As of yesterday, October 13, our home solar system has been activated. AEP Texas, the Transmission and Distribution Utility (TDU), came and changed our meter to one that measures both in and out flow of electricity. Without that, any excess energy the solar panels produced would cost me money.
Home in South Texas with Solar Panels made with Bing Image Creator
When I purchased the solar panel system, I asked for only six solar panels. However, as they were having a promotion, I got an extra solar panel at "no cost". My goal was not to eliminate my electric bill completely. I merely wanted to lower it. The system cost is about $10,000. This does not include finance costs. We plan to pay off the financing quickly to reduce interest paid. I had quotes of $24,000. But the numbers don't make sense given the size and value of our home.
The solar system is expected to produce a little over 2 kW of electricity each hour. In south Texas, it works out to between 2,200 and 2,500 hours of sunshine per year. Adjusted for seasons, the solar system can produce between 14 kWh daily in winter to 22 kWh daily in summer. This does not completely cover our electricity usage, which ranges between 160 kWh and 450 kWh every week, which averages to about 29 kWh and 64 kWh daily. Roughly, that is between one half and one third of our power will be provided by our solar system.
In money terms, our electricity costs between $100 and $280 per month without the solar panels. Although our electricity provider only charges about $0.099/kWh, AEP Texas charges an additional $0.055/kWh for delivery charges. In Texas, AEP Texas manages the electrical grid, for which they receive $5.88 per month plus the $0.055/kWh to offset their cost of maintaining the electrical grid. With inflation, their cost of materials and hardware has increased, which gets passed on to consumers. While our cost of electricity remains at a contractually set $0.099/kWh, the delivery cost is not set. Then, of course, as the cost goes up, so does the sales tax. Another fee that we pay is a minimum usage fee of $10.95 if we do not use a minimum of 1000 kWh in a month, which is the basis of our contract.
Given all the variables and fixed costs, it made sense to create a spreadsheet to calculate our total cost for electricity for each billing period. These calculations range between $70 for 330 kWh in January to $197 for 1190 kWh in June and July. Compared to $100 to $280 we paid last year, we expect significant savings.
Although it might be tempting to add more solar panels to our system, it's not an assured win. Not all retail energy providers buy back excess electricity. Our current REP does not. Therefore, there is little incentive to have a system that produces excess power. If we do switch to a REP that buys back power, then we can expect to pay much higher rates for imported power and lower rates for exported power. Some REPS will bank excess power that we could consume back at a later date when our usage is higher. And, it is not clear whether AEP Texas will calculate delivery charges both in and out.
What this means, effectively, is that if we upgrade our solar system, we are better off upgrading to be net energy exporters during part of the year so that we can offset the higher cost of higher usage during the summer, combined with higher rates with a company willing to buy back power. Or, we could upgrade just enough to zero out our lowest use month while keeping our current low-cost retail energy provider (REP).
One limitation we have is how much physical space is available on our roof. We have used all of the south-facing roof space. All that remain faces north, east, and west. Fortunately, with microinverters, even low production locations are useable. However, your cost per kWh of production increases. Over the years, this cost becomes negligible. However, we're talking about today's dollars.
We will have to revisit potential upgrades in 2025. We need to establish a baseline for the year starting today. Then we can evaluate if it makes sense to add more solar panels or remain as is. It is important to have a baseline as the above calculations mentioned here are from reading the labels on the equipment. We all know that what is advertised is not always what one gets. However, the calculations give us a reasonable expectation for comparison.
The cost of the solar system hardware and installation are not included in any of these calculations as it gets messy with tax credit, interest, and rapid pay down. As we do not intend to move from this property in our lifetimes, we don't have to worry about a return on investment so much. Buying solar panels is a form of prepaid electricity. Therefore, it's not exactly an investment as we would have paid that money to the REP. The biggest benefit to us is the impact on our cash flow.
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Congrats on getting your system up and running. We have a solar system on our house here in Scotland. I found it interesting reading this post because the economics of it is drastically different here than it is in Texas (not a surprise I guess) !
Our system does fairly well from around mid-Mar to the end of Oct, but in the winter months it produces next to nothing. In Scotland we get lots of cloudy days and way less sunshine compared to Texas.
Our electricity cost is much higher than yours at around $0.40/KWh, so thats where we really save. We have a 4KW system, and I cant remember how much we paid, but I worked out that payback period as 6 years, which we have now passed.
At the time we had it installed, the UK government had an incentive scheme running for home solar installations - they would make a payment per KWhr produced, for 20 years ! Plus our elec suppliers will also pay for the excess you produce. So adding that all up, it works out quite well for us. It does not cover all our needs, and especially not in winter, however with the government incentive, and the power company payments we currently get an income from it of around $850 a year, which is nice. And that is on top of the amount we save from not paying for the electricity it covers.
However, the economics of it have changed again in terms of new installations here in the UK. The government no longer pays the incentive, so for anyone installing new here, the payback period is now much longer, although the elec companies will still pay for the excess. It makes the economics of it difficult for new installers here, largely due to the reduced amount of sunshine hours we get compared to places like Texas.
Anyway - enjoy your free electricity - its a great feeling !
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When we have paid off this first installation, it may make sense to upgrade to a larger system, even if it costs more per kWh with a company that will buy back excess. What has been increasing for us are delivery charges, which can be resolved by lowering our use.
Our federal government incentive is a 30% tax credit, which will be roughly $3000 for us. I don't know if Texas has any additional incentives.
We are fortunate to be able to lock in prices on the electricity itself. Our current contract is for 60 months. I think I'll be glad for the PV system when the contract is up for renewal.
30% tax credit is nice ! Best of luck with it !
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That’s awesome! It’s insane the choke hold the power mafias have on us. Here, we have Alabama Power that has huge lines ran down the mountain on the back side of our property, but yet, we have to purchase our power from a Coop 3rd party. Stupid. Then they want to try and charge for solar hookups and such and charge you to run power through their lines before you get paid anything in overage. The lady at the 3rd party that we get power from told me how to get around it with a smaller setup than I had planned, or I told her about mining and she said that was a perfect way to use up the extra power and get paid for it, lol. Lady knows what’s up! Lol. But yeah, I have been dealing with AP on this for years and they wanted to charge me an arm and a leg to produce the power. It’s ridiculous. So, for now I am going to piece mill my little portable panels for smaller usage until I can get the grid tie inverters that I need.
Note, I lived on solar for 4 years while living the van life so I have some knowledge in this area for sure!
Indeed. It's convoluted. I had to deal with the contractor, the city planning department, and AEP to get this done. I've been at it since April. I was hoping to have solar for the summer, my most expensive months. But it worked out that as soon as the dog days of summer ended, I finally got the net meter.
If I want to upgrade the system, I have to go through all that again.
I have thoughts of building out a barbecue trailer with a PV roof that I can plug into the house with a grid tie inverter from Amazon. It's not a permanent structure nor part of the house, so no permits. And there are no rules for barbecue trailers other than traffic rules. And maybe I can rent it out on occasion.
Yeah I have been looking into making “mobile” units that I could put some batteries and maybe even hook a computer up in there and mine some Monero, 😂
This must be an answer to my problem of saving on electricity budget.
It can be. Although it's a big expense up front. However, if you look at it as prepaid electricity, it works out as prices are sure to rise over time.
My kinda someday thats gonna be my project, when am bouyant enough will definitely go for this solar panels
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