The Ward Family Does Not Lose Power - the Generator and Lightning Protection

Like my husband Stephen Moore is an economist. Mr. Moore is also a journalist and recently published an article "When The Moore Family Lost Power."  It is an interesting opinion piece, but I'm an engineer and I think you should do something to ensure that we have electricity, sewage and water- not just talk about it.

When I lived in California I became obsessed with water (okay, water and earthquakes). I maintained a constantly rotated supply of 40 gallons of fresh water at all times and read the precipitation and snow pack levels daily. The average annual precipitation in California is about 23 inches (DWR 1998), but rainfall varies greatly across the state from more than 140 inches in the northwestern California to less than 4 inches in the southern cities where all the people live. California has 1,200 miles of canals and nearly 50 reservoirs-the largest water storage and transportation system in the world that captures enough water to irrigate about four million acres and provide water to 23 million people. Even with this extensive management system there are limits to the water supply; Californian are facing the failure their water- network, due to age and lack of maintenance, growth in population and demand, mining of the groundwater, and the potentially far-reaching effects of climate change. Each new drought is a crisis. For at least twenty years California has failed to plan for the inevitable and easily imagined future.

I could never convince my neighbors of the importance of planning for the future, preventative maintenance and maintaining of our infrastructure. So, when my husband wanted to retire and suggested we look around for a place to live-my criteria was water, location where a mild temperature increase would not be devastating and high speed Internet. My husband was born and breed in Virginia and in truth there was little chance of us retiring anywhere else. Fortunately, based on several different predictions, the eastern slope of the Piedmont region of Virginia is a climate change sweet spot. It was predicted to get wetter and warmer (like the Carolinas), has a moderate four season climate with lots of available water in the Culpeper Groundwater Basin and average annual rainfall of over 44 inches a year. (Virginia’s earthquake last year was quite the surprise, but did no damage here.) We found ourselves a foreclosure with a private well with an excellent recharge rate and good water ($1,600 of water tests before purchase verified those facts) and set to work improving the home and making it more sustainable, secure and self-reliant. I test my water annually to make sure that the water remains good. I can control only my own behavior and my private infrastructure.

My Generac Guardian under my deck

Without electricity I have no water, no septic and my freezer containing a quarter of a cow (grass fed sustainably raised down the pike) is in danger of spoiling, my carefully laid down wine is in danger of being damaged and my life generally disrupted with the loss of the all the modern conveniences. So five years ago when we first bought the house, I had a Guardian 16 kilowatt automatic generator manufactured by Generac installed. When the power to the house is cut, the generator automatically kicks in to power most of the house in about 20 seconds. (Generac advertises that the new generators come on-line in 10 seconds.) I had the generator installed so that the backup power automatically turns on. The generator runs on liquid propane from a tank buried in my yard that also powers my hot water heater, backup furnace, gas grill and stove. The generator can supply the house for 23 or more days depending on whether the gas furnace is running, and is housed in a lovely insulated aluminum casing under my deck (muffling the sound) and looking good as new even after five years of sitting outside. (Note that if the generator runs more than a few days especially when new it will need oil.) The generator works great, though during a recent power outage in our area, the DVR took a couple of minutes to reload the program we were watching, the internet was back almost immediately. Over the years we’ve adjusted the load a few times, but we are never without power.  The generator is serviced annually by the electrician who installed it and my propane tank is never allowed to fall under 50% full. The propane tank has a very readable gage on it. Consumer Reports has a buyers guide for generators. 

The house also has a large south facing roof span. So in addition to the generator, I also have 7.36 KW gross, 6.2 KW PTC of Photovoltaic Solar panels on my roof. However, the panels are connected to the grid so that when the grid goes down, the solar panels do not supply power to the house. I would have to have a back-up battery and different configuration for the inverters. The solar panels have proved very reliable and actually produce slightly more power than predicted by the PV-Watts program. If electrical power were to become unreliable in my little pocket of the NOVEC service area, I would consider converting my PV solar system to directly powering the house. It turns out that except for the heat and air conditioning the solar panels can pretty much power the house on most days.

