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Why solar is surprisingly affordable

Solar Panels

You’re sitting at your desk, eating lunch, using your last five minutes of your break to pay a bill online.

Watching the spinning circle as your payment processes, you notice the sun shining through the window reminding you to check that special app on your phone.

This app shows you how much power your solar panels at home are generating and how much power each major appliance draws.

You can’t help but smile when you see your system making more than you’re using. At this rate El Paso Electric is going to owe you a credit at the end of the month like it has for the past six months…

Wouldn’t it be nice to make that sunny daydream a reality? Maybe it’s closer than you think.

You live in the beautiful Southwest for a reason. The sunny climate is certainly part of it, but you value the outdoors, the quality of life, and the variety and small town feel of our large and small communities.

As a good citizen and someone who values our environment and landscape, you’ve embraced recycling and xeriscaping, and you’ve made changes to keep your home more comfortable and energy efficient.

But you notice the news is full of talk about the Federal solar tax credit ending soon. Is now the time to think seriously about solar?

Lots of reasons to love solar

Whether it’s about “free” energy, independence, sticking it to the power company, a great way to be green, or it’s just plain cool, you can feel good about solar in many different ways.

Some people like the idea of “energy independence” or living off the grid. Whether it’s for financial independence, homesteading, preparedness, or wanting a break from society, they want autonomy.

Others have environmental concerns; if we can pollute less, we can leave a better, cleaner world for our kids and grandkids.

Of course, watching your meter run backwards in the sunshine is incredibly satisfying if you’ve spent most of your life writing checks to the power company. And if you’re the tinkering and engineering type, it’s just plain fun to geek out and learn about something new and interesting, and fine-tune your system to see just how efficient you can get.

Solar is more affordable than you might think

If you think solar is too expensive, think again. A lot has changed in solar technology and pricing in the last few years.

First, let’s talk tax credits, AKA “free money”. The Federal government extended the full renewable investment tax credit of 30% through the end of 2019. After that, the credit goes to 26% in 2020, and 22% in 2021. Every solar blog and solar company website is reminding you that the “uncapped 30% credit” ends by the end of 2019. But the credits aren’t going away completely any time soon.

Ambitious green residents may even be eligible for tax credits for LEED rated homes. If you’re building or considering a new home, it’s an incentive to move energy efficiency up your list of priorities.

Plus, you should check this Database of State Incentives for Renewables and Efficiency to see if there are other incentives you might qualify for. Who doesn’t like free money?

In addition, a solar panel system is considered an improvement to your property, but it isn’t added to the value of your property in determining property tax in Texas and New Mexico. Other improvements are fair game to tax assessors such as adding a bathroom or deck.

Of course, solar panels as an improvement do increase your home’s resale value. One study found this increase to be around $15,000 on average. Yes, you really can have your home value cake and eat it, too – as long as it’s a sunshine cake.

What’s this about the meter running backwards?

El Paso Electric offers net metering in Texas and New Mexico. That means solar residential customers who generate more electricity than they use can send it back into the grid and get credit on their electric bills. It’s common for homes in this area to produce excess energy some months and use more energy other months.

Net metering credits don’t expire, so you might end up using credits you generated in March to power your air conditioning in August. But no matter how much that meter runs backwards, you won’t get a check back from the electric company; net metering credits can only reduce the power charges on your electric bill.

Can the savings from solar pay for my system?

No question solar is more expensive than a dishwasher or microwave. However, the cost is in line with common home improvement projects like adding a room or major home repairs.

And the time until a home solar setup pays for itself is shrinking. Solar has come down 43% over the last 5 years. Prices dropped 30% in 2018 due to price pressure from Chinese manufacturers. However China’s solar subsidy program is ending and panel prices are starting to stabilize. And panels are also getting more and more efficient.

So how long does it take for a solar power system to pay for itself?

Here’s an example of how to calculate your return on investment (ROI) for solar. We’re just using round sample numbers here; your numbers will be different.

Gross cost of the system – upfront incentives = combined costs

$15,000 – $4,500 = $10,500

Annual electric bill savings + other incentives = annual benefits

$1,200 + $300 = $1,500

(assuming $100 pre-panel monthly bill and panels generating 100% of use and $25 monthly credit from incentive programs)

Combined costs / annual benefits = payback period

$10,500 / $1,500 = 7 years

Deciding whether solar is right for you

A good place to start with The Energy Department’s homeowner’s guide or El Paso Electric’s consumer guide.

