As of recent, I’ve started to think more seriously about getting solar panels for my residence. The thought has crossed my mind on a number of occasions but never gave it any serious consideration. Here I’m going to attempt to figure out how much a system will cost me, how much it will reduce my current bill, and what’s my break even point.
Before I take the deep dive as they say, I want to share a few preliminary considerations and thoughts.
1) I live in Southeastern MI.
2) My lot is free of trees and other obstructions.
5) I high doubt that my electrical costs are going to trend downward over the next 20-years. If anything they’ll, remain the same. If I was a betting man, I’d say they’ll increase. More kids equals greater energy needs.
3) According to Google’s Project Sunroof, my home receives 1,489 hours of usable sunlight per year. Additionally, I have 1,286 sq feet available for solar panels.
4) Over the past year, I’ve spend roughly $2k on our electrical needs.
The next item I want to discuss is the pros and cons of moving forward. Everything in life has pros and cons.
Pros
1) Projected long-term ROI of $8,000 over 20-years if financed.
2) According to a 2019 Zillow study, solar panels add 4.1% to the value of the average home. So, that would increase my by Increases value of home by approximately $13,000
2) Better for environment.
Cons
1) All loans carry risk of default though somewhat unlikely in my situation. I know, famous last words.
2) Have to stay in home for 20-years and beyond to maximize savings.
3) Incur maintenance costs after 20-years of ownership.
Basically, I have to ask myself if taking on this risk is worth it. I know some of you will say, why not just invest the difference. I suppose I could go that way but money spend on electricity will be spend on it no matter what. It isn’t a question of having extra money. It’s a question of reducing a bill that will have to be dealt basically forever.
As with any project I undertake, I’m thinking about what is going to reduce my monthly household operating cost. If I can reduce my electricity bill down to nothing and just have a loan payment left over, why not? In this configuration, at least, I’m going to get to a point where this bill goes away. So, out of the cons, the biggest problem is risk if all other things check out. Nothing is permanent.
Alright, now I want to dive deeper into the math to determine if this will be a worthwhile investment for my situation. First up, what I’m currently spending.
The first item is to know where I stand now. According to my DTE energy bills, I spend a grand total of $2,070.86 over the past year and used 11,809 KWH. Doing a simple calculation, I spent 0.175 per KWH. This number is most likely a bit over inflated as part of my DTE energy bill is administrative.
Obviously, I’d need to not spend more than 2k in loan and other costs for this to be worthwhile or break even. I would consider a slight increase to make this happen but not much. I’m trying to win now and later.
Okay, now, here’s the fun part, trying to figure out how much the solar panels will cost out the door and what sort of cost savings I can expect.
According energysage.com, the average 10 kw system will produce 14,165 KWH of electricity. This system should fit our needs for the time being with some room to grow.
As of July 2020, the average cost of solar in the U.S. is $2.91 per watt or $29,100 for a 10-kilowatt system. If we fact in the federal ITC discount of 26%, we’re looking at $21,534.
Now let’s talk about the quotes I received. In total, I was able to retrieve 3 quotes – Green Panel, Yellow Lite, and Michigan Solar Solutions.
Michigan Solar Systems came in at $30,690.20 for a 10.36 kw system.
Green Panel came in at $28,194 for a 10.4 KW system.
YellowLite came in at $27,000 for a 10.56 KW system.
According to our docs, our loan payment will be $137.33/month and our new utility bill will be right around $28.27/month. Our grand total cost for electricity moving forward puts us as $165.50, which is CHEAPER than what we’re paying now. As a matter of fact, about $10 less and will only increase as time goes on.
At this point, it’s unclear why I wouldn’t go with solar. There’s so many pros and very few cons. The deal seems to be in our favor.
We decided to go with YellowLite as they were the cheapest, provided the largest system, and had the best warranties. The sales rep was also very knowledgeable and spent hours on the phone with me as I asked every question under the sun.
As you can see, we were quoted a price we simply couldn’t refuse.
Haapala Family Finance 