New Solar Panels for the White House

Last Friday, the Obama Administration finally installed the long promised solar panels on the roof of the residential section of the White House timed to correspond with the President’s Climate Action push. At the time of the installation the President was in California laying out a list of clean energy objectives he can accomplish without congress. The White House has not specified how many panels they installed or how much they cost, but reportedly, the solar installations on the White House is the size of the “typical” residential installation and will pay for itself in energy savings and Solar Renewable Energy Certificates, SRECs, in eight years. I do not know if the White House installation qualified for a federal tax credit.

At today’s costs solar panels can have a payback of eight years only with the “help” of tax rebates and Solar Renewable Energy Certificates, SRECs, which are available to residents of Washington DC and a few other states. Currently, SRECs in Washington DC are the most valuable in the nation, but it is an artificial market that will fall as more solar systems are installed and the price supports are decreased in the next few years. If you live in the District you can see what the cost and return of a solar system on your building’s roof top would be using the Mapdwell Project mapper. This assumes the SREC market remains viable. The solar system size used is based on the size of the roof and is effectively the maximum size solar array you could install. You of course could install a smaller array. To those of you not old enough to remember, this is the second time that solar panels have been installed on the White House. President Jimmy Carter spent $30,000 on a solar water-heating system for West Wing offices in the late 1970's that were subsequently removed by President Ronald Reagan.

As I watched the U-tube video of the White House installation I was a little envious of how smoothly it all seemed to go. This was not the case with my installation. On the back of my house is a roof mounted 7.36 KW solar array consisting of 32 Sharp 230 watt solar photovoltaic panels and 32 Enphase micro-inverters, somewhat larger than the “typical” home installation, but not much larger than what I imagine the White House installed. When I purchased my solar panels I choose the Enphase micro inverter system so the power cables running down the side of my house, albeit inside a pipe, are 120 current instead of 240 and the energy production of each individual panel can be checked on the internet. The solar array consists of panels the racks that hold them, micro inverters and wiring and plugs. My installation did not go smoothly, and surprisingly to me, maintenance has turned out to be an issue.

I check my solar panels production numbers every month when I get my power bill. I am on net metering with my power cooperative to sell my SRECs into the Washington DC SREC market where my system was grandfathered when it was closed to out of city systems. My installation web page allows me to see the current energy produced by each of my 32 panels every minute, every hour, daily, weekly, monthly and the cumulative total power output. I only spot check the solar panel midday on the day when my power bill arrives or after storms to make sure all the panels are performing optimally. The reason I chose Enphase was to be able to easily identify a problem with the system. Little did I know that barely three years after the installation I would be facing repair issues.

my solar array with the failed panels

About 14 months ago, less than three years into their expected 25-year life span, one of my solar panels appeared to fail. My first attempt to have my system repaired was emails, letters and phone calls to the company that installed my system. The company I hired to install the system was no longer in the solar business- without renewable energy rebates and a viable solar renewable energy certificate market; there was not enough business to sustain a solar installation operation in Virginia. They were focusing instead on energy audits, but they finally referred me to a Maryland and Washington DC based installer, Lighthouse Solar.

It took a while for them to come out. They looked into my system and spoke to Enphase and determined that the problem was probably the micro inverter so they ordered a new inverter from Enphase. By the time they had scheduled my repair a second inverter had failed. I was delighted when they were able to replace both inverters on the same day. According to Lighthouse Solar, they have replaced many Enphase inverters. The good news is that the inverters had a 10 year warrantee and it cost me nothing. The bad news is that the new inverters did not fix the problem, though for a brief period of time it appeared to fix one of the two panels. After some back and forth between Enphase, Lighthouse Solar and me, I appeared to have a solar panel failure. Sharp was not as cooperative as Enphase with replacing the panels which were guaranteed for 25 years.

Ultimately, I think that the original installer paid for a new panel and when this spring arrived, Lighthouse Solar made a second attempt at repairing the system and replaced a solar panel. Once more Lighthouse Solar came through for me and got the repair done at no cost to me. Unfortunately, after replacing the solar panel I now have one failed panel and one panel working at partial capacity. After speaking once more to Enphase Energy, Lighthouse Solar now says that they will try new inverters. There are a limited number of components that could have failed, but unfortunately since Lighthouse Solar has to fight to obtain each component for me under warrantee, they have been unable to simply replace everything at once and get the problem solved. The actual cost of buying and replacing all the potentially failed portions of the system would cost more than a year’s worth of power production of the entire system.

All solar PV panels degrade and slowly over time produce less power, however based on news report there appears to be a cluster of failures after a couple three years. Solar photovoltaic panels have no moving parts so that the operating life of the solar panels is largely determined by the stability of the coating film, the quality of finish and fit of the panels and the proper sealing of the edging and connectors. Quality control in manufacturing is essential to have a solar panel that wills last 25 years in sun, rain, sleet and snow. The quality and life span of these rapidly produced solar panels is about to be tested in the next few years.

