I’m Saving $200 A Month With Solar

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When we bought our home a few years ago, we brainstormed on all the ways we could save money.  Replacing the non-working A/C and furnace with an energy-efficient model.  Check.  Replacing the windows from 1972 with dual-pane Low “e” glass.  Check.  Top off the attic insulation with blown-in insulation.  Check.  Add solar panels to our roof to lower or eliminate our electricity bill.  Whoa!  That’s a LOT of money.

And, so we waited for a year as we paid off the A/C, furnace, and windows.  We did our research on the pros and cons of buying vs. leasing, the companies that offered solar, and whether or not it would benefit us.

After investigating several companies (such as Sungevity, Verengo, Costco, and SunPower), we chose to go with SolarCity because they offered the best terms.

Good Thing We Waited

Anytime you make a major move, like buying a house, you won’t fully realize the impact financially until you’ve gone through a full calendar year.  We weren’t sure of A/C bills during the summer and heating bills during the winter.  And, since we moved from LA County to Orange County when we bought our home, how would changing utility providers affect our monthly bills?

We thought we had a good handle on our bills, so we signed up with SolarCity in late-January 2011.  We knew we’d have a full year to ensure we made the right decision because we live in Anaheim, and they have their own utility company, so their rules are different.  Their application window for generous rebates only opens once a year in early-January.  We had missed the window by 2 weeks.  Oh well, at least we’re first in line for next year, we though.

Well, we thought we signed up.  January 2012 came around, and we don’t hear from the company.  We were busy with our almost 1-year old son, so we weren’t focused on it.  Finally, around September 2012, I come across the paperwork again.  I call to find out what happened.  Turns out that the person we signed up with had left the company and never finished our paperwork, so it sat at his desk untouched and unnoticed.  What the heck?!?!

It actually worked out for the best for our family because we bought a Chevrolet Volt in July 2012.  We’re saving a TON of money on gas, but our electricity bill obviously went up.

By my calculations, our average monthly bill was $138 before we got the Volt and that went up to an average of $250; an increase of $112 per month.  With our average mpg of 140 over the last 16 months, we surely profited from that transaction.  Our usage went up by 348 kwH per month, which meant that we needed a bigger system if we were to reduce our electricity usage down to the “basic” tier, which charges the lowest rate.

How Did Things Work Out?

The good people at SolarCity made a bad situation right by honoring the previous pricing and had us signed up properly this time!  They even allowed for the larger system given the Volt purchase and increased A/C and heat usage with our newborn.  (You can be sure I followed up first thing January 2013 to be sure!  Thanks Google Calendar for the reminder!!!)

Our system was approved by the city’s utility company, so we waited for our plans to be finalized.

The system was installed at the end of May.  And it has been awesome!

What Have Our Bills Been Since?

A couple of our friends have been able to eliminate their bills entirely.  We haven’t for a few reasons:

  • We drive the Volt as much as possible around town, which reduces our gas consumption (and extends the life of our Tahoe Hybrid), but increases our electricity usage.
  • I like being comfortable, so I often have the A/C set at 74, or even 72.
  • We have a pool, and you have to run the motor for 6-8 hours a day.

Our bills have still been nothing short of tremendous!

Our average, even during the five hottest months of the year – June, July, August, September, and October has been $54, which is $196 lower than before!!!  Our October bill was only $31.

Electricity bill 2013-10

And our electricity production has been awesome!

SolarCity production 2013-11-20As you can imagine, the production will drop during the winter months, but so will our usage of A/C.

What Does It Cost To Get Solar?

The all important question.  Yeah, so we’re saving $200 a month… if it costs $300 a month, it’s not a good deal.  When evaluating a deal, you always have to look at the net impact, not just what you’re saving.

So, SolarCity offers a few different options:

  • You can buy it… which I don’t recommend.  I’d rather they continue to own it and be liable for any repairs and maintenance.  Plus, if they own it, as a business, they get to depreciate it (aka write off the value on their taxes), which allows them to pass some savings on to you!
  • You can do a traditional lease.  In our case, the traditional lease would have been about $100 a month for 20 years.  Or, approximately $24,000 in total lease payments.
  • You can do a pre-paid lease.  If you have access to the money, this is your best option!  Ours was about $12,000, or about half of what it would have cost us to make small monthly payments.

Now, with the savings of $200 a month, I put that into a savings account in order to pay myself back.  Eventually, I’ll redeploy that money into something that will earn better returns than the sub-1% that online savings accounts (like Capital One – formerly ING Direct) pay today.

Conclusion

Adding solar panels to your home can be a great idea, but it doesn’t work for everyone.  Some of my friends were interested, but their electricity bills were too low for the math to work.  I’d suggest that you explore the various companies to see if solar will work for you.  If it does, please comment below and let me know your experiences… good and bad.

 


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1 COMMENT

  1. I came upon this article through Nords’ “The Military Guide to Financial Independence and Retirement” FB account…and reading through it reminded me of a similar analysis my wife and I went through before pulling the trigger on a pre-paid lease with SolarCity as well. The 20-year pre-paid lease appealed to us for a few reasons which you’ve already pointed out, namely: Maintenance and responsibility for said maintenance is SolarCity’s; being in the military, we couldn’t take advantage of generous state rebates since we were not residents so buying had less appeal; wasn’t too keen on “purchasing” a depreciating asset since advances in manufacturing and technology should make going solar cheaper in the future.
    We had a solar water heater already installed in our house, so we knew the value of solar. With our electric bill averaging about $130 a month prior to solar panels, we opted have enough panels installed to “zero out” our utility bills…but since our Electric Company has a connection fee, we effectively only had to pay for the connection fee of $17 per month. We would be paying an average of $0.083 per kWh for the next 20 years vice HECO’s current price of $0.308 per kWh (and expected to rise)…talk about an inflation hedge. The beauty of it is, since we’ve build up credit and have had more electricity pumped into the grid than we were using, we actually received a credit for this month’s bill and only paid $9 last month.

    • Thanks for writing Mel! Doug is a great friend and such an awesome source of information. I’m glad you are experiencing value from your solar installation. I was hoping we, too, would have zeroed out our electricity bill, but I’m a big fan of being comfortable and setting the A/C at 72* rather than just being “less miserable” and setting it to 76* or 78*. I figure if I’m going to spend a little money, I want to make sure I enjoy it!

      As people complain about the price of gasoline and utility bills, it is a great feeling knowing that I’m using less and less of each every year. We also had a whole house fan installed in September 2013, so I think that will really help keep our usage to a minimum as well.

      When our pool pump finally burns out, we’ll pay extra for the multi-cycle motor which I hear is a huge energy saver. A couple of friends said that they’ve installed one and really noticed a difference in their monthly bills. I haven’t investigated it enough yet to determine whether it makes sense to replace now vs. waiting until the motors burns out and replacing it then.

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