A Simple Guide to a Solar Electric System

Table of Contents System Overview Costs Financial Incentives Payback System Sizing and Location Location Time of Use Metering The Big Picture Glossary of Solar Energy Terms

System Overview

POCO SOLAR ENERGY brings you the many benefits of an alternative energy solution. Consider the following:

• Take control of your electric bills and increase your energy independence.
• Guard against future rate increases.
• Protect the environment while producing your own clean, quiet electricity.
• Add immediate value to your home.

A solar electric system consists of two main components:

There are racks and brackets to mount the panels, and wires to connect them all together, and that's it! No storage batteries are required, since the system is tied directly to the utility company grid and any excess power you generate is "stored" there by means of credits ($$) that you receive.

The solar panels are not very heavy and are easily supported on most roofs. They are designed to withstand winds up to 125 miles per hour and hailstones up to 1-1/2 inches. The system creates no noise and no fire hazard.

Here's the full picture:

1. When the sun is shining, the panels generate electricity for the home, with any excess being sent back to the utility grid and "banked" as credit.
2. When the sun is not shining, the pattern returns to the typical one, with the utility company providing the electricity and charging for it.

The times of maximum sun exposure during the day are also the times of peak energy usage. This is the time when your utility company sells-and buys-electricity at the highest rate. When you have a solar system, you can adjust your rate schedule to a "Time of Use" metering so that you are charged an extra-high rate during peak times and an extra-low rate during off-peak times. By keeping your peak-time usage low, you can take maximum advantage of the system by banking (selling) electricity at the highest rate and drawing (buying) it at the lowest rate.

Costs

To determine the true cost of a solar electric system you first need to assess your current energy situation. In effect, you currently have an "energy mortgage" on your home—a monthly payment to a utility company you must make in order to be able to live in your house. The terms of this mortgage are as follows:

• It is a variable rate, and all experts agree that it will continue to go up.
• It can go up any amount at any time.
• There is no lifetime cap.
• You can never pay it off.

If you were looking for a home mortgage and someone offered you a loan like this, would you take it? Of course not-no one would. But you have it. Can a solar electric system improve on this situation? You bet!

Buying a solar system means you are purchasing your own power plant. You are moving from being a renter of energy to an owner and producer of energy. Just like moving from being a renter to an owner of your home this requires an up-front investment. And just like owning a home this investment can be an excellent financial move and pay great benefits.

Financial Incentives

The government is trying to make solar energy as affordable as possible by giving financial incentives in the form of rebates and tax credits. They currently are as follows:

• State rebate of $2.50 per watt, adjusted for location, which for an average home system is somewhere between $6,000 and $12,000.
• Federal tax credit of 30%, capped at $2,000 for residential systems.
• For commercial systems, the federal tax credit of 30% is not capped, and the government also allows 5-year depreciation, as with any other business asset.

There is currently no state tax credit.

Deducting these incentives from the full cost of the system gives the net cost, and this is the figure used in financial calculations.

Payback

For most homeowners the net cost will be between $15,000 and $40,000, depending on the amount of your electrical usage. Commercial systems typically have a much greater range, depending on the size of the business. One way of measuring the value of this investment is to determine the payback period. This is done as follows:

1. Determine how much energy the system is likely to produce each year.
2. Determine the future value of this energy.
3. Determine the time when that value will equal the system cost.

Since we are dealing with the natural world and trying to predict the future, the payback figures will be estimates at best. The most accurate figure is the amount of power the system will generate, since the components are very reliable and the amount of sunlight falling on them is determined by detailed records from the national weather service and is very accurate. The future value of this energy can be estimated by looking at past history, in which utility rates have gone up an average of 6% for the past 20 years. Most experts expect rates to rise faster in the future, but to be conservative we use the 6% figure in our calculations.

After running the numbers, the typical payback period for a home system ranges from 9 to 12 years. For commercial systems, with the larger tax credit and depreciation, this can be as low as 5 to 7 years. People with higher monthly bills (and a higher initial investment) tend to pay off sooner, those with lower bills take longer. The main reason for this is the rate structure of the utility companies, as explained below.

Once the system pays itself off, you receive essentially free energy for the remaining lifetime of the system, which is warranted for 25 years and will likely last longer than that. The total value of the energy the system generates can easily be 4 to 5 times the initial investment-a great return on your money with very low risk!

System Sizing and Location

The size of your system depends on the amount of your electric usage and how much of this usage you want to cover through solar. Because of the utility company's rate tiers, covering a part of your usage will result in covering a larger part of your bill.