Without micro inverters a failure of one panel in an array like mine is a 3% reduction in power production and might not be noticed, it could be attributed to decreasing efficiency of the panels or weather variations. In Ed Begley, Jr.’s “Guide to Sustainable Living,” he said that over the years he had four solar panels fail, his storage batteries were replaced after 15 years and the wiring for the panels were damaged and needed to be replaced at 18 years. So, these systems are not trouble free even in sunny warm California, you cannot just install them and forget it. The President is only going to be living with the White House solar array for less than three years so he will not have to worry about maintenance, but as a nation we need to maintain our clean energy infrastructure. In my calculations of cost and return I was conservative on SREC value, but I did not consider maintenance costs or loss of power production due to equipment failure. I am on net metering and still connected to the grid so I continue to get all the power I need from the grid. I have spent a lot of time and effort on trying to get my solar panel array repaired without yet succeeding. Nothing magically maintains itself, consider maintenance and repairs whenever buying equipment.

map dwell example of cost and return

Leasing Solar Panels – No Free Lunch

It is not possible to lease solar photovoltaic panels in all locations. The solar leasing companies are profit making enterprises that excel at managing, government guarantee loans, rebates, incentives, tax credits and solar renewable energy certificates, SRECs, to maximize their profit while providing discounted electricity from renewable sources to homeowners with favorably oriented roofs in locations with adequate rebates. Due to a bit of luck, the dollar value of the solar power I generate from my solar panels is worth less than half the money I have sold my SRECs for over the past three plus years. However, there is no guarantee that my SRECs will be worth anything next year. However, many of the solar panel leasing companies have enough scale to negotiate multiple year deals with utilities to buy their SRECs reducing their financial risk and ensuring a better deal for them than I can get on my own.

Incentives and solar rebates have been reduced in many locations, but still exist. Some of the rebates are state wide, others are county incentives, there are rebates based on household income and many that are based on sales of SRECs which in turn are based on the power produced by the solar panels. 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.

 You must live in a county or state where there are rebates and other incentive still available to make creative options like leasing solar panels possible. Even with the current lower cost of solar panels, without any rebates or incentives, the return on investment before depreciation for solar panels is about 6%. The return on investment after depreciation is about 2.5%. This return would not be acceptable to any investor and could not repay a loan taken out to build a solar photovoltaic array on a roof.

In this part of Virginia I buy my electricity from an electric cooperative that sells me power for $0.114 a kilowatt hour (this is slightly lower than it was five years ago), has no currently available incentives and there is no viable way to sell SRECs. Thus, there are no opportunities to lease solar panels at this time. Leasing arrangements depend on the solar leasing company obtaining enough incentives, rebates and other government incentives to produce a high double digit return for the leasing company that needs to borrow the money (with federal loan guarantees), pay their staffs of sales people, financial types that manage the lease contracts, others who navigate and manage the incentive market and profit for the subcontractors who install the solar panels.

In the typical leasing arrangement, the homeowner agrees to pay the leasing company a predetermined price for the electricity the system produces; the rate is pegged to be at least 10% lower than prevailing electricity prices in that area. Customers buy any additional power needed from the local utility at the going rate, but are locked into long-term electrical contacts from the leasing company which is in essence an unregulated, government subsidized profit making utility.

Lease arrangements are a rapidly growing part of the solar market, but the financial benefits to the homeowner are often limited. In states like California where the electricity prices increase steeply with increased usage, leased solar panels could keep the rest of the usage in a lower tier and increase the return. Leasing arrangements enable homeowners and businesses to get a reduction in electricity and the psychological benefit of having solar power without paying the full cost of the still expensive systems. The problems with leasing are two fold. The first the return to the leasing company is much higher than to the individual homeowner and practically all the return to the leasing company is based on incentives that are ultimately paid for by the taxpayer and electric rate payer. The contract with the leasing companies is written (by the leasing company’s lawyers) in the leasing company’s favor. Typically, all the obligations are on the homeowner with limited remedies.

The risks: electric rates may fall due to lower cost natural gas or remain flat and the contracts tie the homeowner into a set schedule of payments that typically escalate over the life of the lease (usually 15 years which is the life not of the solar panels, but of the SRECs). Solar photovoltaic panel costs may continue to fall and the value of subsidies may increase down the road (which happened with the Washington DC SREC market increasing my return). Typically at the end of 15 years the homeowner has the option to have the panels removed, buy the panels (which usually only have a 25 year life) or renew the contract. It is very possible that a long-term lease is more expensive than buying solar panels outright in future years, or it may be a bargain because the incentives for solar panels will not be available in the future and the price will not be low enough.

If you choose to jump on a solar leasing deal, get at least three bids, check the installer’s references compare the quality of the solar panels installed and read all the contracts carefully. You need to understand your rights and obligations under the lease who is responsible for insurance, roof leaks, repairs, snow damage or lightning strikes as well as the economic risks of the agreement to make a sound choice. Just because the company is providing solar panels does not make them altruistic or your friend.

