There’s (solar) gold in them thar hills!

The Thinker by Rodin

If you own a gold mine, it’s a pretty good investment until of course the gold veins run dry.

But there’s a kind of mine that never runs out: solar gold, you might say. I’ve already gotten a share of this solar gold. For three years, we’ve had 20 solar panels on our roof. According to the obsessive statistics I keep, we’ve generated 20,076-kilowatt hours (kwhs) of clean energy since it went online in June 2016. It’s the equivalent of planting 363 trees.

But twenty solar panels turned out not to be enough. The remainder comes from carbon-free wind energy, but perhaps not much longer. A solar farm is under construction in Gardner, Massachusetts. We’ll probably get the rest from that solar farm when it is operational in March 2020.

The electricity from our house’s solar panels is free, after we recoup the cost of the system, which should happen around 2023. The same can’t be said for this solar farm under construction. We won’t own any of these solar panels. Instead, we’ll be renting them. Unlike our wind energy, for which we pay a 3.8 cents/kwh premium, we’ll get this solar power for less than it would cost to draw it from the grid. So we can go greener and pay less for the privilege.

How this works is that our “share” of the solar farm’s electricity is credited to our electric bill. So if our share generates 500 kwhs a month, presumably we’ll get a $0 bill from the electric company and see that as a credit that we draw from in future months. Of course, we still pay for our “share”. I’ll get into how that is done in a moment.

There are solar farms going up all around us. Land is relatively cheap here in Western Massachusetts, at least what there is of it. A lot of it is set-aside as conservation areas. But areas that have been deforested might as well become solar farms: huge arrays of solar panels that do nothing but wait for sunshine and sell it to the local electric company, National Grid. These solar farms have done the math and basically everyone wins.

  • Society wins by reducing the amount of carbon pollution
  • Electric companies win because they buy the power at a wholesale rate, and mark it up for retail pricing. Also, they don’t have the investment costs of creating new power plants.
  • I win because I get a discount on power compared to what I’d pay National Grid for their retail price
  • Solar farm gets to claim SREC (Solar Energy Renewable Certificates) payments for putting up a solar farm, plus they get the income selling the power to National Grid. These solar farms also make profits from the 15% discount I get compared to National Grid.

Moreover, there are no fields that need planting and harvesting. It’s all passive income. Maintenance costs for solar systems are almost zero. I imagine they might need to replace some inverters from time to time, and build a tall fence to keep people out, but that should be it. In thirty years or so they will probably swap the panels, or if new panels become much cheaper and more efficient, it might make sense to replace them long before then.

What I’d like to do is add more solar panels to my roof. I’ve looked into it but for reasons that look entirely bureaucratic, I’d have to put up a completely new system, with separate pipes, metering, etc. This frankly makes no sense but I’ve found no way around it after trading many emails and a phone call with National Grid. The cost of a separate system compared to adding to what I have amounts to thousands of dollars.

But even so, there’s a limit to the amount of panels I can put up. Realistically, it would be hard to add more than four panels to my roof. Putting more up in my backyard is not an option. First, I may be in a single-family house, but it’s a 55+ community, so we’re technically a condominium. Second, I have no backyard to speak of. I have about four feet of it. Otherwise my “yard” is a steep hill with about a 15% incline. There’s all this plus my new car is a Toyota Prius Prime, a plugin hybrid. So it is now drawing energy from the grid too. At least it’s all clean energy.

As we look toward a carbonless future though, it’s clear to me that these solar farms are leading indicators of what 2050 will look like. There will be lots and lots of solar farms. People who have roofs that are reasonably unobstructed will add solar panels. One state, California, requires it for all new construction. With the cost of solar panels continually dropping, pretty much any surface that points toward the sun and is unobstructed will have them. In time, they won’t look like solar panels, but will blend in naturally.

Lots of condo, apartment and city dwellers though will want to buy their share from solar farms. It’s likely that they will save money for doing so … and help save the planet.

Trump’s Paris Climate Agreement decision is unlikely to stand

The Thinker by Rodin

Yep, President Trump’s decision to pull the United States out of the Paris Climate Agreement was reckless, stupid and deeply counterproductive, both to our country and to the planet. Bear in mind that until yesterday the only countries that hadn’t signed the accord were Syria and Nicaragua, and Nicaragua refused to sign because it didn’t go far enough. Syria is in a state of constant civil war, so it’s not too surprising they didn’t make it a priority. So essentially the whole world was in agreement until Trump decided to pull the United States out.