When I finished my basement and installed the elevator that makes it possible for those who can no longer climb steps to live in this house, I installed a secondary sump pump utilizing the elevator shaft (installed a couple of feet below the basement) as the natural drainage point. The elevator is one of many handicap features I’ve installed in this house. Each change or improvement is intended to be sustainable and accessible. Even if we did not need an elevator when we moved in, this is a retirement home and we will all be old and infirmed one day-plan for it. The sump pumps are also tied into the generator. Power is most likely to fail just when you need a sump pump. The sump pumps are tested and run each spring when I drain the hot water heater. The house has good natural drainage and I am not aware of the sump pumps ever needing to operate, but I have them. The elevator is greased, tightened and serviced twice a year and the type of elevator was chosen for its durable design.

Tying the solar panels into the lightning protection system

Installing an Air Terminal

It is large storms that tend to bring down the power around here. Generally speaking lightning strikes are geographically concentrated in the southeast, south and mid-west. Until we moved to Virginia (with an annual average of 344,702 lightning strikes a year and likely to increase with climate change) from California, I had not thought much about lightning. However, the fire that resulted from a lightning strike at my neighbor’s house convinced me that my husband was right and lightning protection (and whole house surge collar) was something we should buy. The air within a lightning strike can reach 50,000 degrees Fahrenheit, and one lightning stroke can generate between 100 million and 1 billion volts of electricity frying every computer and electrical appliance in the house. Lightning is still a major cause of building fires, even though highly effective (though not perfect) protection has long been available. 

The National Fire Protection Association, NFPA, established the American standard for installation of lightning protection systems now known as NFPA 780 in 1904.  Installation of a system in conformance with NFPA 780 can cost thousands of dollars depending on the size and shape of the house. To provide effective protection, a lightning protection system must include a sufficient number of rods with tips exposed and extending above the structure. These lightning rods, called air terminals become the preferred strike receptor for a descending step leader from the thundercloud. That rapidly-varying lightning current must then be carried away from the building into the earth through a down conductor system that will provide the path of least resistance and impedance to the flow of current and prevent "side flashes" to other objects in the vicinity of the system. All nearby metal components of the structure (solar panels, generator, roof vents, water pipes etc.) must be properly connected to the down-conductor system to ensure the flow of current to the earth. I will never really know if I needed a lightning protection system. So far, the major benefit is I’m very relaxed and sleep well during lightning storms and I am satisfied that preventing the small probability of losing all my appliances and electronics is worth the price.

In the United States we have failed to plan for the future, to properly value and maintain 24/7 water, sewer, electricity and phone. This infrastructure needs to be maintained and improved constantly replaced no mechanical component has an infinite life span. Water, sanitary sewers or septic, electricity and phone and Internet service are not a birth right. We have failed to spend our money on maintaining the infrastructure we have and to fund the commitments we have made. The likely future is one with more and extended power outages, water supply disruptions and other failures. Think about it. The Moore family might, but the Ward family does not lose power.   

Solar incentives and Other Market Distortions

The government in its wisdom has determined that solar, wind and geothermal sources of renewable energy are to be encouraged either to prevent global warming or for energy independence. Tax incentives and rebates targeted at end users were created to encourage the adoption of inefficient and costly technologies like solar panels. To purchase and install a 7.36 KW solar array consisting of 32 Sharp 230 watt solar panels, 32 Enphase micro-inverters and mounts was $57,040. The engineering and permits cost $1,500 for a grand total of $58,540 out of pocket. A rough estimate using the DOE model of my savings on electricity is $1,400 per year. That is an under 2.4% return on my investment each year. Not a very attractive investment. To encourage the solar voltaic industry, the federal and state government offered incentives.

The 7.36 KW are equivalent to 6.2 KW PTC. I managed to reserve 6 KW PTC Renewable Energy Rebates from Virginia and on completion of installation, inspection by the county, and sign-off by my power company, NOVC, I filed my paperwork with the state and received my renewable energy rebate of $12,000 from Virginia. This payment may or not be taxable income. When I file my federal tax returns at the end of the year, I will have to fill out a special form and maintain copies of all the documentation for my federal tax returns as well as evidence that Virginia paid my Renewable Energy Rebate to obtain my 30% tax credit of $17,562. Thus, from the original installation cost of $58,540 I subtract the Virginia Renewable Energy Rebate of $12,000 and the 30% tax credit of $17,562 and my total out of pocket cost for my solar system after the first year is $28,978. which ups my return on investment to almost 5% a year.

