Is Solar Worth It? DIY Grid-Tie Solar Costs & Payback Times

Is solar worth it financially?

Solar power is all the buzz at the moment but it still represents a hefty investment for most home-owners. This post presents one man’s view and reflections about his own DIY grid-tie solar system. The results of his financial analysis clearly show what the vast majority of people report:

Domestic solar panels are well-worth the investment of between 2 to 3 dollars per watt. It is worth it from an environmental point of view, reducing carbon-dioxide and also worth it as a money-saving investment, with zero energy bills, 12 to 14% ROI and 7 to 10 year payback period.

Are solar panels worth it in my state?
Is solar worth it for the average home-owner?

The big question is ‘was it worth it to get solar‘?

Well to answer that in this video I’m going to show you the secret of how we get away without paying for electricity and our solar production numbers. I’m going to go over the five main categories of solar expenses and show you what I bought, how much it cost and how I calculated my rate of return.

Finally, I’m going to show you how much I saved by doing this myself. First, how do we get away without paying for electricity? Well, the journey begins right here – understanding how much electricity we use. Here’s one of our electric bills before we got solar and I’d say this is close to average for us for the year.

Before getting solar we were paying about 181 dollars a month, which includes heating and cooling our house. PV watts is a helpful online tool to get a rough estimate how much power you could produce at your location. After I put in all the information from my house it gave me a whole range of what was reasonable to expect.

I also used other online modelling tools, like PV sketch and Solar Edge and I got a whole range of numbers. Solar Edge was actually on the high end – close to 21 000 kilowatt hours a year. This is exciting because it gave me the confidence that I could get to net zero and if i did the project myself I could see some big savings, so i decided to go for it.

Are solar panels worth it?

After getting the permits, buying everything and installing it, i was eager to see if those original estimates would match reality. I’d be really disappointed after all that time, money and energy. If those electric bills didn’t go to zero like I expected. I even spent on the high end of my budget to get premium Panasonic panels that enabled me to maximize the solar on my roof, so this had better be worth it!

It’s important to mention here that you have two main options with solar. You can get a grid tie system, where you’re still connected to the power grid, or you can get an off-grid system, when you’re only using batteries for storage. In my setup here, it is a grid tie system and I don’t have any batteries.

You might ask ‘what do you do when it’s dark’? That’s a great question. I draw power from the power company whenever it’s dark, but what makes this financially worth it is something called ‘net metering’.

In Pennsylvania what this means is I get credit on my power bill whenever I make extra power, so the power company is sort of like my battery bank. It allows me to store up all the summer sun and all the excess that I make so that in the winter time, or when it’s dark, I’m drawing from that credit. It’s a pretty sweet setup, even though I installed the system about two years ago I am still amazed at how accurate the modelling was.

Here’s a report from the past calendar year. You can see I have two inverters, and what each produced, and in total the 48 solar panels produced over 19 371 kilowatt hours. Again, I think this is amazing, because the number is right in line with all those estimates I got beforehand.

The lowest estimate was 18 500 and the highest was just over 21 000. Incredibly, with weather changes, snow, shade and debris in my panels, the actual production number was almost directly in the middle. Let’s talk about how much I pay per month.

Here are a few bills from last year one for zero dollars. Another for four and another for seven dollars, and actually seven dollars is the normal monthly amount. Here’s a screenshot from my phone for the past three months over winter and you can see it’s about seven dollars per month.

To be connected to the power grid to supply me with power when it’s dark it costs about seven dollars a month or about eighty four dollars a year, but there are two important ways that I earn money from solar that offset that cost. The first is one of the benefits of net metering. Remember I mentioned I get a credit built up on my bill?

In mid-December i have about 5000 kilowatt hours banked up. This number goes down throughout the winter and if I have an extra kilowatt hour spend credit when May comes around, the power company pays me for the extra as a financial credit on my bill and i start back at zero.

