About one year ago, we shared in the post entitled “How We Get Paid By Our Power Company with Solar Panels” how we installed solar panels to offset our electricity bill. Ever since then, we haven’t paid a dime to the electric company. We’ve also built up a nice cushion of credits in our account to draw down when our electricity usage in the winter (due to our electric heat pump system) outstrips production. This has been a big help in reducing our monthly cash outflow, particularly helpful since Deb will be staying home to be with the baby real soon.
I made some projections at the time based on my research and the information given me by my local installer. I have one year’s worth of real-life data now to analyze, so I wanted to give you an update on how we did.
A Brief Review
Let’s start by revisiting some of our initial projections (you can read up on our original post for the explanation for all of these figures):
- Total Installed Price: $9500 (after a 30% federal tax credit and $1000 local utility rebate)
- Size: 3.5 kW (kilowatt)
- Net Meter Premium: Base electricity rate (fluctuates around $.10/kWh) + $.04/kWh
- Projected Annual Gain: $840
- Projected Monthly Gain: $70
- Projected Rate of Return: 8.8%
So I was anticipating my original $9500 investment to yield an annual 8.8% rate of return for me. As I mentioned in my post on 8% investment returns, that’s about the average return on the stock market through history, so I thought this was a decent number.
But how did we ACTUALLY do after one year?
The Actual Numbers
Here are the actual numbers of how much we earned in the past 12 months from the solar panels:
- Total Generated: $699.46
- Monthly Average: $58.29
- Actual Rate of Return: 7.4%
Indeed, the solar panels underperformed our initial projections (which is disappointing), but it is still within a range that I’m satisfied with. The amount I get paid for my energy generation is pegged to the going electricity rates, so if that amount goes up, so will the amount I get paid. Seeing that energy costs have consistently been on the rise, I’m comfortable with the prospect of earning more in the future.
So Why the Difference?
I’ve been watching my solar production very closely throughout the year, so I have a few observations that helps explain the underperformance. Perhaps these can be helpful to any of you who are considering installing solar panels at your place.
- Solar production goes WAY down in the winter. Clouds and rain (and SNOW!) severely cripples solar production. We get a fair number of sunny days, but sunny days with intermittent clouds can still send solar production plummeting.
- Warm days do not equal good solar production. Related to the previous point, we get plenty of warm, dry weather, but that doesn’t mean that the solar panels will do well. In fact, heat decreases the efficiency of the panels! They don’t need heat, but direct sunlight. Those are usually synonymous to us, but not to the panels.
- The angles are important. Because my panels are fixed at one angle all year long, even if the sun is shining brightly, it may not hit the panels at the optimum angle. This results in lost production.
In short, the starting projections for my area were way too optimistic. The monthly production rarely exceeded the average needed to hit our target, and certainly not enough to compensate for the low yielding months of the winter. In the end, I don’t see how it would have been possible for my system to produce as much as originally expected. The external variables in my area such as the installation site and weather prevented that from being reality. So if you are considering installing solar panels, use more conservative estimates for your needs and the benefit of solar is really questionable if you live in a place with a lot of overcast days.
An Interesting Observation
Even though I mentioned that winter production goes way down, you’d think that the hot summer days with the longest hours of sunshine would result in the highest solar production. But that’s actually not the case. In fact, a clear, sunny day in the winter—even with its much lower hours of sunshine—can outperform the best day in summer. This is for a couple of reasons: 1) Our panels are angled to the south so there is actually more direct sunlight when the sun is lower in the southern sky, 2) The solar panels operate more efficiently in cooler temperatures, 3) There is less moisture in the dry air winter air than in the summer. It’s remarkable how much the solar production is decreased due to the summer haze. What this means is that the highest producing single days are found in in the cooler months. The best producing months are in Spring and Fall where there’s a balance of longer days, sun lower in the south, and cooler temperatures.
Before you ask…
I’m sure many of you are aware of the big announcement not long ago by Elon Musk on the Tesla Powerwall home battery packs. So in my next post, I’m going to address a question that many of you are probably wondering: What do I think about them and will I be getting them? Naturally, I’ve been very intrigued by it and have done a bit of thinking about it. Stay tuned for my thoughts next time.
In the meantime, what do YOU think about Tesla’s Powerwall and renewable energy in general?