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Summary:

A year ago, we took the solar plunge and installed 41 panels on our back roof. How much did it cost; what’s the benefit; would I do it again? Read on for the answers to these questions and more because there’s little I’d do differently.

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Enphase Envoy solar panel monitoring serverJust over a year ago, we took the plunge at my house and covered the back roof with solar panels: 41 of them, to be exact. After 12 months, we’ve created 13.8 megawatt hours of electricity while using only 7.59 megawatt hours. The energy surplus becomes a credit on our electric bill and once per year, our electric company issues us a check for any unused credit. So what was the installation and usage experience like? Overall, it’s been excellent and I’ll share the pros, cons, and actual costs of our project in an effort to shed more light on any solar panel projects you might be considering.

First things first: Decisions and costs

Our family has always tried to be green when possible. We’re avid recyclers, we tried a small composting project, we use CFL or LED bulbs throughout the house, and I can’t tell you how many solar-powered chargers I’ve tried for my mobile devices. (The most recent one is outstanding.) But we never had the money to “go solar” even though we wanted to. That changed due to a unique financial situation. In the spirit of transparency, I’m going to share the details.

My wife inherited a family member’s IRA account several years ago and the law required that the funds be liquidated over a five-year period. We got to the final year in 2011 and realized we were going to be hit with a large tax bill on the remaining IRA funds and decided to invest the funds into something with a tax incentive. After much research on solar energy — this is a great site to estimate system sizing, pricing and benefits – return on investment and such, we decided to go with solar panels, moved in part because our rear roof faces south.

It turns out that a local contractor nearby put solar panels on his office and became a certified solar panel installer. I requested a number of quotes from companies in the area, but he gave the best price at the time: $5.50 per watt. I then looked at our electricity usage for the prior year — we’re a family of four, with two full-time work-at-home people — and over-specified the system by 25 percent capacity for two reasons. We have a four bedroom house, so I planned for the next homeowner to have five occupants. And I wanted to maximize the tax benefit, which was a 30 percent federal tax credit on the entire project.

The specified 9.43 kW (DC) system turned out to be 41 panels — 230 Watts each — which produced 12.05 megawatt hours of electricity from Nov. 1, 2011 to Oct. 31, 2012. That cost us $51,865 up front, including installation, permits, inspections, parts, labor and warranty. Yup, it’s a big chunk of change but that federal tax credit totaled $15,560, which helped offset taxes on the IRA liquidation. And many states offer rebates on solar projects; ours provided us a check for around $7,100 once the system was up and running. Our net cost then was $29,205.

It’s also worth considering companies in some states offer no-money down solar panel systems: essentially you let them install a system on your property and then lease the system. The company itself reaps the incentive benefits, but you may save money on your electricity bill.

Installation of the puzzle pieces

Enphase microinverter

I had thought the system would be complicated by many parts, but it’s actually quite simple. Obviously, we have the panels, which generate electricity from sunlight. All of that power is DC, or direct current, so the system needs an inverter for AC power. We considered one single inverter but instead opted for individual microinverters attached to every panel. There are several benefits to this approach.

For starters, if one panel or inverter fails, it’s easier to locate and fix the issue. Second, the microinverters feed real-time data from every panel via Ethernet over powerline  to a small web server included for monitoring purposes. I can get tons of useful information from the system. You can view most of my system details here online, for example.

Solar panel framingThe microinverters, as well as the small web server that tracks them, are made by Enphase. Each one converts the DC power from its connected panel to AC power. Each microinverter is linked to the next one in the solar panel array so essentially, these are plug-and-play devices. Each connects to the next, and the last microinverter feeds a power line, which we fed through our attic and down along the outside of our house near our electrical meter. The panels themselves are attached to the roof with aluminum framing so the install process is fairly simple: Install the frame, connect the microinverters to their respective panels, attach the panels to the frame and link the microinverters.

Because of the solar panels, two additional electrical meters were needed. We still have the original meter that measures our electricity use from the grid but a new meter is needed to measure power output and a third measures the difference between electricity created and used. More on that in bit.

Smart meters for solar panels

So how well is the system working?

In a word: great! In this graph below — from Enlighten’s web service that creates reports from our solar panel system — you can see exactly how much energy we produced on a daily basis.

In fact, this graph gives you rough history of the weather where we live in southeastern Pennsylvania. The drops on the graph represent days with little or sun, although even on a cloudy day we make a little energy. You can also see when the days get longer and provide more direct sunlight to our roof; we’re in the downward trend now as the shortest day of the year is approaching. Here’s a look at the numbers for production and usage by month:

There’s no maintenance to the system; it’s just always working to create power when there’s enough light. I haven’t yet had to do a thing to the panels, which have a 25 year warranty, same as the microinverters. So with the solar panels then, you’d think we’d be fine during a power outage, like the one we experienced for 4 days last week. Not quite….