In addition, some state governments have required electricity distributors to take measures to reduce the amount of fossil fuel used to generate electricity and increase the amount of renewable energy used within their energy mix. This is called the Renewable Portfolio Standard and utilities can meet their requirements by either investing in renewable technology directly, or purchasing the renewable energy credits from others. Power generated by renewable energy sources (like my solar photovoltaic system) is tracked by a state created authority and given a certificate of production. Then, the Solar Renewable Energy Credit, SREC, can be traded on the open market to allow utilities to meet their Renewable Portfolio Standard, RPS, that are required to offset their carbon-emissions. A SREC is not electricity, it is a credit for energy produced and used elsewhere. SRECs have value only because RPSs require that a portion of energy produced by a utility be produced by renewable power.

Utilities in the state buy SRECs from solar installation producers. It is a way for states to ensure that the upfront cost of solar power is recovered from utility companies (and ultimately from the consumers). Some states, like New Jersey and Maryland, require their utilities to buy SRECs only from residents of their states creating a closed market where the price is kept high. Other states, like Virginia, have no current RPS requirement. Still other states, like Pennsylvania allow their utilities to buy their RPS from any resident within the PJM regional transmission organization. The power in the grid is purchased and sold on a regional basis, so I suppose there is some logic to a regional SREC market. This is a virtual market place where virtual commodities are sold by virtual companies. Only accounting entries change hands in this market.
In order to produce SRECs, a solar system must first be certified by state regulatory agencies, usually public service commissions or public utility commissions, and then registered with the state authorized registry that creates and tracks SRECs. Once a solar system is certified with the state agency and registered with a registry such as PJM GATS, SRECs can be issued using either an estimate table or actual meter readings depending upon state regulations and the type of meter used. My solar meter has to be manually read, and thought the power production of my panels can be monitored online; the PJM GATS uses estimated production for residential installations. In most cases, smaller installations are able to use estimates, while actual meter readings are required for large installations.

Within the PJM (where my house is located) I can currently sell my SRECs to utilities in Pennsylvania and Washington, DC. I can sell my SRECs on the spot market or I can shop for a long-term SREC contract. The discount for a long term contract is huge because the market is not well established and potentially risky. The value of SRECs will go up and down depending on the supply and demand as determined by the number of solar installations, states requiring RPS, and states allowing sale within the PJM regional transmission organizations. RPS requirements are currently set to increase over time, but regulations can change. SRECs in Pennsylvania have ranged from $200-$300 per megawatt hour. So after having my system qualified in Pennsylvania, I could earn an additional $2,000-$3,000 a year for 15 years or as long as the demand for RPS lasts which ever is less. Under the federal incentives (what my husband lovingly calls Al Gore funny money) I can sell SRECs for 15 years assuming that there remains a market for SRECs in the future. So my return on investment could double or triple depending on the value of the SRECs.

SRECs are not physical entities, but merely a credit for having made power (I used all the power produced by the panels in my own home) their value depends entirely on regulation which can change over time. There is a certain risk that SRECs could become worthless at any time if regulations change because SRECs are nothing real. Of course they could become worth more. Meanwhile, I will continue selling SRECs on the spot market. After looking into creating an account for my SRECs in Pennsylvania and Washington DC, I ended up signing up with a service to manage my SRECs for 5% of the sale price. After investigating the market, I discovered that there are tremendous inefficiencies, a few young companies and not a lot of operating history. I ended up taking a bit of a flyer on SREC Trade, a small operation out of San Francisco after checking references with the state regulators. So far it is working out. I have successfully been registered in the Pennsylvania and Washington DC markets and have received three checks so far for the sale of my SRECs.