Solar Panels Buy Now or Wait

The answer to that question depends on where you live, your cost of electricity, the orientation of your roof, and if you have to borrow the money to install the solar panels. However, the economics of solar panels with just the federal tax credit now make sense even in locations like Prince William County Virginia where there are no rebates or other subsidies beyond the federal tax credit. Above is a comparison of the costs and benefits of my solar panels compared to what that system would cost today.

There are several components to the cost and return of a solar system. The first cost is the cost of the system. The market cost of solar panels and installation has been falling for years. When I signed the contract to purchase my roof mounted solar system in 2009 (though it was not installed until May 2010) the cost per kilowatt for the Sharp panels I bought was about $6,700 plus permits and installation. These days that cost is about $1,800. I could probably have the same system that cost me $58,540 installed for around $19,000.That reduction in price goes a long way to make solar a reasonable purchase. Back in 2009 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.

To calculate the return on a solar photovoltaic system you need to know how much power the solar panels actually make. Now this is really weird, but with three years of data my solar panels make more power than predicted by the PV Watts model and the maximum output exceeds their rated power production. Instead of the expected 9 megawatts of power each year my solar panels have produced an average of 10.8 megawatts each year. This “bonus” was a pleasant surprise. I do not know whether it is due to having a steep angle roof that faces dead-on south over-looking a 3 acre open field or if the sharp solar panels are more efficient than rated. The dry weather in the past year might also have contributed to the higher than anticipated power production. Nonetheless, my solar panels make more electricity than predicted and that production rate would translate into a 9% return on investment (before depreciation) for solar panels bought today. It is not a spectacular return, but respectable and would justify installing solar panels and helping to reduce the summer peak demand on the power grid.

Lifetime power produced by my panels

However, with only the power generated by solar panels my return would around 4% before depreciation. To take the risk of buying and installing the solar photovoltaic system a chance for additional return on my investment was necessary. Solar Renewable Energy Certificates or SREC are another incentive that was available to me in 2010, but is no longer available for Virginia residents.

A SREC is a credit for each megawatt hours of electricity that is produced (and used by me). 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. Utilities in those states 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 rate paying consumers). Most states at this point require their utilities to buy SRECs only from residents of their own states creating a closed market where the prices typically start off high until supply responds to that price. Other states, like Virginia, have no current solar RPS requirement and their RPS is voluntary. There are a couple of states, like Pennsylvania allow their utilities to buy their RPS from any resident within the PJM regional transmission organization. The Pennsylvania SREC price collapsed in early 2011 due essentially to oversupply and a method of calculating the penalty fee, the Solar Alternative Compliance Payment, SACP. It is to be noted that my electricity provider, NOVEC, would buy my SRECs for $15 each which is exactly what they pay for other forms of renewable energy they buy.

Within the PJM, a regional electricity transmission organization in 13 eastern states and the District of Columbia, I can sell my SRECs to utilities in Pennsylvania and Washington, DC (because I registered my system before the market was closed to outside systems). I had my solar system certified by both Pennsylvania and Washington though at the time only Pennsylvania was a viable SREC market. Today the Pennsylvania market has collapsed and in Washington DC my SRECs are worth around $400 for the moment. It will not last, all SREC markets get overbuilt in response to a high SREC value, but Washington DC has significant land constraints limiting large commercial solar arrays. So the SREC market may remain viable for a couple of years, I hope so, but I am not depending on it.

I had the choice to sell my solar renewable energy credits by estimate on the spot market or I can shop for a long-term SREC contract. The discount for a long term contract is huge and I refused to allow the company to put a lean on my house. A second option was a “guaranteed” price contract. In that case the fine print indicates that if the market collapses I might not have a viable guarantor of the payments. I would be giving up the upside without a true guarantee of price. 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 and markets change. SRECs in Pennsylvania have ranged from $200-$300 per megawatt hour in 2010 and then collapsed and fell to $13 as the market remained open and became hugely overbuilt. Washington DC is currently undersupplied to meet the mandate so the SRECS have passed $400 each. The market will respond (I only hope not too quickly or too much). There was a time that New Jersey SRECS topped $670, they fell to $65 and are currently $140.

So while it lasts, the revenue from the sale of SRECs is higher than the value of the electricity the solar panels make. Today’s pricing make the return on investment in a solar photovoltaic system simpler to calculate here in Prince William County. There are other locations where various rebates and incentives and higher electricity rates make the return rich enough to support a market in financing alternatives, but it takes time and some level of expertise to optimize the solar incentives markets. Also, the incentives need to be paid for with either tax dollars (Department of Energy loan guarantees, grants and other incentives) or higher electricity rates- the renewable energy to fulfill the RPS and solar carve outs costs more than energy produced from other sources and results in higher electricity rates.

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.