Different systems for different needs

One of the upfront decisions you’ll need to make when planning a solar panel system is will you still be tied to the electric grid? Or will you go off-grid? There are pros and cons to each; the former costs less up front while the latter provides stored power during the evening hours or during an outage. Since we had no power during Hurricane Sandy, you can guess which system we have: One that keeps us tied to the grid.

That means all of the power our panels create is actually fed back into the grid; we still get all of our power from our electric company in this configuration. And in the case of an outage, grid-tie systems such as ours are automatically disabled. Why? Because if we were feeding power into the grid during an outage, it would be unsafe for the workers trying to fix the outage.

To go completely off-grid and have batteries store excess power would have added approximately 20 percent to our up-front project costs. My wife felt we’d never regain that cost because we rarely have outages. During Hurricane Sandy, of course, I gave her one — and only one — light-hearted “I told you so.” And at this point, I’m reconsidering what to do for backup power, but that’s another post for another time.

Is solar right for you?

Solar panel materialsI can’t answer that question, but hopefully, I’ve provided some insights to help you decide. Having a house some south-facing roof is a must unless you plan to have panels on your grounds. Local or state incentives vary by location as well so you’ll need to check them in your area.

The biggest issue for most is likely the large up-front cost involved although you could start small and build up the system over time. I can’t argue that the costs are still high, although they should be lower now than a year ago. And the payback period — which will vary based on your system, location and energy costs without solar — can be high. Our break-even point is around 7.3 years, but that includes the home appreciation expected due to the system.

We may not be here long enough to break even but we’ve already gained an appreciation benefit from the panels. Taking advantage of the low rates, we refinanced our home last month and the added value of the solar panels was around $30,000. And why not when the next owner of this home is unlikely to have an electric bill ever? We were paying around $2,500 per year for electricity before the system was built; now build up a credit in most months. But for us, it’s not all about the money or the investment, even though we have a hedge against a rise in electricity costs: Any price increase means we’ll get more for our excess energy production.

We feel we smartly took advantage of certain tax incentives, added value to our home and are one step closer to being energy independent, save for a backup system. If I could go back in time, I’d probably add some type of battery backup. At this point, we’re making enough excess power that we’re considering a plug-in car to replace our current vehicle. Why not let the sun power our home and our wheels while cutting down on our annual gasoline costs at the same time?

  1. Electricity from the grid *will* increase in price.

    Solar panels will steadily improve in price, performance, and durability.

    Eventually, that will come to a point where I can afford it. At that point, I will probably also buy an electric car. I just hope that time comes fairly soon.

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  2. So your electricity bill use to be $2500 and you decided to pay $56k for a solar panel system. That would take you 22.4 years just to break even unless I’m missing some stuff.

    How much is you yearly refund?
    How much does is the kw/h cost where you live and what state do you live in?

    Also solar prices are going UP not down because the US has placed tariffs on Chinese made panels. I would have liked to see more math in this article

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    1. Hi Jason, I appreciate the feedback. I didn’t put any more math in this article because everyone’s system needs / electricity consumption is different. That’s why I shared my specific costs/benefits and provided a link to the solar panel calculator for others to use.

      I live in southeastern Pennsylvania and it costs about $0.09 per kWh for energy production from my provider. Based on the 12 month surplus shown in the graph, that’s $558. The utility company keeps my account credited for any surplus until May each year, when it then cuts me a check. So that additional money should be part of the break-even. I also didn’t pay $56k if that’s what you used for the break-even math.

      As stated in the article, the up-front cost was just under $52 but you can’t use that in your analysis, which I know you did (because 56,000 / 2,500) is where you go the 22.5 years. Reduce the cost by the tax incentives and rebates. Even without any home appreciation benefit, the net cost was $29,205. If you want to use that and my old electric bill of $2,500, that’s an 11.6 year payback. Factor in the home appreciation and the refund for excess energy and the payback is even shorter.

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      1. I guess, even tho I have no say in it, I will say you are welcome.

        You took my tax dollars to pay for your solar system.

        IT’S NOT YOUR MONEY!!!!!

        How do you think this would work out if every home in the USA did the same?

        I guess it is no problem – just raise taxes, huh?

        What about the cost of maint on the system – did you estimate that?

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        1. So I’m not going to get into political debates or the tax system here, because that simply detracts from the point of the post which is to inform people on the solar power experience. But I will say 2 things in response and leave it at that. 1: The incentive is there for all; I didn’t get any special permission for it. We can disagree if it should be there, but the fact is: it exists and you, I or any other tax paying American can take advantage of it. Second: I doubt you paid *anything* towards my system – this was essentially a swap of money, meaning: the tax benefit of the solar panels essentially offset the tax costs I would have paid on the inherited IRA. Thanks!

