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August/September 2003, No. 199
“Get your Hands-On Solar”

August/September 2003, No. 199
“How to Choose a Solar Installer”

August/September 2003, No. 199
“The Solar Patriot”

August/September 2003, No. 199
“A Simple Solar Solution”

April/May 2002, No. 191
“The Case for Solar-powered Electric Tractors”

February/March 2002, No. 190
“Go Solar, Be Secure”

Grid-tied Solar Money Management

Before you decide that a solar system is right for you, it helps to calculate the payback period of a potential system. For two examples, let’s look at Mark and Kristin Sullivan’s home in Capitola, Calif.

Because the Sullivans’ home is designed so efficiently, the couple’s total energy use is so low that the house uses less power than most American homes — on average, less than 7 kilowatt-hours a day (kWh/day). In fact, the Sullivans’ power consumption stays within California’s first tier of the penalty-pricing bracket, which means they only pay 11.4 cents per kilowatt-hour for electricity — the lowest possible rate from their utility. In the Sullivans’ region, the second penalty-pricing tier doesn’t apply until their monthly consumption of grid power reaches 19.1 kWh/day in the winter and 10.4 kWh/day in the summer. Because of this, their system payback period will be longer than for a California home with more typical electricity consumption. (Go to www.MotherEarth News.com/downloads/simplesolar for details on calculating seasonal production.)

The following payback analysis assumes a 5-percent annual increase in the price of electricity after the first year. The Sullivans produce about 4.7 kWh/day of photovoltaic power and use about 1.7 kWh/day of grid power sold to them at 11.4 cents a kilowatt-hour. This means the Sullivans’ solar system earns about $196 in the first year [0.114 cents (grid price) x 4.7 kWh/day (PV production) x 365 days (year)].

Now let’s calculate how long it will take the Sullivans to pay off their grid-tied solar system. The total installed cost of the Sullivans’ system was $11,563. Without rebates, tax incentives and grants, the system would pay for itself in the 34th year. But with a $3,992 rebate from the California Energy Commission (www.consumerenergy center.org) and an $861 state tax credit, the couple paid only $6,710 for the system, which reduces the payback period to 22 years. A similar system with batteries would cost about $12,000 after rebates and incentives, and would have a payback of 41 years.

Let’s calculate the payback period for an average California home that consumes 20 kWh/day (almost three times as much electricity as the Sullivans’ home), using the same Sullivan system assumptions, including rebates and system cost. In this case, the average home would rarely step out of the lowest-priced tier during winter (19.1 kWh/ day), but would regularly step into the second and third pricing tiers during summer (10.4 kWh/day).

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