My Solar Photovoltaic Project Update

The renewable energy rebate in Virginia was limited by the $15 million in stimulus funds that the Commonwealth of Virginia allocated to the program. Applications to the Solar and Wind Incentive Program closed on November 18 because all the funds were allocated to projects. Though, I personally reserved only the 6 kilowatts that I estimated would fit on the main portion of my roof and my available funding (and ultimately went into contract for), I am sure that plenty of individuals signed up for the full 10 kilowatts and not all the rebate reservations will be used. There might be a second opportunity to sign up for rebates, so keep your eye on the Department of Mines, Minerals and Energy website for updates.

I signed up for the renewable energy rebates two days before the cut-off, I did not complete my due diligence and select my contractor, sign the contract and make a good faith deposit until after Christmas having been delayed by the mid-December snow. My selected contractor is a local company employing local residents and is affiliated with a Virginia roofing company. I obtained three bids, reviewed references, checked the contractor licenses for complaints for both the solar company and the roofing company, and decided to go with American made solar photovoltaic panels. As the winter snow storms hammered northern Virginia over the winter my selected contractor struggled to prepare the engineering work and drawings necessary to obtain the permits. Weather delays and the usual contractor delays (always a couple of days later than the salesman promised) interfered with obtaining the completed engineering work and the permits.

You have 180 days to actually install the system and meet all the requirement of the program to obtain your rebate. Signing up only guarantees that there is still money available for your project not that you will receive the rebate, so the clock is ticking and there is 60 days left. The contractor has assured me that they are still on schedule to meet the deadline. I hope so since all the contractor’s projects need to be finished in virtually the same two week period, and the window grows tighter. I have received my HOA’s permission to continue with the project, so now I wait for the contractor.

We decided to go with Sharp Solar PV panels. Sharp has manufactured 25% of the world’s solar PV currently installed having been in the business for over 40 years. Sharp has continued to invest in the research and development of photovoltaic solar panels. Their newest panels put out almost 10% more wattage using the same square footage than many competitors and allowed me to fit the 6 kilowatt array on the main roof section avoiding any shadows from vents. The Sharp panel sold in the United States is manufactured in their Memphis Tennessee plant, which has produced over a million panels to date. The Sharp modules meet the intent for the “Buy American” provision in the stimulus bill. In addition, the plant has achieved Green Factory Status.

The standard warranty period for most PV solar panels is 25 years. Sharp has panels in operation since the 1960’s are still producing in most cases up to 85% of their original rating. When I viewed the various panels the Sharp panels had a more uniform appearance and finish. One of the reasons we choose our contractor was his use of Sharp panels.

Reducing My Energy Consumption

I have been systematically making small changes to my home to reduce my energy consumption. I started with the easiest steps; lowering the thermostat in the winter and raising the temperature in summer, purchasing energy star eligible appliances and choosing an LCD TV over a plasma (an LED TV is even more energy efficient, but was not available at the time). The next simple step was to change all the incandescent light bulbs for florescent bulbs and when I installed additional lighting it was florescent fixtures. (Though, I warn that the clothes in my closet look oddly colored in florescent light.) The next project was to install solar films on the windows and patio door and drapes and curtains on all the windows. These were small steps, but I learned over the years that small steps do add up.

The following year, after servicing the heat exchanger and furnace to ensure they were working properly, and appropriately sized for the house, and inspecting the attic and accessible areas of the basement and crawl spaces for adequate insulation, I turned to the Building Envelop Research of the Oak Ridge National Laboratory for guidance. The Oak Ridge National Laboratory performs their Building Envelop Research for the US Department of Energy, DOE. The DOE publishes their guidance in their “Insulation Fact Sheet,” which is available on the blog home page. Following the recommendations by the Oak Ridge National Laboratory the attic, crawl spaces, eves, ductwork, underside of a large portion of the main level floor were insulated with cellulose. The pipes, wall end caps, knee walls, sump pumps and all identified areas were sealed, the garage ceiling was insulated and an insulated garage door installed. I was actually surprised at the winter energy savings and pleased with the improved comfort in the master bedroom and bath.

