Adding Solar, Part 2: Proposals and Economics

In the previous post, I described various factors affecting the suitability of our house for a solar installation. Now I'll review the talks we had with solar installation companies, including configuration and economics.

We ended up with proposals from three firms: EcoHouse Solar, Paradise Energy Solutions, and Third Sun Solar. Joan and I had met Kevin Eigel of EcoHouse Solar eariler, during the 2014 Green Ohio Tour, and we also met with Sheldon Stutzman from Paradise and Kyle Kidd from Third Sun, companies that had advertised in the Green Ohio Tour brochure.

The first thing that all the companies made clear was that we had shade issues, particularly due to the locust east of the roof section. The economics were iffy. This picture shows the situation, albeit with the leaves off. Also note the woods to the west, which will truncate the late afternoon sun.

The companies were willing to discuss specifics once Joan and I made it clear that our primary motivation was not to make money, that is, to reach a payback on the installation as rapidly as possible, but rather we were intrigued by the technology, and wanted to do our part for clean electricity generation in Ohio. This led us to our catch phrase, You do what you can (ydwyc). Our house is not a fresh construction located in a corn field with a sapling or two in the front yard, nor are many other houses, but in such cases it is still appropriate to investigate what we can do, given where we are. You do what you can.

Costs
All of the final bids ended up being for twelve panels, two strings of six, with varying wattages per panel. At first Paradise Energy proposed sixteen panels, but when I commented on this, Sheldon admitted that twelve, leaving empty space next to the locust, would make more sense. Looking at raw costs, but including the 30% Federal tax credit, the proposal numbers looked like this:

There were many points to consider besides our shade issues and raw cost.

Other Incentives
There are minimal state-level incentives for renewable energy sources in Ohio. Indeed, the legislature has frozen the state's renewable-energy goals for the next two years, which has caused the value of SRECs, or State Renewable Energy Credits, to drop substantially. At this writing an SREC, representing 1 MW-hour or 1,000 kW-hours of production, fetches $30, so our system might produce $100/year through SRECs.

Currently the Ohio SREC market will cease in 2024. 

Roof replacement
If the roof is more than 10 or so years old, the homeowner must realize that taking the solar panels off to re-roof a few years down the road will be a significant additional expense. Our roof is twelve years old, in the gray zone, so none of the companies would offer an opinion whether to replace he surface on which the panels would be placed. I had two roofing companies come out to evaluate the roof, and their estimates for the remaining lifetime of the roof were between fifteen and twenty-five (!) years. (The roof is composed of "40-year" dimensional shingles.) Joan and I decided not to replace.

Optimization Tech
In the past, a drop in the power output of one panel, say due to shade, could affect output of an entire string of panels. There are now two technologies for reducing these losses, microinverters and DC optimizers. There's a lot of information on the web comparing the two technologies, much of it suspect due to conflict of interest. Even the proponents of power optimizers will admit that the microinverter technology is likely better for installations with large shade issues, and we went with that.

Monitoring
Modern systems include a monitoring package based on the solar installation feeding performance data back to the manufacturer, over the Internet. Both the owner and installer can log in and review the information, including per-panel output numbers. The per-panel information incurs an extra charge, but that is usually included in the quote from the installer.

Net Metering vs. Net Metering
The term "net metering" has been applied to several different arrangements, leading to much confusion. With the old spinning-dial electric meters, when a photovoltaic system put a surplus of energy back onto the grid, the dial would spin backwards, erasing the corresponding amount of electrical consumption from the meter. That doesn't apply any more; the first thing that our utility (AEP-Ohio) did was swap our old meter for a new, digital meter that records energy-from-the-grid and energy-to-the-grid separately. This provides flexibility in billing.

For a long time I, and the solar companies, had the impression that the only way to receive any credit for putting energy back into the grid was to use AEP-Ohio as the electricity provider, and that the alternative energy suppliers who have sprung up with deregulation in Ohio would not provide any credit at all. But Reynoldsburg, our municipality, has an aggregation agreement with AEP-Energy (now a separate entity from AEP-Ohio) that gives us a less expensive rate than AEP-Ohio. The question became, should we switch to AEP-Ohio, and receive net metering, or stick with AEP-Energy, without net metering but with a cheaper rate. It would depend on the charged rates and how much electricity our system would put back on the grid. That's a head scratcher, especially in a rapidly changing electricity market, and when AEP-Ohio and the Ohio Public Utilities Commission are frequently at loggerheads.

Then, after receiving my Interconnection Agreement from AEP-Ohio, I had a conversation with the Distributed Generation Coordinator. He explained that most if not all CRES (Competitive Retail Electric Service) companies would recognize the from-grid and to-grid information that AEP-Ohio (the distributor and billing agent) sent to them, and charge only for the net. What's the difference with AEP-Ohio, then? AEP-Ohio will carry a negative balance (so much electricity put back on the grid that your monthly bill was a credit) forward to the next month, but a CRES would not. In fact, his office maintains staff to work through billing issues with the CRES companies. He advised sticking with AEP-Energy CRES, because our system would rarely produce a negative monthly balance. And if my first bill isn't right, call him. He was a pleasure to work with.

Does your head hurt yet? Mine did! And we'll see how the distribution charges are affected when the first monthly bill arrives.

Payback Times
The payback time, how long it takes to recoup the installation cost, depends on too many factors to have much confidence in the final result. What will the real-life electricity production be, after shade and other "derating" influences? What is the rate of inflation of electricity cost? What will SRECs be worth? Will the utility regulations change? Will the state pass more anti-green legislation?

Also, in my experience, when a solar company gives you a payback estimate, that doesn't include making up deferred income. That is, you could have invested the money you paid for the solar installation. Or, if you took out a loan, you're paying interest.

The estimates for our system were for a payback period of 14 to 18 years. (In states with expensive electricity, such as New Jersey, it might be half that.) The net cost of our system will diminish over time, but there has to be some intrinsic satisfaction with the project, some non-financial value to justify the outlay.

You do what you can.

The companies all seemed competent; some had been in business longer than others; the bid costs were all different. Some had small extras (free annual inspection for the first two years). In the end, given the high expense, the low bidder won our job.

At one point after signing the contract, EcoHouse Solar proposed using larger (315 watt vs. 305 watt) panels with power optimizers at no change in cost. (The microinverters aren't appropriate over 305 watts.) This sounded good. However, after measuring our roof to double check, EcoHouse reported that the larger panels would completely cover the height of the roof, from gutter to ridge vent. We decided to stick with the original proposal.