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      2. @lyle Don’t worry Lyle, the govt has been printing money with no end in sight (they call it QE), so Kevin here didn’t take your money, but actually freshly printed money. For your money? Well it’s going to the department of defense, fossil fuel companies subsidies, and monsanto/ADM/Dupont subsidies… and for the rest mostly medicare/medicaid. So don’t pretend he’s using your money.

        Actually he’s reduced your overall in the long term: less green house gases (less weather catastrophes, less money wasted thru FEMA), less power plants (less wasted on subsidies to power generation companies), more value to his home (more taxes for you)…

        So you see, it’s always good to think twice before you write ;)
        Have a good day!

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      3. Holy crap! You write an informative article about switching to solar and you get hated on.

        lyle – nothing stopping you from doing the same thing. the author is just trying to explain the cost/benefit of switching to solar. If you put your fists down and took the time to do some simple arithmetic, you might figure this could work for you too.

        btw: great article

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      4. Lyle, go complain to every oil company, sports team, traditional utility, and every other company that gets tax incentives.

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      5. how many square feet?

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      6. I have 46 panels.
        I have questions on that math.
        $2,500 / .09 cents per KWH = 27,777 KWH / 12 months= 2314 KWH per month.
        You said your system only made 13,803 kwh per year.
        27,777 kwh used – 13,803 kwh made = 13,974 kwh more used than you made.
        You are are short 13,974 kwh?

        What am I missing here?

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    2. Jason, Lyle you suck!

      This guy was in no way shape or form pushing his political opinions in my face. Kevin was sharing a personal experience and left it up to the readers to see if this would work for them.

      A guy and his family (thank you Mrs. Tofel, it was your money) takes the initiative to go green at their cost and they get criticized. I guess BP, Exxon, and other oil companies exist to solely make the world a better place. Making billions of dollars doing it is simply a coincidence. Folks like the Tofel are bad Americans who take advantages of tax incentives and rebates. SMH…

      Word of advice: READ do not skim an article. If you do not fully understand something, RESEARCH. THEN, post your opinion.

      Sometimes internet anonymity is a curse.

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      1. Please don’t feed the trolls.

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  3. Loved the article for its details. May start thinking about Solar because of your article.

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  4. any thoughts on your solution vs panels that follow the sun (how much higher is the cost and the output and same for using solar tiles instead of panels.

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  5. Katie Fehrenbacher Sunday, November 11, 2012

    Love the real world details and transparent user experience of this article. So helpful Kevin!

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  6. adrian cockcroft Sunday, November 11, 2012

    Here’s my own annual summary, similar experiences but California regulations make a difference http://perfcap.blogspot.com/2012/09/solar-power-update-annual-costs.html

    We have 10KW of grid tied solar, backup generator, an almost all-electric appliance and heating house and Nissan Leaf electric car.

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    1. NIce writeup, Adrian – thanks!

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  7. adrian cockcroft Sunday, November 11, 2012

    It’s interesting that some states/power utilities cut a check for the full dollar credit each year, but others pay a reduced rate for the aggregate power difference. The effect is that it’s worth over-sizing the array in Pennsylvania, but not in California.

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  8. Do you have an electric furnace and water heater?

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    1. No, we use propane for heat and hot water. We may change to an electric or hybrid water heater when it’s time to replace the unit.

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  9. Kevin,

    This is interesting. We also installed 41 panels for a 9.3 kwh system at ~ the same cost earlier this year. We moved to Honolulu from the Bay Area last December. Hawaii electricity is diesel-generated, at 33-35 cents, 3x that of Los altos! Our payback period is <4 years. We consume only 60% of our production. HECO will not send us a check, instead, they sell the energy to our neighbors. We just reserved an EV for mid-2013. This would cut carbon close to zero. Solar economics is very compelling here.

    We also wish there is a battery for storage. The next evolution would be networking the neighborhood and sell and buy from each other!

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    1. Whoa: great minds think alike! ;) That’s some serious costs for power. I’d expect more solar projects where you are due to the lower latitude and weather.

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    2. Paolo Generaytor Monday, November 12, 2012

      Joseph,
      selling and buying in the neighborhood is happening soon in Europe (http://qualenergia.it/articoli/20120515-sistemi-efficienti-di-utenza-SEU-la-grid-parity-dietro-al-contatore).
      Article is in Italian. It’s a kind of energy P2P

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  10. Jonne Comlatelee Sunday, November 11, 2012

    Congratulations.
    Its a great feeling to go solar. Saving electricity. Money. Taxes. The list goes on.
    Thanks for documenting a common type of residential solar installation experience that is occurring thousands of times daily in the USA today.
    Made possible by microinverters, the lower cost of Chinese modules, and tax incentives.
    I have been looking at doing the exact same thing, many times, over the past 4 years.
    I am now part of the solar industry and I am finally going to move ahead on my own home, but after being a Enphase fan the past 3 years, I am no longer going to install Enphase or the 250w variety of solar panels. I have found a better way.
    Thanks for your article. I will share it with friends.

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    1. what is your better way?

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