My next project was to spend the winter saving money eating and entertaining at home, watching DVDs for “nights out” on my LCD, eliminating trips to the mall and saving up money for my next energy saving project. Back in October 2008 President Bush had signed the Emergency Economic Stabilization Act of 2008 (P.L. 110-343). The Act extends the 30% investment tax credit for residential solar Photovoltaic or geothermal heat pump installation for eight years through December 31, 2016 and removed the cap on qualified solar photovoltaic projects and geothermal projects (from the previous $2,000). This allows taxpayers to use the credit to offset dollar for dollar their federal tax liability, and to carry unused credits forward to the next succeeding taxable year. Essentially Uncle Sam was now willing to pay 30% of the cost of my next energy savings project. I couldn’t believe it.
According to the DOE heating and cooling account for 56% of the energy use in a typical U.S. home, making it the largest energy expense for most homes. So that is where I looked for my next project. A wide variety of technologies are available for heating and cooling your home, and they achieve a wide range of efficiencies in converting their energy sources into useful heat or cool air for your home. Heat pump systems provide both heating and cooling and offer the benefit of delivering more useful energy than they consume. Unfortunately, on very hot days or very cold days they do not do as effective a job as an air conditioner and a furnace. For climates with moderate heating and cooling needs, heat pumps offer an energy-efficient alternative to furnaces and air conditioners.

Higher energy efficiencies are achieved with geothermal (ground-source or water-source) heat pumps, which transfer heat between your house and the ground or a nearby water source. Although they cost more to install, geothermal heat pumps have low operating costs because they take advantage of relatively constant ground or water temperatures. However, the installation is expensive because of the need to bury coils to deliver constant temperature fluid or install a groundwater pump and injection well to supply constant temperature water to the system. Ground-source or water-source heat pumps can be used in more extreme climatic conditions than air-source heat pumps, and are more effective at cooling and heating at the extremes.
According to the heating and cooling experts and the manufacturers of the various equipment that I have, my heating and cooling system, which is a split system with a gas furnace and air conditioner for the lower level and an air heat exchanger for the upper level, should last another 7-12 years. The most sustainable approach would be to use the current system for its entire expected life despite the fact that I could probably reduce my energy consumption somewhat by changing from my current equipment to two geothermal (ground source) heat exchangers. Though geothermal heat exchangers are more expensive to purchase and install than a traditional furnace and air conditioner, they are far more efficient, reportedly consuming 25-30% less energy to operate. The most reasonable thing to do was to wait and continue using my current system even with availability of the tax credit. Thought for the next several years I will continue to keep an eye on my equipment condition.

In October 2009 Virginia announced that a portion of the stimulus dollars for the state would be allotted to its Residential and Commercial Solar and Wind Incentive Program to provide rebates to partially reimburse the costs of renewable energy systems. For residential users on the first 10 kilowatts, the rebates will be $2.00 per watt for Photovoltaic Solar systems, $1.50 per watt for small wind turbines and $1.00 per watt for solar thermal units (solar hot water heaters). The rebate is less than you might think because system capacity is defined as the installed system’s predicted peak alternating current (AC) output which is around 75%-80% of the DC rating. Combining this incentive with the federal tax credit of 30% and the sale of the renewable energy credits, REC’s, which can be sold to utilities needing RECs and suddenly, there is a positive return on the investment. It was still a big decision because even with rebates and tax credits we have to come up with the cash to pay for the system and while current prices quoted for RECs are $220-$300 per kilowatt/year and are sold in 4 or 5 year contacts there is no guarantee that the REC’s will have any value in the future.

One of the selection criteria for my home was the large southern roof span, perfect for solar panels. I was able to reserve funds from the Virginia Renewable Energy Rebate Program for a 6 kilowatt solar photovoltaic system before all the money was gone and we put the deposit down for an American made solar photovoltaic system installed by a local company. We will be installing a 6 kilowatt system that we estimate will save us approximately $1,300 per year on our electric bill. That is about twice the savings we achieved by insulating the house; however, the cost (before rebates and incentives) is more than ten times the cost of the insulation project. Even after all the rebates and incentives (assuming I successfully navigate these) this energy savings was many more times more expensive than the insulation project.