Rate tiers mean that the more energy you use, the more you pay for each unit of energy, the units being measured in kilowatt hours, or Kwh. Look at the following exerpt from a PG&E bill:

The total amount is 1,316 Kwh at a cost of $271.10. But notice that 610 hours, or 46% of the total, is in the highest rate tiers (29 and 33 cents per Kwh, and going up). Since any power generated by a solar system reduces the top tiers first, eliminating this 46% of usage would result in a reduction of $190, or 70% of the total bill. Eliminating the top three tiers, or 795 Kwh (60%) would result in a reduction of $230 or 85% of the total bill.

The highest financial return comes in eliminating the top tiers. Sizing the system to cover the lower tiers as well results in a slightly lower (but still good) return on investment, but insulates you further from future utility rate increases. Your Poco Solar consultant can help you determine what system size is best for you.

Location

Most systems are installed on the roof of the home or commercial building. This is the easiest and least expensive way to do it, and usually gives the best sun access. It is important that the area where the panels are located be free of significant shading (from trees, hills or other structures) for at least the midday period from 10 to 3.

Since we are in the northern hemisphere and the sun is more in the southern sky, the more south-facing the roof is the better. West or east are also acceptable, but north-sloping is not. Flat roofs are fine, and panels can be tilted as necessary to increase efficiency.

In general, the more sun exposure the panels get the more electricity they will generate, but they work on foggy and overcast days as well. California is a very sunny state, and even areas with lots of coastal fog get enough sun to make solar economically viable.

Time of Use Metering

There is one more factor is assessing the value of your system, and that is a rate structure based on Time of Use, or TOU. This is a special rate to encourage people to conserve energy during times of peak demand, and is particularly beneficial for people with a solar electric system since it can increase the value of your system up to 20% or more.

This rate charges a very high price for peak usage, and a very low price for off-peak usage. Peak time: from noon to 6 pm., Monday through Friday Off-peak time: all the rest of the week, including all day weekends

Going on this rate plan with a solar electric system you can earn you money through the principle of "buy low, sell high." The peak usage times are the times when the sun is shining most and when your system will produce a lot of surplus energy. You "sell" this to the utility company (spinning your meter backwards) at the extra-high rate, and then buy it back off-peak times at the extra-low rate. The more you can lower your consumption during peak times, the more money you will make, and the lower your overall bill will be!

The Big Picture

A solar electric system can be an excellent financial investment, but it has many other positive effects as well:

1. It helps support local businesses and create local jobs.
2. It keeps money in the community and provides local taxes.
3. It helps decentralize the energy grid and take control away from outside energy companies such as Enron.
4. It lowers the pressure for the state to build expensive, environmentally-harmful new power plants.
5. It lowers our nation's dependence on imported oil and gas, with all the social and political implications.
6. It reduces pollution and global warming.

It's reasonable to argue that these factors make solar energy a good investment regardless of money. But given the great financial returns possible, what's not to like?

Glossary of Solar Energy Terms

Array An arrangement of solar panels.

Conduit Hollow metal piping that contains wires.

Electrical Terms: Volt, Current, Watt These are terms of electrical pressure, flow, and output. They are best understood by using the analogy of a water hose. The number of volts is similar to the amount of water pressure in the hose, the amount of current is similar to the rate that water flows through the hose, and the number of watts is similar to the total amount of water that comes out of the hose.

Inverter A device that changes the direct electric current (DC) that comes from the solar panels to alternating current (AC) that is used in the home. The inverter is a rectangular box about two feet square that is attached to the side of the house.

Footers Metal fittings which hold the racks that contain the solar panels. The brackets are usually bolted directly into the roof joists and are sealed with roofing materials to prevent leakage. For flat roofs, there is also the possibility of a non-penetrating mounting system.

Net Metering A process by which your electric meter can run both forwards (when you're using more energy than you're generating) and backwards (when you're generating more energy than you're using). After a certain time period, usually one year, the net amount on the meter is what you owe the utility company.

Panel (or module) A rectangular metal framework containing solar electric cells. Panels are approximately 3 feet by 5 feet and weight 30 to 40 pounds.

Payback Period The amount of time it takes for the money you save in energy costs to equal the amount you paid for the solar system.

Photovoltaics A fancy word for solar electricity. "Photo" refers to light, and "voltaics" to volts, a measure of electric energy.

Racks Metal rails that hold the solar panels.

Rebate Money paid by the state of California to people who purchase solar systems. The rebate amount is determined by the number of watts of the system.

Solar Cell A wafer of semiconductor material that generates electric current from sunlight. Multiple cells are connected together in a panel.

Tax Credit An amount of money that is subtracted directly from the tax you owe. The amount you save is the full amount of the credit.