Catching Up: Solar Numbers and V2H

It’s been ages since I posted anything here except for the brief announcement about Cat moving in with us. But there is a good reason for that. Pretty much nothing has been going on here. At least nothing worth writing about. But now I do.

Solar, Taxes and ROI

So we just got our taxes back from the accountant so I wanted to talk about money and solar power. Especially about the 30% federal tax credit for the purchase of solar equipment. I’ve been wading through a lot of solar power related forums for some time now and there is a lot of misinformation floating around about this, so let’s see if I can straighten some of this out.

First of all, the best way to determine what is or is not a qualified purchase for the purposes of the tax credit is to go straight to the horse’s mouth, the IRS, and the agency’s information about Form 5695, which is how you apply for the tax credit. All of the information you need is right there if you click on that link up there. Stop paying attention to the self appointed “experts” on the internet and go directly to the IRS if you want information.

Note first of all that this is a federal tax credit. That means it is applicable only if you owe the federal government. It goes towards reducing the amount of tax you pay.

In our case here pretty much everything that we bought for the solar power system was allowable: batteries, solar panels, inverters, circuit breakers, wiring, switches, etc. could be applied to the tax credit. Once our accountant got done with all of it, our residential energy tax credit amounted to about $5,000. Needless to say, MrsGF and I were more than pleased with this.

So what does this mean when applied to our out of pocket costs? When everything we had receipts for (you did save your receipts and invoices, right?) was added up our total cost, including solar panels, was $16,000. The tax credit brought that down to $11,000.

So let’s now talk about ROI, or return on investment. How long will it take for our solar system to more or less pay for itself?

Since we put in the system about a year ago we saw a dramatic decrease in our electric utility bill, far more than I’d anticipated. I had estimated that if we were able to use the system as intended, it would cut our utility bill by about 1/3 when it was in operation. This should have been significantly more but at the moment we are restricted because we can’t get enough solar panels out there to really feed enough power into the system. We’re going to need to mount panels permanently on the garage roof. We can fit about 5KW – 6KW of panels up there. But the garage roof (and the house, for that matter) are scheduled to have the roofs replaced in another year. That’s how we have things budgeted, and we aren’t going to change the schedule at this point in time. It doesn’t make sense to put all those panels on the roof, only to have to take them all down again and then immediately have to reinstall them in a year or so when the roof is replaced. So for the time being we only have 2KW of solar out there on the backside of the garage. Once we get enough solar panels out there, we can take full advantage of the system and batteries and there should be a lot of days when all of our electrical needs are met by solar.

Anyway, let’s look at some numbers. Our electric bill in the year before we put in the system was pushing close to $300/month and some months even more. After we put in the system that dropped to around $150 – $170 per month. We estimate that we’re saving about $1,800 per year.

Our cost after the tax credit was $11,000. 11,000 divided by 1,800 is 6.11. So the system will basically pay for itself in 6 years. That’s assuming the rate we pay the utility for electricity stays the same as it is now, $0.16/kWh. And the chances of that rate going up significantly in the next few years are pretty much 100% considering the way things are going.

Of course our expense is going to go up when we add more solar panels, but once we do that we’ll be able to utilize the system more fully and further cut our utility bill as well.

I still need to do some work on the system. It is still in “experimental mode” so to speak. I need to make some changes to the wiring, run conduit, add a few safety features dictated by building codes, etc. But now that I know the system pretty much works well I can go forward with that.

V2H

In case you don’t know what that means up there in the heading, it stands for Vehicle to Home, and it’s related to EVs and their potential use to power a house during a blackout. The idea is, of course, that you have this massive battery pack sitting in your EV so why not use that power, or at least some of it, to keep essential equipment running in your home during a blackout.

There is also something called V2G, vehicle to grid, which is where the utility company wants to suck the power out of your EV to keep the grid going under heavy load conditions, but that’s an entirely different subject.

Ford made a big deal out of the V2H capabilities of the Lightning when it was first introduced, promising to actually sell you all of the equipment you’d need to do it. At the time I did a bit of research and the marketing people were saying the kit to do this would cost about $5,000, which I thought was a bit expensive, but not too horrible, all things considered.

Well last week I was talking to an actual real person who puts these things in out in California and I found out that the $5K price that was initially bandied about was ridiculously optimistic. He just put one in last week and the total cost was actually $14,000. He’s done about a dozen of these now and the cost of the installation, including labor parts, etc, has been running between $12,000 to $15,000 depending on what the electrical service in the customer’s home is like.

But $14K??? Seriously? That is a hell of a lot of money just to be able to suck power back out of your truck. Especially when you consider that my entire solar system, including batteries, inverters and solar panels, was only $16K.

That’s about it for now. Hopefully I’ll be getting back to updating this on a more timely basis!