Choosing Solar Power

Solar Photo Voltaic panels are one of the least cost-effective ways of reducing your use of non-renewable resources. The only way these systems get installed are by all of us subsidizing the cost. This is accomplished by tax credits, state rebates, and renewable energy credits. A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. The American Recovery and Reinvestment Act of 2009 extended the tax incentives under the Energy Policy Act of 2005 (EPACT) and eliminated the limit on the credit. Rebates from the state are an inefficient return of tax dollars paid because it requires administrative costs to funnel the dollars back from the stimulus package, but does ensure that the systems were actually installed. Finally, SRECs, solar renewable energy credits, are payments to the owner of a renewable energy system from a utility. They are currently greater than the value of the energy created. This is only possible because the utilities are required to have an ever increasing portion of their generation of power from renewable sources. To meet this requirement the utilities must buy the RECs and in turn charge all their customers a higher rate to cover the cost of the RECs. RECs paid in cash to the Solar PV system owner, increase the utilities' cost to operate, and thus, the cost they charge per kilowatt goes up making my solar system more valuable to me.

Though I want a solar system, I am concerned that my decision is based primarily on government incentives. Making an economic decision based on tax incentives, puts me at risk of capricious government action leaving me stuck with the economic reality of my decision if the tax incentives should be modified. Choosing solar now only makes sense based on the incentives and RECs. Then there is the problem of cash. In order to proceed with a 5 kilowatt project I would need to have about $40,000 in cash to pay for the Solar PV system, and then in turn I can reduce the taxes I pay the federal government next year and the years beyond by $12,000 (this is not a refundable tax credit) and can receive a rebate from the state from the state for about $7,700. The RECs will pay quarterly for at least four years and the power savings will be for the life of the system. Nonetheless, I will still have to pay (net assuming I navigate the rebate and tax credit requirements correctly) a bit more than $20,000 in cash. The estimated power savings of the system would be about $760 per year.

Solar PV systems and solar thermal systems for heating water will not save enough from electric (or gas) bills to make them financially viable in a homeowner's lifetime. There is an argument for installing solar panels but it is not an economic one. The various financial incentives provided by the government make the cost palatable. The incremental change in the use of fossil fuels because of the installation of solar panels will not prevent climate change, but the increased cost of power to consumers may reduce their use of power. These tax incentives seem geared to increase conservation of energy by increasing the cost of power. The reasoning presented is we are allowing the solar industry to develop better, more efficient products by encouraging and subsidizing the installation of Solar PV and thermal systems. The federal stimulus program is just “priming the pump” with a few billion dollars in federal money and an unknown amount in REC payments from utilities in order to make solar power economically feasible in total cost. In doing this we are burning the financial resources of the country in hopes of building a self sustaining solar industry. This makes me uneasy. The government incentives to home ownership ended up encouraging irresponsible behavior on the part of lenders and individuals and excesses that resulted in the real estate mess we are in now. I am trying to anticipate the types of problems that might result from my Solar PV system. Since I am looking only at the personal downside the analysis is much simpler.

The first thing is to make sure that I qualify for the federal tax credit, i.e. you would actually pay 30% of the total cost of the Solar PV system in taxes next year or beyond. Remember, you are going to have to pay the money upfront and reduce your withholdings or apply for a tax refund for the 2010 tax year in 2011. You might be out of pocket the money for the solar system for a year or more. There do not seem to be any more restrictions, no limits on income or the cost of a system. The state rebate in Virginia is limited by the $15 million in stimulus funds that the Commonwealth of Virginia has allocated to the program. In order to obtain a rebate, you first have to sign up and be accepted. This is a very simple procedure to ensure that some of the stimulus money is reserved for you. You can go to the website and sign up with little more than your name, address and type and size of system you intend to install- if you are serious about installing solar. Do not sign up until you have done enough research to be seriously considering the installation and only sign up for the size system you can afford or your home can support. Otherwise you will be tying up funds other people could use. Your request to conditionally reserve funds from the Virginia Renewable Energy Rebate Program will be immediately approved as long as funds are available. You then have 180 days to actually install the system and meet all the requirement of the program to obtain your rebate. Signing up only guarantees that there is still money available for your project not that you will receive the rebate. My reservation for funds has been conditionally approved. I am obtaining bids, reviewing references and checking contractor licenses for complaints, and looking for reviews of solar panels. The selected contractor will have to provide me with evidence of liability insurance, workman’s liability insurance (they will have people on my roof), and a bank reference. In these tough economic times, I can not afford a contractor to go bankrupt in the middle of my project. The delay could cost me the state rebate.

