Here at My Solar Backup Depot, we obviously recommend and promote solar energy systems which are capable of providing backup power. In this post, however, we will consider both types of residential solar electric systems: those which include battery backup, and those which do not. Benefits and drawbacks for each configuration will be discussed, followed by the primary factors which affect the financial payback from any grid-tied residential solar system.
The simpler grid-tie solar system configuration requires no batteries and a less expensive inverter. Since there are no batteries to charge, excess power generated from the solar panels goes straight back into the grid. But there is one big drawback: the sun may be shining on those solar panels, but when utility power goes out, you too, will be without power. That said, if your primary goal is to save money on electricity, and you are less concerned about losing power during outages, then perhaps this type of system is right for you.
The other method, of course, is one that includes a battery backup system. These systems are more expensive, but do provide backup power when utility power fails. Note, however, that a 5% drop in system efficiency can be expected. This is due to the energy loss which results as batteries are charged and discharged.
Naturally, these systems will be more expensive. Expect to pay 15% to 25% more for a system with battery backup capability. Some may shy away from this additional cost, but for those who live in areas with frequent power outages, the extra investment will bring with it a dependable power supply for the home. To keep costs down, most backup systems are designed to provide power only to a portion of the home’s circuitry. These circuits are normally chosen in consultation with the home owner.
Keep in mind that the payback from any solar system is highly dependent on where you live. Long term savings can be realized if your area has high electric rates, financial incentives, net-metering policies and good sunlight. A brief description of each of these factors follows:
High Electric Rates: From 1982 to 2010, the average yearly increase of the Consumer Price Index (CPI-U) has been 3.07%; the retail cost of electricity, however, tends to increase at a higher rate. With modern “tiered” rates, the precise increases are more difficult to calculate, but experts usually “conservatively” estimate annual increases at 5%. In some states, customers have watched average residential electric rates increase more than 10% annually. Specifically, from 2004 to 2008, Connecticut, Delaware, Hawaii, Massachusetts, Maryland, and the District of Columbia all experienced a compound annual growth rate in excess of 10% (source: U.S Energy Information Administration).
Financial Incentives: The U.S. Federal Investment Tax Credit (Residential ITC) is 30% of the solar system cost. Since 2009, and through 2016, there is no cap. (For the years 2006 through 2008 there was a $2000 cap.) This tax credit can be taken in addition to state rebates and tax credits, but these will vary state-to-state. Consult a certified tax advisor in your state to understand how the state incentives will apply to your particular situation.
Net-metering Policies: Laws controlling net-metering vary state-to-state, and individual utility policies can vary. Under most net-metering laws, energy generated by your grid-tie solar system offsets electricity costs at retail prices.
Good Sunlight: Sunlight is usually not a problem in the continental United States: most locations are within +/-20% of Miami’s sunlight level.
Again, at My Solar Backup Depot, we tend to favor the solar electric systems which include battery back-up, just for the peace of mind they engender, especially in “times of trouble.” Installation of a solar system in your home is an expensive proposition; careful consideration should be given to your individual (family) needs and priorities. Do your homework and consult with professionals. Make sure you’re specifying and ultimately buying a system that will deliver on your expectations. And finally, consider the financial factors outlined above, which will help you determine whether your system will pay for itself, as the years go by.