Knowing my true energy costs with solar

[invalid]

Since we recently brought EVs into our life, I've been paying much more attention to our energy usage to know if it would now make sense to move to a TOU rate plan. This had prompted me to pay a bit more attention to our solar setup, and in particular been curious about its performance in terms of production and rate equivalency.

We have a ~10.14kW PV system from Solar City installed in July 2016. We went with financing it through Solar Mosaic.

I was struggling to come up with the right frame of context on how to think of the system. I can't really take my current daily generated amount, since October isn't the peak, and basically no month could be fixed. I can't take the past year, since there are gaps due to some issues with the stupid hub thing not being able to the connect with the inverters for a while, until I finally ran an ethernet cable over very close to them. So my data has holes a few months wide.

Now, in our docs it does reference an "agreed price/kWh" of $0.08187, however it doesn't fully make sense. Its listed along side the guaranteed production. And it doesn't really add up to the total system price.

What I ended up deciding to take our guaranteed kWh produced over the span of the 20 year warranty, and the total of all payments from our financing doc to calculate a baseline $/kWh. I know it may not be bulletproof, since the system could last over 20 years, but it seems reasonable enough, and after 20 years or shortly thereafter, would likely have more efficient stuff we'd be looking to move to. Heck our AC condenser is 25 years old and on our list to be replaced in spring for something much more efficient. To note, we did not put the rebate towards our loan, mostly because in 2016 we had some other tax items and in 2016 pretty much broke even with the solar tax rebates.

Our total of all payments is $68,639 ($42,791 system cost, 4.986% APR) and our guaranteed production is 237,460 kWh. This lands us with a rate of $0.289/kWh. Which is kind of depressing.

On PG&E E-1 net metering, that is ~$0.012 higher than the 101-400% over baseline rate. And on EV-A TOU rate plan, it is ~$0.05 over the part-peak rate. It is less than the peak, but with our system layout, we generate more during part peak than peak (we run at peak production 10am-2pm).

Overall it is pretty disappointing. Anyone else have thoughts around figuring their rate costs, or other experience with Solar City true cost realizations?

I've been doing more solar research, as we may want to restructure our system some or expand it, but we have a bit of a foul taste with where we are today.

 

[wwhitney]

To note, we did not put the rebate towards our loan, mostly because in 2016 we had some other tax items and in 2016 pretty much broke even with the solar tax rebates.

Our total of all payments is $68,639 ($42,791 system cost, 4.986% APR) and our guaranteed production is 237,460 kWh. This lands us with a rate of $0.289/kWh. Which is kind of depressing.

If $42,791 is your system cost before the 30% solar ITC, then even though you didn't put your tax rebate into reducing your loan, you should still consider the rebate in computing your levelized cost of electricity (LCOE). Effectively 70% of your loan is to the pay for the solar, and 30% of the loan is to finance your other 2016 tax items. So that gives you an LCOE of 70% * $0.289/kWh = $0.202/kWh.

Also, the time value of money plays a role here, so just summing up the future payments on your loan to come up with your total cost doesn't reflect the current value of that payment stream. Properly accounting for this will lower the LCOE further.

Cheers, Wayne

 

[Need]

If you use the guaranteed production, wouldn't it be like using the worst case scenario? Also with net metering (at least for SCE here), using the actual solar generation to calculate the cost doesn't really work. For example, I am using about 2800kWh last month but only generating about 1800kWh. I don't have to pay (other than the non-bypassable charges) because solar generate at peak and off-peak rate, and about 1200kWh was used at super off peak to charge the 2 Tesla's.

My solar payment would have been about $425 for a 60 months loan. So last month, my /kWh would be 425/2800 = $0.15/kWh. It would be higher in the winter months as I don't use A/C and still have to pay the same payment. I don't know what would be the average but it would probably be about $0.20/kWh for the next 5 years. It doesn't sound like a really great deal, but I would have to pay about $350 electric bill if I didn't have solar last month. So really I am only paying about $50 to $75 extra a month to get the solar. And after the first 5 years... I am clear and free... every month I will be saving $250+ if the electric rate stays the same. If the electric rate goes up... I will be saving more!

 

[invalid]

If $42,791 is your system cost before the 30% solar ITC, then even though you didn't put your tax rebate into reducing your loan, you should still consider the rebate in computing your levelized cost of electricity (LCOE). Effectively 70% of your loan is to the pay for the solar, and 30% of the loan is to finance your other 2016 tax items. So that gives you an LCOE of 70% * $0.289/kWh = $0.202/kWh.

