Utility buying solar power at a rate of 22.5 cents per kW/hr, should I build now

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System
System Posts: 2,511 admin
in General Solar Power Topics #1
Ultimately, my question is "Is a 22.5 cent per kW/hr buyback enough to generate a neutral or positive return on a batteryless gridtie system over a 10 year period?" For more background, I just purchased land in northern Wisconsin (generally a poor solar area) and am 2-3 years away from building a house and moving up there. Given the federal renewable energy credit and a another incentive offering a 10 year loan at 1.9% for renewable energy projects, I was considering putting in a batteryless gridtie solar system right now on my property. My utility will buy back any energy I generate at a rate of 22.5 cents per kW/hr and the program is guaranteed to continue for 10 years.

Should I build now, or wait for potentially cheaper panel prices and better federal incentives at the risk of perhaps the loan or buyback program closing? If I should go ahead and build the biggest system that I can (the 1.9% loan maxes out at $30,000). Thanks for any advice!
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  • niel
    niel Solar Expert Posts: 10,300 ✭✭✭✭
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    Re: Utility buying solar power at a rate of 22.5 cents per kW/hr, should I build now

    nobody can accurately predict the future even though most feel the pvs will drop in price with higher production and a lessening of the european demand. now you could wait, but state programs can be fickle as they sometimes change them or run out of funds. it's a tough call, but one that you will have to make. as for paybacks you can't accurately predict this either because at sometime in the future the rates will go up, but how much and how often is not certain so look at any figures as the very most amount of time you should recoup the costs in.
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  • BB.
    BB. Super Moderators, Administrators Posts: 33,439 admin
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    Re: Utility buying solar power at a rate of 22.5 cents per kW/hr, should I build

    Do the math for your installation:

    $/kWhr= (System cost) / (kWhr per year * time frame in years).

    My system (3kW grid tie) was calculated by the installer as $0.146 per kWhr over 30 years (including about 33% worth of CA state rebates and a smaller fed income tax break).

    No rebate costs:
    $/kWhr = $29,000 installed / (400 kWhr/month * 12 months/yr * 10 years) = $0.60 per kWhr.

    With Rebates of ~$8,000 or $21,000 installed = $0.44 per kWhr over 10 years

    with rebates over 30 years = $0.146 per kWhr

    I have net metering (basically, I can bank one year of use/generation) and I have Time of Use metering. Summer rates are $0.09 a kWhr off peak, and $0.29 per hour peak (Mon-Fri, noon - 6pm). I try to use very little peak power so, I get 3x credit from my, usually positive solar generation in the afternoons. The higher rates (above !900 kWhr/month) are unbelievable with this E7 rate plan in summer $0.51 per kWhr (about the same as a Honda eu2000i 2kW generator and a gallon of gas from my local service station)... So, needless to say, I am very careful about power usage (I should be around 200-300 kWhrs per month, so I actually should generate more power than I use over a one year period). With our net metering, at the end of one year I either pay for the power I used over than one year, or if I have a credit--my account is zeroed and started over (I will not get any money for the excess power I generator--so having too large of system is not useful for me). All I should have to pay with my system is ~$5-$6 per month connection fee (minimum charge must be paid every month).

    No maintenance costs included (10 year system guarantee--I would allow for a few grand for, at least one, new inverter down the road). Remember, that this assumes that you consume all of the power you generate. If you are grid tied and have net metering, vs generator, tiered rates, etc. can all affect your "true" numbers. You take your numbers, you take your chances.

    As aways, the first place you should invest your money is in conservation... In general, a dollar spent in conservation will give you a better return than just trying increase the size of your solar system.

    -Bill
    Near San Francisco California: 3.5kWatt Grid Tied Solar power system+small backup genset
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