Things Are Getting Interesting. Let’s Talk About Money, Utility Companies, And The Grid

It’s here! This pallet with 500 lbs. of equipment was delivered from Texas Wednesday last week.

And not only is that pallet full of stuff heavy, it’s expensive, and that’s what I want to talk about today, money.

What I have on that pallet are two, 6500W inverters with built in solar charging systems, three 5 KWh LiFePo batteries, and some misc. parts and cables to make it all work. That pallet up there cost me right around $9,000. And by the time I add in the cost of cables, connectors, bus bars, circuit breakers, the parts I’ll need to connect it all to the house’s electrical systems and a few specialty tools I need, I’ll have about $11,000 invested in this. And then I still need to add more solar panels. Let’s call it a total of about $13,000 for the entire system.

That’s a hell of a lot of money. Or is it, really? Think about it for a moment. When fully configured this system is going to be a complete 13 KW, 240V split phase power generating system that can provide enough power to run the entire house, entirely off grid if I can get enough solar. And if we’re conservative with our electrical usage at night, enough battery capacity to carry us through the night until the sun comes out again. Once you consider that, that $13K price tag begins to seem a bit less shocking.

This system should also qualify for the federal energy tax credit, which means I could get back about 30% of the cost in tax credits. If my accountant can pull that off that would bring my out of pocket cost down to under $10K. But to be honest I’m not counting on that money. The US tax system being as convoluted and laden with pitfalls and booby traps and the like, I am not counting on that money and will be pleasantly surprised if we get it.

So the question now is will this system eventually pay for itself? The answer depends on equations that have a lot of “ifs” in them.

When we ran the numbers on all of this we knew right up front that while this system could handle all of the house’s power requirements, we’re never going to actually achieve that. There is no way that we could put in a system that would take us entirely off the grid. This is, after all, Wisconsin. We get a lot of days up here where we will be generating no solar power at all because of the weather. We can go for a week or more without seeing the sun. So we assumed that, at best, this system might be able to handle half of our electrical usage when averaged out over the course of the year. That is optimistic. I admit that, but it’s a place to start anyway.

Our electric bill right now is averaging around $300/month, $3,600 a year. Half of that is $1,800. We have $13K invested in this system. 13,000 divided by 1,800 is 7.2. So the equipment would pay for itself in about 7 years. That’s really not too bad, all things considered.

If we get the tax credit things look even better. That would bring the cost down to under $10K or so. That would bring the payback time down to about five and a half years.

But as I said, there are a lot of “ifs” in that equation. If the weather cooperates, if the equipment works as specified, if the batteries hold up that long, if we don’t have any significant problems with the system, if we can get enough solar panels up to feed it, if… You get the idea.

If you’re thinking of putting in a system like this yourself, here is another thing to consider. The only reason this system is coming in at this price is because I’m doing almost all of the work myself. I got some estimates on similarly sized systems from contractors and the numbers were a bit eye watering, to say the least. If put in by a professional installer I’d have been looking at prices anywhere from two to four times as much as this. That’s right, prices ranging from about $27,000 to well over $40,000.

Now let’s talk about another aspect some people think about, which is using a system like this to sell power back to the utility company. You’ll hear claims from people that you can make a system like this pay for itself by selling power back to the utility.

Let’s get one thing straight right up front. Utility companies are a government sanctioned monopoly that exists for one reason, to make money. Period. That is their sole reason for existence. And they make money by selling you power. And you with your few little solar panels? They hate you. You are an existential threat to their existence. Every watt of power you generate yourself is a watt of power they can’t make a profit from by selling to you. Every watt of power you try to sell them is, at best, an inconvenience to them and at worst, something that actually costs them money.

What it boils down to is that the utility company is not your friend. All of that PR fluff and nonsense about them caring about renewable energy and being environmentally friendly and caring so much about solar and wind power? It’s BS. All of it. Pure, unadulterated bull shit.

They will buy your power. If they are forced to by law. But they don’t like it, and they will put as many obstacles in your path that they possibly can. There will be special “fees”, special equipment requirements, special electrical code requirements and I don’t know what all else that are designed specifically to make it as difficult as possible for you to hook your system into the grid to sell them power. In a lot of cases the utilities actively bribe lobby state legislatures to change zoning laws, change permitting processes, change building codes and everything else they can to make it difficult or even impossible for you to sell power back to them.

And even if you do manage to jump through all of the hoops and force them to do it, there’s no guarantee that the rules won’t change tomorrow or next month or next year.

If you can manage to pull it off, good for you. But personally I’m not even going to try. I have no desire to sell power back to the utility. I want to become more independent from the utility company, not tie myself to it even more tightly.

Let’s talk about the grid for a moment.

One of the reasons I started to look into a system like this is because I am not optimistic about the sustainability of this country’s electrical distribution system and power generating capabilities. We are in the process of an enormous change in this country, switching from internal combustion engine powered vehicles and other ICE powered equipment, to vehicles and equipment that is powered by electricity. I am not opposed to this. I think it is a good idea for a variety of reasons.

The problem is that we aren’t ready for it. The electric grid in this country is already so stressed that even relatively minor weather events like a mild heat wave brings the grid to its knees. And now we are embarking on adding tens of millions of electric vehicles and other electrical demands to a system that is already strained to the breaking point. We simply do not have enough electrical generating capacity, first of all. And even if we did, the distribution system, the power lines, sub stations, etc. that distribute that power around the country, is old, rickety, and utterly inadequate to carry the amount of power it will need to deal with in the near future.

Last summer California announced proudly that it was going to ban the sales of ICE powered cars in the near future, as well as the sale of new lawn and garden equipment and other equipment powered by small internal combustion engines. And just days later, the state was forced to issue emergency instructions begging people to not plug in their EVs to charge them because the grid was strained to the breaking point and they’d have to begin rolling blackouts to reduce the load if people didn’t curb their electric use. Same thing happened here in Wisconsin this past winter, although for different reasons.

We need to upgrade the electrical distribution system. We need to add more electric generating capacity. And we need to do it right now. And no one seems to be in all that big of a hurry to do anything about it.

This is another one of the reasons I am putting in this system, to get at least some kind of independence from the grid, not just to save money on my electric bill. Am I being paranoid? Maybe? But I think the problem is serious enough that I want to take some kind of precautions.

Anyway that’s for this time. Next time I’ll go into some detail about this system.