: United Germany, genocide, post war rebuild, reindustrialization, re-unification of East/West Germany, now transitioning away from fossils in favor of solar. Not to mention amazing beers despite the restrictive purity laws. :slight_smile:

Yeah, if solar capacity goes up by a factor of ten, we’ll have to start beginning to think about dealing with the variable supply. But not yet, particularly as the biggest demand just about everywhere in the US (and UK too I believe) is on hot sunny days – you know, the days when solar panels are producing the maximum. So right now, adding solar generation to the system reduces the need for excess generating capacity.

It’s true that power producers don’t like homeowners installing solar, because selling less electricity means less profit for them. But that’s hardly a good argument for someone not to do it. I mean, every day I don’t light all my furniture on fire reduces potential profits for furniture makers, too.

IME, the local installers are not wildly optimistic (a little bit, but not wildly so), and they will know for sure about whatever state and local benefits there are.

Now, just from your costs and location it seems unlikely to be a great deal for you, but for anyone interested, it wouldn’t hurt to get an installer to give you a free quote. you can always check their numbers for sanity, but they might know about some rebate you don’t yet know about.

A lot of good points above:
any calculation makes an assumption bout energy cost - usually that it stays the same. It won’t.
Fortunately coal and gas do not have the same level of risk of depletion as oil, but never underestimate the ability of government regulation to drive up the cost.
If you want to live “off the grid” -well, this is why Tesla is selling electrical battery packs for houses. That’s another major breakthrough, battery tech is getting much better too.
You electrical use doubles in winter? I assume this means you use electrical for heating. Maybe this is not the most efficient use of electrical solar panels. You are probably better off using a big propane tank or something if you cannot get piped in natural gas. This would significantly reduce the size of solar installation you need. Ditto - do you use an electrical range and oven?
The other consideration is “peak usage”. not just what do you use per month, but what do you use when everything you need is going at once.
(I’ve always thought that one unexplored facet of home automation is reducing peak power by allowing a controller to put heavy electrical equipment on a round-robin strategy. Your freezer will wait until dinner is cooked and the furnace fan would wait until the freezer and fridge had done cooling, etc.
Plus, what was said above about light bulbs.
I’m surprised nobody mentioned too that solar panels have a limited life, from what I’ve read. Not just that, but in about 20 years they could be producing significantly less power with the same electricity.

Current panels are warrantied to degrade less than 1% to 1/2% a year, for 25 years. So you’re looking at say 80% of original power after 25 years.
(Or, another way, a loss of total energy production over the ten years of less than 10%. ) That’s enough that you should ignore any installer proposals that don’t account for it (as being misleadingly optimistic) , but not enough to dramatically change things.