Renewable Energy Incentives and Solar PV Panels

On October 6, 2009 Governor Kaine of Virginia announced that a portion of the stimulus dollars we are all paying for as been allotted to its Residential and Commercial Solar and Wind Incentive Program. Up to $15 million will be provided in rebates to partially reimburse the costs of residential, commercial and nonprofit renewable energy systems. For residential users the first 10 kilowatts, the rebates will be $2.00 per watt for Photovoltaic Solar systems, $1.50 per watt for small wind turbines and $1.00 per watt for solar thermal units (solar hot water heaters). The rebate is less than you might think because system capacity is defined in Virginia as the installed system’s predicted peak alternating current (AC) output. The system’s predicted peak alternating current (AC) output is calculated as: PTC output Watts per module x Number of Modules x Inverter weighted efficiency. Thus, the rebate is for the AC output not the DC installation size that you are sold. The predicted peak alternating current output would be around 75%-80% of the DC rating.

Virginia has net metering. Combining this with the federal tax credit of 30% and the sale of the renewable energy credits, REC’s, which can be sold to California utilities who’ve just had their renewable energy hurdle rate increased or to others needing RECs. Current prices quoted for RECs are $220-$300 per kilowatt/year and are sold in 4 or 5 year contacts to REC aggregators. (Packaging RECs might be a nice clean business to be in.). Solar mounting modules with connectors built in cost about $7-$8 per (DC) watt installed. All of these incentives added together could bring solar PV within range of dreaming of actually having a payback period.

Though, I am fully aware that the payback period for my hybrid car is around infinity, due to my extremely low driving (less than 4,000 miles annually). I am tempted once more by green technology. So I went to the renewable energy recourse center to use their PVWatts calculator to see if I could get an estimate of the energy cost savings for the Solar PV cells. It helps to have your latitude and longitude (get it off your cell phone GPS function) and know what you actually pay for electricity and if you have net metering (the credits for power generated is at the same rate as you are charged). The model uses hourly weather data and a PV performance model to estimate annual energy production and cost savings for a crystalline silicon PV system. It allows users to create estimated performance data for any location in the United States. The PVWatts calculator uses the data from a typical meteorological year data station and site-specific solar resource and maximum temperature information to provide PV performance estimation. (Solar systems work more efficiently on sunny cool days.)

The PVWatts tells me that a 5 kW array mounted on my roof would generate about $760 dollars of electricity a year at $0.0122 per kW. This is what I pay NOVEC, my power co-op. Taking that data and calculating a payback period using a 4% interest rate and assuming that I obtain all the available incentives, the payback period for the solar panels would be 30 years with power costs remaining constant. The life of solar panels is between 20 and 25 years, so the payback with these assumptions is about the same as my car- will never happen. However, the sale of the RECs changes the economics. RECs are bundled together and sold for 4 or 5 years, paying quarterly. They represent twice the annual savings in power. So counting the RECs the solar panels actually appear to have a reasonable return. There is no guarantee what the value of the RECs will be in the future or if there will be any value. RECs only have value because utilities are required to generate and increasing amount of their power from renewable sources. If the regulations change or the utilities find cheaper sources of RECs then the return evaporates.

Armed with this information, I was able to convince the husband that the solar panels might be worthwhile based on the above analysis and the fact that I would let him turn up the air conditioning in the summer. It is still a big decision because even with rebates and tax credits we would have to come up with the cash to pay for the system. So, its on to the next stage of investigating installing a solar PV array. Now, it is on to finding the right contractor and obtaining bids.