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With the limited Winter daylight hours and snow, my panels aren’t producing as much as they do at other times of the year, but I wanted to take some time to share my experience with the actual economics of my solar system so far.
If you’ve been following along, you’ll recall that my Solar System started up on February 23, 2015, a little over 22 months ago.
My system consists of 69 panels at 255W each for a total of 17.6kW (more specs on the system can be found on my Solar Generation page)
Solar Pricing
Massachusetts Electricity prices having been going up about 9.5% year over year since 2008. When I started with SolarCity, my electricity price was $0.1627/kWh including delivery, supply & taxes. Prices have continued to climb:
The state went through a fun over-inflation and correction period in 2015, but the current rate I’m paying for electric is $0.1906/kWh (all in again) with the best supplier I can find.
SolarCity prices their Power Purchase Agreement (PPA) prices based on your current electricity usage and costs and other rates in the area. I had a number of options when I signed up including a variable rate, a fixed rate and a (discouraged) outright purchase. I chose to do a 20 year fixed rate plan at $0.1420/kWh.
The way the PPA plan works is that I pay $0.1420 for every kWh generated by the SolarCity panels. The kWh they generate offsets the electricity I would consume and so the savings is the difference or $0.0207/kWh initially, or about 13%. With today’s electricity price my savings is $0.0486/kWh or about 25% thanks to the rise in electricity prices.
Savings only get better over time.
There were no costs for installation or anything else, so my entire cost is based on $0.1420/kWh times the amount of power I’ve generated.
Solar Costs
In the last 22 months, I’ve generated a whopping 33.8 MWh (33,800 kWh) of power:
My cost for that was $4,800. The SolarCity bill goes up and down depending on daylight hours, weather etc:
In that same period, my Electric company reported that I used 23,800 kWh of power. Since the solar power offsets that, my actual power use for those 22 months was 57,600 kWh — I use a lot of power between my Tesla, Pool, A/C and other things!
About 59% of the power I need for my house and my Tesla comes from my SolarCity system. I wanted a system that could cover 100% of my needs but National Grid (local electric company) blocked that.
For the 23,800 kWh I purchased from the Electric company I paid $4,595, or $0.1930/kWh (averaged over the 22 months).
My total electric cost (money paid to electric company and to SolarCity) for the 22 months was $9,395 or about $427/month.
I use a lot of power between my Tesla, Pool, A/C and other things! 59% of it is provided by the sun.
Solar Savings
When I started with SolarCity, they provided a $1,000 signup bonus if you signed up after buying a Tesla. Since I did that, they sent me a check for $1,000.
Back then, if you referred others, they sent you $250 for each person that signed up for a new system. I did one of those and got a check for $250.
So I started 22 months ago with no money down and $1,250 in my pocket and a nice new solar system on my house. Not a bad start!
Had I purchased all my power from my electricity company at the average of $0.1930/kWh it would have cost me a total of $11,117. But thanks to SolarCity, my total cost was $9,395, so my savings was $1,722 over the 22 months.
My savings was $1,722 over the 22 months
That savings and benefit will continue to grow over the next 20 years as the electric company continues to jack their rates.
Solarcity underestimates the savings they provide as they base it on the initial electricity rate they quoted you at. Those rates climb over time in areas like mine so these little savings dashboards are wrong:
I’ve saved more than twice that!
Now, if we add in the referral checks, my savings goes up to $2,972. The referrals don’t necessarily scale over time and they keep changing the program, but here are my results so far:
Summary
For no money down and no risk, I’ve saved about $3,000 in just under 2 years (27% of what I would have paid) while generating green energy and taking some load off an overloaded power grid.
When I did the math before signing up I knew the system would be a good deal and I’m very happy to see the results proving out. Since I’m on the power purchase program I don’t have to worry about equipment depreciation, loss in solar cell effectiveness over time (I only pay for what they generate) or a whole slew of other things. By the time my plan is up, much better systems will be available.
If you’re interested in exploring Solar power for your house, here’s my referral link to get started. SolarCity will do a free analysis of your situation and let you know if a solar system may work for you:
share.solarcity.com/teslaliving
May the Sun be with you!
I strongly encourage folks to buy their solar panels. They are really quite trouble free. Yes my first inverter broke under warranty, but that would have been a hassle if it was a lease too. The “please come and fix” hassle regardless.
Now after 10 years, all my electricity is FREE…..
Solar panels themselves don’t really have any moving parts and are under warranty for 25 years.
It is a better bang for the buck in the long run.
Solar panels are supposed to lose efficiency over time. Plus more efficient panels are being developed. There’s also the whole time value of money calculation I would have had to do to see if it would have made sense to purchase. When I looked at the numbers the outright purchase didn’t make sense (plus plopping down another $100K+ after buying the Tesla wasn’t appealing)
Whether one owns or “leases” solar panels the degradation in efficiency will mean buying power from the electric company. Now that SolarCity, and most other solar companies, partner with lenders purchase is the way to go. Their model is to be a bill swap for 20 year financing and double the cost on a 10 year note. If one can realize the tax credit it is the way to go. The real secret in a PPA is the buyout. I assume most homeowners will purchase their systems toward the 20 year mark. Free power after that!
I do have a question about your graph on the increase of electricity. Can you provide the source? According to what I have found on the Energy Information Administration’s website residential Massachusetts rates have gone up only 4.31% from q3 2008 through q3 2016.
source:
http://www.eia.gov/electricity/data/browser/#/topic/7?agg=0,1&geo=002&endsec=8&freq=Q&start=200803&end=201603&chartindexed=1&ctype=linechart<ype=pin&columnvalues=0&rtype=s&maptype=0&rse=0&pin=
Bill swap wouldn’t do the job without savings, so they need to do that too. But, I agree, a loan in the same format would have done the job. Before, you basically had to come up with the $150K (for my size install) on your own with little lending help. Now there are other (better?) options.
For the electric prices, those are directly from my actual electric bills from National Grid, not some online source.
Turns into this table:
Average for Year Increase Y/Y
2008 0.1229
2009 0.1256 2.2%
2010 0.1485 18.2%
2011 0.1474 -0.7%
2012 0.1488 0.9%
2013 0.1606 7.9%
2014 0.1764 9.9%
2015 0.2018 25.7%
2016 0.1815 13.0%
2017 0.1906 8.0%
I think this is the route im going to go when i get my new home. I think i have a pretty good understanding on how this whole thing works but one thing i cant seem to understand. How does the “annual escalator” work? does your rate always go up by 2.9% or can it be less than that? How much has it gone up for you?
Yes, I think its a standard 2.9% rate increase each year. Still less than what the electric company does on average, but it’s a fixed increase each year. I went with the flat rate option.