You’re definitely in the right part of the country as far as climate. Our corner of Southern New Mexico and West Texas is pretty sunny – we get an average of 294 to 300 sunny days per year depending which source you check. And that’s prime weather for solar.

Next, look at your electric bill and get a sense of your usage in terms of kilowatt hours (kWh). Your bill shows rates and usage per kWh and this is the terminology referred to when evaluating electricity, solar or not.

You’ll also need to know your roof orientation, angle, size, material and age.

Solar panels don’t take much maintenance, but you can’t just ignore them either. You’ll still need to clear dust at times and check for critters nesting within or chewing on the wiring. Make sure you understand what maintenance is required and you’re comfortable with it.

Another factor is how long you plan to live in your house. Do you want to be in the house long enough to benefit from the system and see your panels pay for themselves?

You’ll also need to decide whether you want to buy or lease panels or perhaps enter a Power-Purchasing Agreement (PPA). PPAs are similar to leasing except that you only pay for electricity produced versus the full payments of a lease.

Leasing and PPAs are an option to get started with solar without the upfront cost of purchasing a system. That decision depends on a lot of factors, of course — here’s an easy to digest resource.

The size of system you’ll need depends on the system’s efficiency, your location, your usage, system placement, and your budget, keeping in mind your current electric rates.

Each solar company you request a quote from will talk you through the process of this evaluation, but make sure you walk in armed with some basic information.

The more you know, right?

Once your home is assessed, you’ll be given system configuration options. When they run the numbers of “optimal output”, you can check their numbers here.

And keep in mind solar panel systems are modular. You can start with a small system and add more panels later.

Choosing a trustworthy solar company

As with any other home improvement project, get more than one quote and do your research. Check unbiased review sites like solarreviews.com; they don’t allow companies to pay for written reviews. Check your favorite review sites, and look for contractors certified by the North American Board of Certified Energy Practitioners (http://www.nabcep.org/NABCEP). Surveys indicate local firms often give better customer service than larger national firms.

Consider which panel manufacturers they carry, too. Does American-made matter most to you, efficiency ratings, appearance, or cost?

And ask about the warranty. The company has to be around to service the warranty so consider how long the company has been in business.

Get interested in inverters

You need an inverter to convert the variable amounts of DC electricity produced by solar panels into usable AC electricity at the proper voltage, and to manage that production. So the next decision is what type of inverter you will need, micro or string?

Micro inverters are more expensive because one is needed for each panel, but they have several advantages. If there’s panel failure, only one stops working versus all of them. They tend to produce more power overall because each inverter is converting each panel individually versus a string inverter working harder to convert all the panels at once.

String inverters are more cost effective because there’s only one needed per system versus one per panel.

Solar add-ons and options

Pricing for battery storage has come down but batteries are still not common for most households unless you’re off the grid. Batteries also negate the benefits of net metering because you’re storing your excess energy versus sending it back to the grid. However it’s a discussion to have if you worry about power outages or if you want to go off the grid eventually.

What if you don’t like the high-tech look of most solar panels? Newer products entering the market offer options, including clear solar panels, Tesla solar tiles, solar skin, frameless panels, double-sided panels and solar windows for a more subtle look, although these can get pricey.

What about insurance?

Homeowner’s insurance usually considers a solar panel system a part of the roof and covers it. Once you have an idea of the system you’re getting, contact your company to confirm it’s covered. You might also want to consider increasing the coverage limit on your policy.

Take the first steps to solar

Can’t wait to watch your home run on clean noiseless energy from the sun? Eager to watch your meter slow down and stop?

When you’re ready to let the sun shine on your electric bill, talk to us at White Sands Federal Credit Union about financing options. Our Eco Loans are perfectly tailored for home solar panel projects.

Even if you determine solar panels aren’t right for you now, you can still take advantage of the federal tax credit and a White Sands FCU Eco Loan for other energy efficiency measures like solar water heaters, small wind energy and geothermal heat pumps.


Links to more solar resources

Need more info? Here’s a list of handy links to lots more information about home solar energy!