The Small Home, Big Decisions series follows Jennifer and her husband, Tyler, as they build a self-reliant homestead on a piece of country property in northeastern Kansas. The series will delve into questions that arise during their building process and the decisions they make along the way. The posts are a work in progress, written as their home-building adventure unfolds.
To lessen our dependence on oil, coal, and the large, monopolistic companies that control these energy interests, we are dedicated to incorporating renewable energy into our future home. We covered which renewable energy options we’re considering for our home in an earlier post; now, we’re really breaking down the financial aspects of each option. No matter our commitment to solar and wind power, we have to be able to pay for the system to make it a reality. We have been working with Good Energy Solutions to create a home-scale, hybrid solar and wind power system. A consultant from the company came out and looked at our property, got specifics on our home size and orientation, and then compiled a bid for a few different system options. The ball is now in our court to make a selection of which system — how big, which solar panel company, etc. — we want to install. Sounds pretty straightforward, right?
The truth is, these initial bid numbers are just one piece of the financial puzzle. First, we also want to take into account the pros and cons of putting the system onto our home mortgage. In an ideal situation, the portion of our monthly mortgage payment that would cover our renewable system costs would be less than our energy bill would be if we were to pay for electricity from the grid instead of install our renewable system. We’d be "in the green" both financially and in practice from the outset. However, this would mean that we’d need to trim enough out of our current house budget to add in the cost of the energy system — not an easy task. Also, we’d be paying interest on the system purchase to the bank, which means the ultimate payback period of the system would be longer.
Second, federal renewable energy installation tax credits are available. This tax credit is for residential installations of solar and wind energy systems, as well as several other types of renewable energy. How it works: A homeowner pays to install a qualifying system, and then claims a 30 percent rebate for the qualifying cost on the following year’s taxes. So, to take advantage of this, we’d need to be able to cover the total cost of the system, either out of pocket or with our home mortgage, until we filed our taxes and received our rebate from the government.
Third, the availability of net metering, so homeowners can "sell" any power their renewable energy system produces back to the grid, is not available in all states. In Kansas, we do have net metering in place, however, the company that runs our electricity (Westar Energy) limits the payback benefits. In a nutshell, Westar will pay us for any excess power that we generate and provide back to the grid at whatever it would have cost them to produce it, not at the full price we would be paying for any energy we need should we under-produce. This means it's not really economically smart to try and produce a bunch of extra energy, and Good Energy Solutions would work with us to size the system to be as close to our needs as possible, instead of just as big as possible.
Fourth, state policies and legislation can also impact the payback period of a renewable energy solution. Currently, Westar Energy is seeking a request for new financial setups for households with solar panels as part of their proposed rate increase due later this year. While the company is claiming it wants to “offer more payment options for customers,” both of the options would increase the monthly rates of energy-producing households pretty significantly. If this request is approved, the new plans would roll out in late October of this year, which means we will need to decide before then what we’re going to do, ideally, in order qualify under the older, less expensive plan.
If all goes as we hope, when we move in to our new home, a Pika wind turbine will be up on the hill behind our house and SunPower solar panels will be installed on our roof. An average U.S. home of our size would use about 10,000 kWh of energy each year, but we likely will use less based on our lifestyle. We could always start smaller and build up if we cannot financially support the full system upfront or if we decide we need more than we initially included. Stay tuned: As our energy choices become more solidified, we’ll share with you what we learn.
Photo of Pika wind turbine from Chip Means.
Jennifer Kongs is the Managing Editor at MOTHER EARTH NEWS magazine. When she’s not working at the magazine, she’s likely in her garden, on the local running trails or in her kitchen instead. You can connect directly with Jennifer and Tyler by leaving a comment below!