Over the past seven years solar panel installations have become more uniform, racking systems are now standardized and better and installers have gained experience and knowledge. Yet, according to the Solar Energy Industries Association prices for solar photovoltaic panel installation have fallen 63% in just the past five years. These days I could purchase solar panel array and installation through my electric cooperative, get a better installation and pay a fraction of my initial cost.
I have dealt with the effects of a poor installation and components that have proven to be less than robust in the 4 season climate of Virginia. My solar photovoltaic array has turned out to need regular maintenance and be subject to damage from snow, hail, rain, wind and roofers, and I find myself struggling to find someone to repair something on my system almost every year. Right now I am waiting for a replacement Enphase microinverter for one of the panels.
Don’t get me wrong, I like having solar panels. I feel good about reducing my net electricity use, but it turns out just like heating/air conditioning systems, well, and septic- solar panels are just another system that needs to be maintained, repaired and tended to. The difference is that I could just choose not to have solar panels and just hook up to grid through my fairly low cost electric cooperative. So the solar panels need to financially cost effective. Electricity costs me only $0.114 per kilowatt hour from our electric cooperative.
Let’s judge the system based on the cost and return both then and now. When I purchased my roof mounted solar system in 2009 (though it was not installed until May 2010) the cost per kilowatt for the system was $6,700 plus permits and installation. These days that cost is about $1,800 and may be even lower. The Piedmont Environmental Council has launched “Solarize Piedmont,” that runs through April 30th 2017. Go to pecva.org/solarize, and fill out the sign-up form to get a real estimate of the cost, but I think I could probably have the same system that cost me $58,540 installed for around $19,000 give or take.
That reduction in price goes a long way to make solar a reasonable purchase even with only the Federal and local property tax incentives. When I installed my panels I was able to obtain a state rebate of $12,000 which is no longer available in Virginia. I also used the 30% federal tax credit which is still available. The net cost of the solar system in 2010 after rebates and tax credits was $32,578 today it would be about $13,300 for the same 7.36 kilowatt system.
There is also a property tax exemption in Prince William County (and most counties in Virginia). The exemption is based on the Energy Efficient Buildings Tax Exemption (Code of VA §58.1-3221.2) which allows any county, city, or town to exempt or partially exempt energy efficient buildings from local property taxes. The amount of the exemption is based on the installed cost of solar array. I applied for the exemption last winter and was approved so my property assessment will be reduced for five years by the cost of my solar array. Based on the county property tax rate for last year that translates to a savings of $656.82 each of the 5 years.
A large portion of my return is from something called a SREC, a solar renewable energy credit. A SREC is a credit for each megawatt hours of electricity that is produced, but used elsewhere. SRECs have value only because some states have solar set asides from their Renewable Portfolio Standards, RPS, which require that a portion of energy produced by a utility be produced by renewable power. Right now there are no RPS solar requirements in Virginia, thus no value to SRECs beyond the $10-$15 that a RPS credit is worth.
When I installed my system it was eligible to sell SRECs in Pennsylvania and Washington DC. I registered my Virginia based solar array in the both markets in July 2010 though only Pennsylvania was viable at the time. The Pennsylvania market then collapsed due to regulatory changes after the market was flooded with SRECs, but the District of Columbia increased their RPS solar requirement and financial penalties in 2011 and closed their market to out-of-state systems registered after January 31st 2011 from participating in the DC SREC Market. My system was grandfathered. DC has a favorable regulatory market if you are selling SRECs with robust price supports and is currently the only under-supplied SREC market in the nation. Washington DC is a city with limited non-governmental buildings and no available private land beyond the reservoirs and Blue Plains waste water treatment plant. Luck and geography will probably let SRECs pay off my solar panels in about 18-24 more months from now despite having spent almost $3,800 on repairs not covered by warrantee.
The dollar value of the power I generate from my solar panels is about $1,100 per year based on actual performance. The savings from electricity produced, federal tax rebate, and property tax exemption would take about ten and a half years to pay back the cost outlay today. Even with all the hassles of being an early adopter the incentives I was able to obtain will likely give me a very good return on my investment. My SRECs potentially have some value until 2025 though, based on how the penalties on the solar RPS are structured they will decrease in value over the next few years. The power produced by the panels may be more valuable if the price of electricity ever goes up. Once the system is paid for, I plan to save any additional money from SRECs for the future replacement of the system and my roof. I am planning on that in 2035. Next system I will ground mount easier access for repairs and maintenance.