Last may we had 315 kilowatt hours left over and I got a credit of about 17. Not much, but it’s something. The bigger financial piece is the second one, which is a different kind of solar credit – Solar Renewable Energy Certificate or SREC. Most states in the us have net metering but not all states have an SREC program. Here’s how it works:

For every 1000 kilowatt hours produced by solar I get one certificate or one credit. I’m then able to sell these credits on a marketplace. Here’s one that I’ve used before called Flat Exchange. In the state there’s a supply and demand for SREC. Prices can fluctuate.

For example, the highest I ever got for an SREC was 40 and the lowest I got was 19. last year my system made 19SRECs and i sold them for an average price of about 27, which means I made just over 500 dollars from selling SRECs .

If I subtract off that 7 dollar monthly charge or that 84 dollar a year charge, that means not only did I not pay for electricity last year, but I made roughly 400 dollars. If you’re thinking about going solar, make sure you know about SREC, net metering or other incentives available where you live.

A solar installation can be broken down into five main categories. The first one is permits and interconnection to the grid. The biggest thing you need for grid tied solar array is a grid. You may not like all the paperwork but the bottom line is you need the power grid and you need their permission to connect your solar panels to their grid.

For me, all that paperwork, understanding the national electric code, making the plan set, believe it or not was actually one of the hardest parts of this whole DIY process for me. I ended up spending about 722 dollars for those fees and the application to connect to the grid.

The second category is sometimes called ‘balance of service‘. This means all the wires, connectors, conduit, special tools and all the small parts. It also included what I paid my electrician to do that final grid connection to the meter. For all of that I spent about 1500 dollars. The third category is racking, or how you plan to mount your panels.

I had to put them up on the roof, so this includes the flashing, the mounts, the aluminum rails and all the associated hardware. For all of that I spent a little bit more than 2300 dollars.

The fourth category are the inverters. The main role of these guys is to convert direct current to alternating current. I have a solar edge system – each one of these inverters is connected to 24 power optimizers, one per solar panel. This enables me to monitor the output of each panel as well as it makes the system more efficient.

For 2 inverters and 48 power optimizers I spend a bunch and finally there are the solar panels themselves. There are a ton of different options for panels. They all have different power outputs, different physical dimensions, among other things and for me I really wanted to get hundred percent of our electric bill covered.

With my roof of a certain size, it did limit my options. I was originally going to go with a less expensive brand and then I switched to a higher end Panasonic panel when i saw them on sale. I figured it was worth spending a little bit more for them. These panels have a 19.4 percent efficiency. They perform very well in hot weather and the performance warranty is outstanding.

These panels are warranted to produce no less than 91 of their original output even after 25 years and I’ve been really happy with them so far. If we add all this up my total in the five categories is just under 23 000 dollars.

I qualified for the 30% tax credit, so that takes me down to about 16 000 dollars. Before solar i was paying about 2100 dollars a year, not including that seven dollar a month charge. Without adding the income from the SREC I’m looking at about a 13% annual ROI.

If we do add in that 513 dollars of SREC income, that number goes up above 16% ROI. This also would give me a payback period of about six years. Future electricity and SREC prices could change these calculations. For example, if SREC prices go back to the 40 level, my payback gets closer to 5 years. If they go lower than 19, my payback is closer to 7 years.

How much did I save by installing solar myself? When I did DIY solar I sort of did it the crazy way. Tons of research, talked to a lot of people and figured out how to pull it all together without getting hurt or breaking my house. To get a sense of the savings, it’s helpful to use the price per kilowatt.

However, prices widely fluctuate all the time. Equipment isn’t always the same. It’s not all apples to apples, so I wouldn’t use my figures as your main measuring stick. I spent just under 23 000 dollars for a 15.6 kilowatt system. That’s about 1.47 dollars a watt. For a similar system, a local installer quoted me a price of 2.54 cents a watt, so if you take the difference I save roughly 16.5 thousand dollars doing it myself.

If you factor in the tax credit, I saved about 12000 dollars installing solar myself. This project was so much fun and it’s awesome to see these panels produce so closely to those original projections. It’s also been great financially.

One of the ways I like to think about this investment is like I bought a rental property and I put it up here on the roof. It earns about 14% a year, has no late payments and almost no maintenance.

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