Is Solar Right for You?

Our rooftop solar solar system is now installed, up and running, and we couldn't be happier. On any given day, we produce more power than we use. The excess is sold to our power utility during the sunny hours, and we buy back what we need when the sun goes down  - Nevada Energy works as our storage battery.

While Nevada may be an ideal place for our solar rooftop array, there are a host of things to think about when deciding whether solar makes sense for you. Where you live, your electrical usage, and the size and orientation of your roof are just a few things that will determine whether it makes sense to spend the money to install a solar system. Here are some of the things to consider when deciding on solar for your home.

Net Metering

Many, if not most utility companies buy the excess energy you produce from your solar array. This is called "net metering". Your normal electrical meter is replaced with a bidirectional meter that keeps track of the current flow in both directions. One of the first things to investigate is whether your utility provides net metering, and if so, at what rate. Our utility, Nevada Energy, charges us $0.12 per kwh (kilowatt hour) for what we import from them and credits us $0.09 per kwh for what we export. If your utility doesn't have a net metering plan, adding solar probably won't make sense economically.

Our Net Metering Stats

Electrical Usage

How much electricity you use over the course of a year is, of course, a major consideration. Check your utility bill for the past twelve months to determine how many kilowatt-hours you consume. We found that we used 7540 kwh over the last twelve months. At the current rate of $0.12 per kwh that Nevada Energy charges us, our annual cost is about $904.

Energy prices have, however, been increasing drastically here - 25% in 2022 and 28% in 2023, but let's just assume that it continues to go up at 5% per year. We are also planning on increasing our electrical usage over the next five years or so… we'll probably add a charger for an EV; it's likely that we'll be switching from a gas to an electric heat pump HVAC system; and perhaps we'll be switching our appliances like the dryer, stove and water heater to electric. Using these rather broad assumptions, I calculated that the cost for our electrical usage will be in the neighborhood of $11,907 over the next ten years, and $31,376 over the next twenty years. The spreadsheet I used for my calculations can be downloaded here if you'd like to plug in your own values. (This requires a little patience. The only way I know of to download an excel file is to sell it at $0.00 dollars. You’ll have to enter a billing address even though it’s free).

Solar Array Size

The next step is to figure out how large a solar array is needed. The National Renewable Energy Lab (NREL) in Golden, Colorado has a great app (here) that makes this part really easy. You enter your address, the size array you are contemplating in kw ( most rooftop solar panels generate around 400 watts per panel, so if you put ten panels on your roof, you'd have an array size of about 10x400 = 4,000 watts or 4kw), and the direction your roof faces - south being ideal in the northern hemisphere. The app then does it's magic, and based on the amount of sunlight your location typically has over the course of the year, it calculates how much energy you can expect your solar array to produce annually. If you are really anal (or an engineer), you can also adjust other parameters that might affect how efficient your panels will be, like the slope of your roof. In our case, we determined that fifteen panels was a reasonable size array for us. According to the NREL App, this should produce about 10,441 kwh annually, which should cover our future increased usage and provide enough surplus energy to offset the difference between the credit and debit sides of the Nevada Energy's net metering plan.

NREL App for Calculating a Solar Array Output

Our Solar array Should Produce 10,441 kwh Per Year

Other Considerations

One thing the NREL doesn't factor in is how much shade your solar panels may see. Are you surrounded by tall shade trees or five story buildings? These could drastically reduce your solar array's output.

Another consideration is the size of your roof and what obstructions may be present. Your roof has to be physically large enough to place all those solar panels, taking into account chimneys, vents, skylights, etc. Starting with an aerial view - either from a drone or Google Earth, take a look at your roof and figure out how many panels your roof has space for, and how much shading from any vents or chimneys you might incur.

Government and Utility Incentives

Currently, the federal government provides a 30% tax credit for solar installations. You can take 30% of the total cost of your solar installation and apply it directly to your taxes. If you didn't make enough taxable income to use it all in this year's taxes, the unused portion of the credit can be carried forward to future tax years.

Some states and utility companies offer addition credits and rebates, so be sure to check into what's available.

Return on Investment

There are lots of reasons to justify installing solar on your roof. You may not be (or want to be) on the grid; you want to do your part to reduce global carbon emissions; or you'd like backup if you're in an area that is subject to power outages, to name a few.

These are all good reasons, but are hard to quantify. Another important reason for most of us, and one that is easy to quantify is "will I really save money", and "what's my return on investment"? Let's take a look.

The average cost for a solar installation in many parts of the country is about $2200/kw for a total DIY project to about $3000/kw for an installation by a reputable contractor. We originally leaned towards doing it all ourselves, but after looking at the complexity, required permits and the possibility of damaging our roof (or my old body) we decided to have it installed by a qualified contractor. (See our previous blog (here) on choosing the right contractor).

Our solar array consists of fifteen panels or about 6kw, and cost just over $18,000 to install. Of this, we will get a 30% tax credit of $5400, so our net cost is $12,600. Based on the spreadsheet I referenced earlier, it will take about 10.5 years to recoup our investment. Not a great return on investment, but not terrible either. Another factor is that Redfin estimates that a solar array will increase the value of a home by about 5%, so if you plan to sell your home in a few years, you may recoup most of your investment more quickly.

Is it Right For You?

For us, a 10.5 year ROI coupled with the other valid justifications listed above made the decision easy. You now have the tools to decide whether it makes sense for you.

See you next week…