When we built our own house, we chose to invest in energy efficient choices whenever we could – we installed geothermal, upgraded windows and doors, and hired someone to insulate with spray foam. All of these upgrades up-front have helped to keep our energy bills relatively low.
But over the past year, we began to research and take steps to reduce our power bills even more – by installing solar panels on our property.
While some people can make these decisions quickly, Ryan undertook our solar experiment as he undertakes every decision – as a challenge to learn every single thing there is to know, weigh every last option, and take a year to finalize a decision.
He’s very thorough. (It took the man 9 months to find a minivan. And, dude, there are thousands of minivans for sale at any given moment.)
Ryan originally wanted to DIY the solar panels. The Internet told him he could do it, and the Internet is never wrong. And in total fairness to him, he can do anything and built our entire house. But, after finding out more about the rebates and financial incentives, he learned that we had to bring in a professional to get the max incentives – which is what we did.
Ryan interviewed 8-10 companies before committing to a installer. Of course he did. And after lots of research and planning, our household has officially gone solar!
So I wanted to share some information after living with the panels for the past few months, in case you have any interest in installing solar panels to offset your energy costs.
Why solar?
Why anyone (including us) wants to use solar power is probably pretty self-explanatory. It’s a green source of energy with a superior return on investment. Having solar power means we are no longer subject to the will of the power company if and when they decide to raise rates. This just means we have more control over our power source.
It’s good for the Earth. It’s good for our pocketbooks.
It seems like a no-brainer. Before I get to the money, let’s talk about the solar a little more.
What system did we choose?
The exact solar panels we installed are detailed here. We installed a 7.6 kilowatt system with 24 panels. There are some complex reasons for this sizing. The size was calculated to produce enough electricity over the course of a year to provide power for all of our electrical consumption.
Are we living off-the-grid?
The idea of living off-the-grid is pretty exciting. But the short answer is, no, installing solar panels doesn’t mean we live off-the-grid. The system we installed is tied into our existing electrical grid. But, by choosing grid-tied solar, we can also be PAID by the power company for the energy our solar panels are producing.
So, it’s really a choice between being completely self-sufficient and producing only our own power (off-the-grid) vs. producing power that can be used to offset our own energy consumption WITH the backup of a power grid (grid-tied). There are additional perks to using a grid-tied system – we didn’t have to purchase expensive batteries to store power for times we aren’t producing energy (like at night or cloudy days). And there are large financial incentives that I’ve outlined below by tying the power back into the grid. This makes the installation much more financially feasible.
There are a few more decisions we had to make. First up, we needed to choose an inverter system. An inverter basically changes the power produced in the solar panels into usable energy for your home.
- We could choose micro inverters that mount on each panel and convert the DC power to the AC power used in your house. (Seen below.)
- We could choose a string inverter that converts the DC power to AC power at one source after all the power from the panels is combined.
Finally, we chose whether to run a battery backup or not. This is an additional cost but allows you to store power on-site as a backup, in case of a power outage. This is an alternative to generators.
We chose not to run a battery backup, because of the high cost of batteries. It would actually be far cheaper to purchase a whole-house generator, and we couldn’t justify the additional expense (especially because our power is pretty reliable). However, if the costs of batteries comes down (which we expect it will), we would be open to purchasing and running a battery backup. Stay tuned.
Should I choose a ground mounted or roof mounted systems?
Another decision to make (with the help of the solar company), is where to install the system. This decision can be based on aesthetic considerations (do you prefer the look of panels on your roof or mounted in the yard?) as well as practical considerations (is there enough roof space or yard space to install adequate panels for your energy needs?). There may also be other practical considerations to consider, including zoning requirements, permits and neighborhood rules and covenants. The solar company can help to navigate these decisions, but it’s good to have an idea of your preference going into it.
In our case, we chose ground mounted panels. That means the panels are installed on posts and the power is run underground where it’s needed.
We chose ground mount because it allowed us to install the number of panels we needed (24) at the most efficient angle, basically getting more electricity out of the same number of panels. Roof mount panels are usually less expensive if your roof is large enough and facing the proper direction. In our case, we couldn’t fit the number of panels we’d need in the best location.
As a bonus, we were able to handpick the best location for the panels, keeping them mostly out of sight and out of the way from play areas for our kids.
Here’s a view of the panels from our house – they are located behind the barn.
How was it installed?
The installation of the panels is pretty straight forward. (Especially when someone else does it, am I right?) I-beams and racks were installed on the ground, providing the basic structure. Yep. It was snowing when they installed.
This inverter has a monitor on it that is linked via our home internet to report back how much electricity is produced to coincide with our SREC credit (see more about SREC below). We can check that at any point on our phone.
Only one of us checks it religiously. (I’ll let you guess who that is.)
How does the solar power work with the grid?
So, it seems obvious but it’s worth noting – the solar panels will not produce any power at night since there’s no sun. (Unless you live in Alaska during the summer, in which case, awesome! Can we visit?) During the period that the panels aren’t producing power, we’ll be pulling electricity from the grid just like everyone else. (Unless we had a battery backup, which we don’t. See above.)
When the sun comes out and we are producing more energy than we are consuming, the power flows backward into the grid.
This ebb and flow of power is monitored through the meter. At the end of each month the meter sends a reading on our net usage or production for the month.
Illinois (where we live) and a few other states have a net metering law that works on a 12-month calendar. It works like a savings account for electricity. So, if weproduce 1500 kilowatt hours (kwh) in June but only consume 1000 kwh, then we get 500 kwh credited to our account – that’s a power surplus.
