Solar Payback – Virginia Residential
|Electricity Bill||$113/month or $1,356/year|
|Solar Electric System 6kW generating 900kWh||$48,000|
|State Incentive (Expired March 2010)||$2,000|
|Local Government Incentive||$0|
|First Year System Investment (Net)||$31,600|
|SREC @ $290/per SREC/month (sold to DC) (Apr 2010)||$214/month or $2,568/year|
|Electric Saving (77% offset)||$71/month or $852/year|
The following discussion will take you through a simple, non-technical, description of a typical solar installation. A typical residential solar investment, as summarized in the table above, is explained in layman’s language. We take you through the cost of a typical solar installation and show how this is offset by various incentives. We also describe Solar Renewable Energy Certificates (SREC), something most of us have never heard of but will be very pleased to be introduced to.
Your Electricity Bill
As an example, a Virginia (VA) homeowner with average monthly electricity usage of $113 can offset 63% of that sum with a President Solar 6kW solar electric, photovoltaic (PV), system on the roof. Let’s look at a simplified set of calculations. Your installer can assist if you need more detail. Also, President Solar has provided additional helpful links below.
The average household in the US used 920kWh of electricity per month. In VA this figure was 1,173kWh, slightly more than the average. The average cost of a kWh of electricity in VA is $0.096. This means your bill will be around $113 per month or $1,356 per year. Note that your electricity use may be more or less than these average estimates. Now, a well-situated 6kW system from President Solar installed by your independent installer will generate about 738kWh per month. However, 738kWh will offset 63% of the 1,173kWh usage of a typical VA house meaning your bill falls from $113 per month to less than $42 per month! Your installer will suggest a smaller or larger system to meet your specific needs.
The Cost of a 6kW Solar Electric System
The cost to you from your installer will vary depending on how easy or difficult it is to install the system. Your installer will explain the many factors influencing cost, but let’s assume the price is around $8 per Watt. At 6,000W, or 6kW, that will amount to a total of $48,000.
Federal, State and Local Government Incentives
Now, here is the exciting part. The federal government will give you a 30% tax break on this reducing your cost by $14,400. You may also qualify for various state incentives. These change from time to time as they may be time or budget limited. However, as an example, VA was giving $2,000 earlier this year but that expired in March. For our calculation, we are going to assume the federal incentive and only the local $2,000 credit.
Solar Renewable Energy Certificates (SREC)
If the above credits are not enough for you, there is another very exciting way of receiving dividends from your President Solar electric system. We will outline it here but your installer will explain further and help you apply for it. An SREC is a certificate that you can trade (sell) if you are producing electricity from solar energy. This does not mean you are selling your electricity – you keep that and consume it in your home. The SREC is a certificate that says, I am producing solar electricity and it has value – significant value! Utilities are under state obligations to produce a greater proportion of their electricity from renewable sources such as solar. This would be a great contribution to energy independence for the USA and reduce our overall dependence on polluting fossil fuels such as coal, gas, and oil. Today, much less than even 1% of our electricity comes from renewable sources such as solar.
If utilities cannot show that they are making progress toward the goals for more renewable energy, they are effectively penalized and have to pay fines under statutes referred to as Renewable Portfolio Standards (RPS). To reduce the risk of paying these fines, utilities will buy your SREC that certifies that you are producing a certain amount of electricity through solar. These certificates are now traded like stocks on a trading exchange and someone will write you a monthly check based on the price you sell at. There are now traders who make this process simple for you to collect your check each month with little effort!
No doubt you are asking what an SREC is worth and how many you can produce in a month or year with your 6kW system. First let us define a SREC more fully:
- 1 SREC is equivalent to 1,000 kWh of solar electricity.
A well-situated President Solar 6kW system will produce about 738kWh per month and that will be equivalent to 0.74 of an SREC per month or 8.9 SREC per year.
VA does not presently have its own SREC market permitting trades within the state but you can sell your VA SREC in DC or in PA.
SREC have different values depending on which state the utility that is buying them is located. Their values are also likely to fluctuate over time and like stocks, they will go up and down so there is no absolute assurance of future value. You can sell within your state to a local utility but you should know that some states permit their utilities to buy SREC from outside of the state. DC, for example, will buy VA SREC as well as those from certain other states. Recent prices in MD have been around $325 per SREC. In NJ the prices have been as high as $650 recently. Please note NJ does not allow purchase of SREC from other states. For VA, this means your production of a little less than a whole SREC will be worth $214 per month or $2,568 per year, subject to the fluctuations of the market.
Your investment in a 6kW system will pay back in just over 10 years depending on factors such as your tax rate, credits available to you, electricity production influenced by the sun-hours etc. Your installer will help explain the most relevant of these factors to you. Going Green does pay.
While this may all seem a little confusing and bewildering, do recognize that federal, state, and local government are trying to encourage you to install solar and make it cheaper for you. Your installer will take you through relevant data to make it easy to understand.
** Please note this example is an estimate only and many factors could result in your system having better or worse economic returns than highlighted here. Your installer will provide more specific information that incorporates your specific circumstances and your needs.