Science of The City: Learning what solar can save you

By PAUL RUFFINS

As a solar advocate, Flawn Williams is happy to explain how the system installed at his Hyattsville home provides nearly all of his electricity and protects against an outage. “But,” he said, “I didn’t go solar to save money or have backup power. I’m an environmentalist who wants to reduce air pollution and become less dependent on fossil fuels. Solar panels are a long-term investment, and there are a whole lot of factors that determine how long they take to pay off.”  

He’s right. According to the Department of Energy, your potential savings depend on many variables. Some you can control, such as how much electricity you use, the size of your solar energy system, and whether you buy or lease it. Other factors lie outside your control, such as whether your roof faces due south, which provides maximum sunlight, or whether your local utility compensates you for any extra solar-generated energy you send back to the grid.

Fortunately, Pepco’s electric grid supports two-way net metering, so if your solar panels generate more electricity than you’re using, Pepco will buy back the surplus at the same residential rate the utility charges you.  

Other financial factors include the 30% federal solar tax credit, Prince George’s County’s $5,000 tax credit and the value of the Sustainable Renewable Energy Credits (SRECs) earned for every 1,000 watt hours (kWh) of energy generated. The current value of a Maryland SREC is about $60 per kWh and has varied widely over time. A homeowner’s biggest decision is how big a system to get and whether to buy or lease it. 

Williams has collected 14 years’ worth of real-life data on his well-insulated, 4 bedroom, 3.5 bathroom home. In November 2009, he bought a 4-kWh solar package through Clean Currents, a now-defunct nonprofit organization that helped consumers to join together to negotiate better prices by going solar at the same time. His system consisted of eighteen 225-watt solar panels, as well as the controls, switches and inverter needed to turn the panels’ direct current into the alternating current used by Williams’ lights and appliances.

The initial price of his system was $31,995 minus a 30% federal tax credit of $9,599, the $5,000 county tax credit, and a $5,050 Maryland grant (on which he paid $1,750 in federal taxes), for a net cost of $14,096. Over the next five years, he saved an average of about $740 per year in electricity costs and earned a total of $7,155 in Maryland SRECs, which dropped in value from $400 per kWh in 2009 to $163.50 per kWh in 2014. That year, he added fourteen 275-watt panels at a net cost of $8,335.

In 2018, Williams upgraded his inverter and added a 10-kWh storage battery (together they cost $15,800, net $8,145) that could power a few circuits in his house and allow his solar system to keep working if the power went out. Even when the sun is shining, solar systems without a battery automatically shut off during an outage to prevent feeding power back into the grid, which could electrocute workers trying to fix the problem. Today, a similar battery would cost about $8,500.

Williams estimates that between Jan. 1 and Nov. 1, 2023, his 32 panels generated 99.8% of his electricity and that the whole system had paid off its net cost of around $30,500 by January 2024. From here on out, it will save him about $113 a month — more, if Pepco’s rates go up, or less as the panels become less efficient with age. The National Renewable Energy Laboratory reports that solar panels installed after the year 2000 typically retain approximately 90% of their capacity after 20 years and may produce some power for 50 years.

What about the promise of  no-cost solar?

You don’t have to search too hard to see signs and ads promising solar with no out-of-pocket costs. “Science of the City” spotted one of these signs on the corner of Jefferson Street and Route 1, dialed the phone number and asked, “How is it possible to get free solar when a system can cost $25,000 to $50,000?” 

The representative, Omari Hewlett, explained that the sign didn’t say that the solar system was free, but rather that it would be installed at no cost. This writer has not verified Hewlett’s claims, and every offer should be vetted carefully by consumers. However, offers like this can often be legitimate because federal and local solar tax credits, along with state SRECs, are actively bought, sold and traded, and Pepco must buy back any excess electricity. At $430 per kWh, the District’s SRECs are America’s most valuable. So, District residents and Maryland homeowners lucky enough to live along Pepco’s D.C. feeder line might be able to cover 100% of their electric bills under a lease. But to do so calls for an energy-efficient home and the right roof.     

A common no-cost arrangement involves the homeowner leasing the system for the life of its warranty — typically 25 years. The installer puts a lien on the property, guarantees an electric rate per kWh and then sells any rebates, SRECs, or excess power. As an example, Hewlett cited a large local home that uses electric heaters in cold rooms and had a high February Pepco bill of $366 before about $80 in taxes and fees. He calculated  that leasing 37 panels would save $186.25 a month and cap any rate increases at 2.9% a year. This estimate was competitive with online quotes from another vendor.

“Pepco has been raising prices more than 5% a year with no end in sight,” Hewlett said. “Buying the system has a higher return, but in this house, locking down electricity costs with a lease would still save $132,000 over 25 years.”