Solar: An Investment That Benefits You, As Well As Your Non-Solar Neighbors
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There are very few true ‘win wins’ in the energy challenges facing society. Luckily for all of us, solar is one of those few things, where when one someone installs it, everyone wins.
Some incredible solar factoids:
- For every 1kw you install, your solar panels will directly benefit other electric ratepayers by $4,000 (offset of market rates proven by independent, third party analysis at direction of Public Utilities Commission)
- When you install solar, you can expect to earn a return on your investment better than the stock market
- When you install solar, you can expect your home’s resale value to increase
- When you install solar, you lock in an electric rate for 40+ years
- For every 1kw you install, your system will reduce carbon pollution by roughly 1,276 pounds
Sound incredible? It is, but it’s all true, and it’s why we love being in the solar business so much!
We’re going to spend some time talking about point #1, since the issue of solar and costs to maintain the grid has been in the news a lot recently.
Net Metering: The Basis of Modern Grid-Connected Solar Systems
Back when we started, in the late 1990s/early 2000s, battery-based systems were the only way to go solar. These were systems installed at camps, compounds – places well off the trodden path. In those situations, solar was often the only choice for energy.
By the mid 2000s, grid-tied inverters were entering the US market in a big way, allowing homeowners and small businesses to utilize net metering rules. Net metering (itself a pretty new invention at that time) was actually shaped around the needs of analog utility meters – when a solar array produced electricity, it would spin the meter backwards. When the customer needed power from the utility, the meter would go forwards. At the end of the month, the utility reconciles the meter (on net, did it go forward or did it go backwards?) and applies a credit appropriately.
Flash forward ten years, and analog metering has been replaced with digital meters, and the cost of solar has declined by more than 70%. In New Hampshire, solar has grown by close to 400% (!!!) leading to hitting net metering ‘caps’ that were arbitrarily assigned years ago. In Maine, there is no “Cap,” but Maine has hit 1% solar penetration, which has prompted a ‘review’ by Maine’s PUC (happening over the next few months).
So about all those grid-connected, net-metered solar arrays… How are they working out for society?
Well, we already know the answer to that question – net metered customers are actually giving back value to the grid – above and beyond the compensation they get from offsetting their own power bill!
How We Know that Your Solar Saves Everyone Money
New England’s grid operator, ISO New England, built a neat app called “ISO to Go.” The App will tell you in real time what the current load is on the grid, what the current wholesale price per megawatt-hour is, and what the real time fuel mix is.
To understand solar’s value to the grid, you must understand three facts:
- Electricity becomes significantly more expensive when there is high load on the grid. The highest peaks for the New England grid occur on hot summer days.
- Expensive transmission infrastructure is sized (and, arguably, oversized) for these peak loads. Much of the grid’s capacity is underutilized for most of the year, and some of the most expensive upgrades occur solely to meet demand on these peak days.
- Solar energy reduces peak load on the grid. Solar panels generate some of the most valuable kilowatt-hours, due to the fact that solar panels, by definition, produce power on hot, sunny days.
To quote ISO New England directly, “During times of peak demand, the economic and environmental costs of producing electric energy increase as the fuel mix changes to include more expensive, higher emission fuels.” (ISO To Go app, “About the Power Grid”).
Solar Saves All Ratepayers 10.9 cents per kilowatt-hour pushed back to the grid
The case we just described was proven to be true in Maine’s landmark “Value of Solar” study, published in the spring of 2015 (See: Value of Solar).
The study showed that a kilowatt-hour of distributed solar generation was, in fact, worth more than twice the retail rate of electricity!
Later in 2015, the Acadia Center produced a similar study for New Hampshire, which found “that the value of solar to the grid – and ratepayers connected to the grid – ranges from 19-24 cents/kWh, with additional societal values of 6.7 cents/kWh.”
Again – solar was found to provide benefits to the grid greater than the expenses of compensating them under net metering.
Now, within the last few weeks, Maine’s Value of Solar was updated by Crossborder Energy, and the latest finding is that every kilowatt-hour you send to the grid solar generates 10.9 cents of savings for other ratepayers.
This brings us to the claim that each 1kw of solar (4 panels) will save all ratepayers $3,000 over 25 years. The math?
1kw of solar = 1,200 kWh/yr over 25 years * 14 cents = $4,000 (rounded down slightly to count for panel depreciation).
Solar is the ultimate win/win/win:
You win: by getting a system that reduces your electric bill and gives you energy independence.
Your neighbors win: by paying less to maintain an inefficient, overbuilt vintage electric grid.
The world wins: by having less carbon polluting fossil fuels burned.