These credits will be applied to our low solar production months. For example, we may produce only 500 kwh in December but consume 1000kwh, leaving us with a power deficit over the the month.
But, don’t fret. Because the power surplus produced through the summer will cover that. At the end of each 12-month period, we will be paid for any remaining electricity credits that we have not consumed. In our case, the solar electricity system installed was designed to cover our usage, so there will likely not be a huge surplus.
But isn’t it expensive to install solar panels?
Probably one common barrier to installing solar panels is the up-front cost. However, there are lots of financial perks that make it much more attractive.
By shopping around, we found that different companies have vastly different offerings and prices. There are lots of companies that install solar panels today – you can use a large national company, a regional company or even local businesses. And it was well worth our time to shop around, just like we would for any other big purchase.
There are companies that finance the panels, so the up-front cost is nothing. (This can be a great option if the up-front costs are beyond your budget.) In this case, you’ll pay for the panels over time, sort of like a loan on a car or a mortgage on a house. Once installed, you’ll be making payments on your solar panels instead of paying the power company for your electrical usage. Once you receive any applicable tax credits and rebates and pay off the hardware over the years, you’ll owe nothing and own the solar panels (and the energy produced from them) outright. Typically, the loans on solar panels run 10-12 years and your monthly cost is comparable to your current average energy bills.
In our case, we chose to pay for the solar panels and installation up-front, which also saved us a good amount of money over financing them over time. We had saved for the investment over the past few years.
Following installation, we were eligible for several financial incentives for solar power. These included:
- Investment Tax Credit, a federal tax rebate of total costs (26 percent in 2020, 30 percent in 2019, etc.). This is a “dollar-for-dollar reduction in when you will owe on your federal income taxes.” (Pssst: We aren’t accountants but have a great one. We aren’t here to give you tax advice, but suggest you look into this more if you are interested. The Office of Energy Efficiency and Renewable Energy has provided some great fact sheets with details.)
- Illinois Solar Renewable Energy Credits (SREC) – more on SRECs below.
What are Solar Renewable Energy Credits?
SRECs are essentially credits in the state of Illinois and about 10 other states. They allow your power company to pay us for the right to claim our solar energy as their own. This allows them to avoid building their own solar plants while producing a percentage of solar energy, as they are required to do by the state. Instead of investing in the infrastructure themselves, they pay us for the solar power we are already producing. This is done through a broker specialized in the process.
Note: In order to get SRECs in Illinois, you must use a certified installer.
SRECs are a pretty complex system built around auctions and allotments to different size systems in the region. The amount a person receives could vary greatly based on the installer, the power company, the number of other users in your area, etc. In our case, SRECs worked out to be about 56% of our system costs. But this amount is based on the amount produced so there can be a lot of variability to that number.
This money is paid out as a cash rebate within 12 months.
(You can see all the other states that are eligible for SRECs here. If your state isn’t listed, there are also states with other state tax rebates.)
So, how much did the system cost?
The upfront cost for our solar panels and installation was $23,800.
We did receive apples-to-apples quotes from different companies and prices ranged from $23,000 to $50,000. So, it’s definitely worth shopping around (while also making sure you are getting quotes for the exact same system). In our experience, most of the largest national companies prices were highest. However, these companies also have lots of additional resources and financing programs that smaller local and regional businesses.
How long will the system take to pay back?
The goal of any investment – including solar power – is to pay back you initial investment as quickly as possible (ROI). Our average power bill was around $100 before we installed solar panels. (Our bills ranged from $75-$125 throughout the year, but we’ll use $100 as the average for this scenario.)
Following the initial investment and the credits, rebates and SRECs, our system should take 2-3 years for100% payback.
In other words, after 2-3 years, the system will have completely paid for itself by the monthly savings on our power bills. Since it should have a lifespan of 25+ years (because the panels have a warranty of 25 years), that means at least 22 years of “free power” – and potentially even longer. (Technically, we still have a $8 bill from our power company every month – which is just the baseline fee for the meter.) We have very limited propane needs in our barn and house, so our propane costs should remain unchanged.
The bottom line? I can run the A/C at 65 degrees all the time and it’s basically FREE MONEY. (Don’t tell Ryan I said that.)
What else is there to know about solar power?
Solar power turned out to be a great option for us to help the planet and our pocketbook. We look at it as an investment in our home and the environment, and one that will save us money in the long run. We aren’t experts, by any means, but hope this is helpful to give some information about our decision making and options available, along with some tips if you are getting started. (SHOP. AROUND.)
We believe now was a great time to invest in solar power for our home. Costs for panels are relatively affordable while tax credits and rebates abound. However, the feasibility of solar for your own home will depend on a lot of things – including your location and financial incentives available.
If you are looking for more information about adding solar power to your home, here are a few other resources we found helpful:
Do you have other questions? Please drop them in the comments.
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Christine says
great update to your home. in the future, if you do want to add batteries to go off grid, would you be able to upgrade this current system to add the storage batteries, or would you need to get a whole new system to detach from the grid?
Kim F. says
Thank you for the breakdown Kim! Roof mounted solar is on our long term wishlist – we designed a south facing roof for them!
Kim Woodward says
How exciting! We are so glad we did it!
Brenda Scott says
Great article! So when all is said and done with rebates, credits etc it will only be $3600 out of pocket? Or did I miss the math?
Kim Woodward says
Yes – that’s correct! It’s a steal of a deal.