Also, the time value of money plays a role here, so just summing up the future payments on your loan to come up with your total cost doesn't reflect the current value of that payment stream. Properly accounting for this will lower the LCOE further.

LCOE wasn't a term I'd heard before, but seems to be what I calculated myself. I'd agree that I should include the tax credit in the costs. A bit divided on the "time value of money" on most calculation, and also with the tax credit, may get 30% back, but that amount is in the loan costs and accruing finance charges. Mainly go back and forth on it since personally have a bit of a pendulum with leveraging credit vs not being leveraged.

So still counting the portion financed, looking $0.235 kWh, which is better.

If you use the guaranteed production, wouldn't it be like using the worst case scenario? Also with net metering (at least for SCE here), using the actual solar generation to calculate the cost doesn't really work. For example, I am using about 2800kWh last month but only generating about 1800kWh. I don't have to pay (other than the non-bypassable charges) because solar generate at peak and off-peak rate, and about 1200kWh was used at super off peak to charge the 2 Tesla's.

My solar payment would have been about $425 for a 60 months loan. So last month, my /kWh would be 425/2800 = $0.15/kWh. It would be higher in the winter months as I don't use A/C and still have to pay the same payment. I don't know what would be the average but it would probably be about $0.20/kWh for the next 5 years. It doesn't sound like a really great deal, but I would have to pay about $350 electric bill if I didn't have solar last month. So really I am only paying about $50 to $75 extra a month to get the solar. And after the first 5 years... I am clear and free... every month I will be saving $250+ if the electric rate stays the same. If the electric rate goes up... I will be saving more!

I'm not using or even considering calculating kWh of solar payment by the total kWh used (above you did 425 / 2800, not 1800).

The guaranteed production may be a worst case, or perhaps better called a baseline. In terms of looking forward though, the baseline is the only realistic number I can use. I can hope for 20-30% over or something, but there is no guarantee. Better to track performance and see, which is something I plan on doing going forward and have instrumented now. Also, the baseline does seem to be reasonable. The baseline has year 3 with an expected generation of 12,291 kWh or basically 33.67 kWh/day. Currently, not at peak and not at the worst, so probably a fair between stage, and yesterday I generated 32.36 kWh. So fairly in line with the average.

Monitoring wise I should have everything in place now. One thing I found frustrating was that between Solar City and PG&E, it was difficult to gauge how much power was actually be used by the house. Now have that data collected and in one place, and can track home usage by adding them together.



Next I will likely use the home consumption numbers to calculate comparable costs if all of that was from PG&E and not including solar. Then sort of have a month by month comparison.

 

[wwhitney]

but that amount is in the loan costs and accruing finance charges.
[ . . .]
So still counting the portion financed, looking $0.235 kWh, which is better.

I gather you are still attributing to the solar project the interest on the amount of your loan corresponding to the tax credit. That's not the proper accounting.

Look at it this way: if you hadn't installed the solar, you wouldn't have gotten the tax credit, and so with your other 2016 tax items, you would have owed extra tax for 2016. That would either have been money you'd have had to come up with then, or you'd have had to finance those taxes.

So by choosing to use the solar tax credit to offset your other 2016 tax items, and then borrowing the full cost of your solar system, you have effectively financed some of your 2016 taxes. That financing cost should not be allocated to the solar. Your LCOE with 0% discount rate is $0.202/kWh.

Cheers, Wayne

 

[invalid]

Damn, you're right again.

 

[Zythryn]

20 years is way too short. Most panels have a 35 year lifetime, although there is some degradation so most people use 30 years.
PVWatts maybe a good resource for you to get a closer approximation of expected annual production.

 

[mswlogo]

I think 20 years is quite reasonable and common to use.
All my solar quotes I received was based on 20 years.

We purchased our solar and we are on track to break even in 6-7 years.
After that we make money for 3-4 years. Beyond the $0 electric bill.

It's a lot of money up front though. The only way lease really pays is, when energy costs go up.

You could argue I could have made more investing that money for 20 years. But it sure feels good psychologically.
But it also adds huge resale value to the house if you decide to move.
Where a lease can be a real problem especially later in the lease.
Who will want to take over the lease for say a 10-15 year old technology?

The OP's numbers look horrible.