Try A Net Metered Account
Judging from a flurry of workshops, it’s popular nowadays to have solar systems that tie into the electrical grid so that you end up paying very little for your electricity.
Daniel Flanagan, the 31-year-old owner of Black Oak Electric in Nevada City, is one of the experts. “We are a fully licensed solar electric contracting firm specializing in the financial analysis, design, sale, and installation of grid-tied (and off-grid) solar electric systems”.
How It Works – Technical
It’s a simple system, says Flanagan. Solar modules (usually between 20 and 80) are installed either on the roof or on the ground. When hit by direct sunlight, they produce DC electricity (the kind of electricity found in your car battery). This DC electricity is conditioned by an inverter to produce user-friendly AC electricity, the kind found in typical homes). Excess power is fed back into the grid. It’s seamless, without any change to a person’s electrical service.
How It Works — Financial
A residential solar system is a mini power plant located on the customer side of the meter. This means that energy produced by the solar system is available to the homeowner without it being tallied by the utility’s meter. Any power not needed by the homeowner is fed back through the meter and into the utility grid – spinning the meter backwards in the process. This arrangement is called net metering and is the legal right of any homeowner whose utility company allows for it. In California most, including PG&E, do.
A PG&E customer who owns a grid-tied solar system has what is called an E-NET account, which is billed every 12 months on the net kilowatt (kWh) production and consumption for the year. This means that excess power is “banked” and cashed in at the end of the 12 month cycle.
Not only do you realize the savings from your PG&E bill, the financial incentives offered by the government to install solar, says Flanagan, are considerable. Take, for example, the rebate offered by the California Energy Commission, of $3.20 per watt for solar systems under 30 kW. This typically amounts to over 40% of the cost of a system. The state of California offers a tax credit in the amount of 7.5% of the net cost of a solar system.
Businesses are entitled to even more in the form of additional tax incentives: the state tax credit and the 10% federal tax credit on the net cost of a solar system. They can also take advantage of a first year bonus depreciation on 50% of the net cost and then depreciate the rest of the system cost on a five year accelerated schedule.
Flanagan says he’s now working on a local residence with childcare facility included that is taking advantage of all these incentives.
Another type of financial incentive for all is the decreasing costs of both the solar modules themselves, as well as the installation costs”how does 7% per year decrease over the last 8 years sound?
Purchasing a Solar System
Two methods of purchase are cash and getting a loan. In the first your upfront investment is recovered in the form of electrical cost savings in 8-12 years. After the system is paid for, the value of the electricity produced is seen as return on investment.
In the second, a fixed rate loan, a homeowner’s monthly cash flow will be affected by the net of the loan payment and the value of the electricity produced by the system. This can typically start out saving a modest $20-$80 per month, but gets larger as the cost of electricity increases. The average positive cash flow per month increases at a rate comparable to the rate of increase of electrical cost, which historically tends to be around 6%. This jumps exponentially after the loan is retired, of course. The good news keeps coming.
Purchasing a System From Black Oak Electric
The company will help you determine if you are a good candidate for a solar system using at least four criteria, give a quote (crediting the CEC rebate to your overall cost, thus reducing upfront costs), interface with all the necessary agencies through final PG&E inspection, then put the system online.
Examples of the work Black Oak Electric has done includes the smallest job–a 1 kilowatt grid-tied system for a weekend cabin on the North San Juan ridge (10 modules)–to ten times that, an 80 panel, 10 kilowatt system that took care of a 3,000 square foot barn and a 6,000 square foot house. Of course, they’ll do off-grid installations as well. In fact, one of Flanagan ‘s more interesting stories comes from the time he and an employee dodged bullets while they were installing such a system in a remote location where one of the neighbors was target shooting. When the man didn’t respond to their hails, they decided to get the heck out of there. Says Flanagan, “We jumped into the truck and tore away,” discretion turning out to be the better part of valor. n
Black Oak Electric
email:Daniel@flackoakelectric.comon the web at:
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