Saturday, October 29, 2011

Made the decision

I live in a house that is 100% electric powered. For the last 7 years, $600+ electric bills have become the norm, especially during the months at the extreme ens of the weather spectrum. In the summer, the air conditioner runs continuously, and in the winter it is the heat pump. I thought it was due to the fact that we had an old HVAC unit that was undersized for the house (the previous owner had not upgraded it after adding a 1000ft+ addition). We replaced that two years ago, and while it cut our power consumption about 10%, it was far short of the 20% that the company promised us (luckily, they guaranteed that, so they did pay the difference for the first 2 years).
So, this summer I started researching solar. I looked into several options, from multiple companies. Apparently, my house is a good candidate for solar. Two different companies gave me quotes for systems, but purchasing them outright would require a significant cash outlay, and I am not in a position to do that at this point.
Fortunately, both companies also had $0 down lease/PPA options. The initial offers were similar, in that both had 5.64 KW systems, and both were for around $0.23 a KWh. The main difference was in the yearly escalator clause. One had a 3.5% escalator, the other a 3.9% escalator. Both companies projected I would save between $1500 and $2000 a year by going solar.
Since I don't trust salesmen, I did the math myself. PG&E has a tiered rate system. Tier 1 is around $0.12 a KWh for up to 100% of baseline, tier 2 goes up to $0.14, but only for between 100 and 130% of baseline. Then, the ripoff rates kick in. Tier 3 is $0.30 a KWh for up to 200% of baseline, and then it maxes out at tier 4 at $0.34 a KWh. Since the baseline is 18 KWh a day in summer and 28 KWh winter, and according to my PG&E smart meter, I use between 40 and 85 KWh a day, I am continually paying the highest rate possible for the power.
The system should generate roughly 8000 KWh a year, if they all save me $0.11, that is roughly $900 a year. Not bad for paying nothing, but then it got better. One of the companies offered to give me the first year free. So, that is 8000 KWh I am getting at a savings of $0.34 each, a first years savings of $2700. Of course, in year 2 I go back to paying for it, but that extra $1800 in savings the first year is what is motivating me to get the system installed. Without that, I was on the fence.
There is still some risk, since the solar rates go up 3.5% a year. If PG&E rates stay flat, in year 13 solar will be more expensive for me then PG&E. If baselines increase dramatically, then the savings can disappear. Neither scenario seems likely, but who knows?
I just received the paperwork from the salesman, and I plan to sign it on Monday. By the end of the year, the system should be installed. I will track the progress and savings here. Hopefully, it all goes according to plan.

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