It’s hard to see any good news in this, but in a way there is some good news here. It’s not because what Trump is doing is right. It’s because it quite unlikely to actually happen. Like with Great Britain and Brexit, this is not an easy agreement to walk away from. It will take 3-4 years by which time it will become part of the brouhaha of the next presidential election.

Like many, I was infamous in predicting Hillary Clinton would win last year, so perhaps it’s dangerous to predict that Trump won’t win reelection in 2020. This assumes he does not resign or is removed from office before then, either of which is more likely. In any event when your approval rating is at best 40% just four months into your term in office and then you take climate actions that are opposed widely by most Americans, including a majority of Republicans, you are effectively digging your own political grave faster. This means that you are reaching the point where you can’t climb out of it on your own sooner rather than later too.

Trump hasn’t learned one of the fundamental lessons of leadership, and this decision is more evidence that suggests he never will. Trump has confused taking decisive and unpopular actions with demonstrating leadership. When such actions are necessary for a leader, it’s up to the leader to make a broad and convincing case for his actions to the public based on tangible evidence.

Here Trump failed again yesterday. His rationale in fact argued for just the opposite. Getting out of the climate agreement does not create jobs; it increases the likelihood that we will lose jobs by putting us at a competitive disadvantage with the rest of the world. Our capitalist economy is built on creative destruction: less efficient ways of doing things give way to more efficient ways of doing things, ways that hopefully are led by American ingenuity, such as Edison’s invention of the light bulb. Generating electricity from coal is now inefficient. If you have to generate electricity from burning a fuel, it’s much cheaper to use natural gas, and it is cleaner as well.

No power company in the United States will build a coal-fired power plant again, unless for some reason the fundamentals of the energy market change substantially. And since both wind power and solar power are at least as cheap as generating power from natural gas, power companies are going to continue to increase their investment in clean power generation. Not only does it make business sense, it makes for good public relations.

Moreover, as solar panels become cheaper, homeowners will have more incentive to put them up on their roofs too. Who doesn’t like free energy? I have solar panels on my house, and just today got a notification from National Grid that my power bill for last month is $0. We actually put energy into the grid last month, producing more clean energy than we could consume.

Certainly there are other actions the Trump Administration can do and is doing to weaken environmental laws. The EPA is hard at work destroying our environment, but even here there is a process requiring public comment that makes it hard to change regulations quickly. Power companies that take advantages of these changes to pollute more are likely to get protests as well as bad press. It’s likely that the impact of these changes will be minimal and they will be checked by legislation when Democrats regain control of houses of Congress. Also Trump’s actions are spurring many states to become more aggressive in combating climate change.

So the main impact of this decision will be to increase opposition to these changes. With every unpopular decision at best Trump maintains his floor of committed voters but empowers the opposition to become more politically engaged. My wife and I will be part of multitudes participating in a local March for Truth tomorrow. That and the fact that his hardcore supporters are literally dying off (because they tend to be senior citizens) strongly suggest that his actions to halt progress will be fleeting and ultimately unsuccessful.

I don’t take anything for granted, however, which is why I will be marching tomorrow regardless. This will be my second march in two months, with my last previous march back in 2003 shortly before the Iraq War. I am hardly alone. Trump is almost single handedly creating the whirlwind that should ultimately end the Republican Party, or at least its most recent ultra-conservative manifestation.

So while the United States will go through a process to get out of the Paris Climate Agreement, in the end it probably won’t happen. And if it does it is likely we will rejoin them when the White House is again in Democratic hands. Democrats running for office now have an easy way to get votes. They simply have to say, “If you elect me, I will work to have the United States rejoin the Paris Climate Agreement. And I will work to make the United States a leader in environmental change again.” Given that a majority of Republicans agree, it’s a compelling reason for them to break ranks.

Solar absorption

The Thinker by Rodin

Two months after starting our solar project, our solar panels are online and producing clean and free energy.

Installation day (June 16) was a big deal for us. It certainly was for our cat Cinnamon who was freaked out by all the noise and strange people inside our house and quickly ran under our bed for the duration. Direct Energy Solar sent four trucks with two guys to do the roof work and two to do the electrical work. The roof work required attaching rails to our roof to hold the panels. Before the panels were attached inverters were placed next to the rails. The inverters convert the direct current (DC) from the solar panels into alternating current (AC) used everywhere. Meanwhile two electricians crawled through our attic, laying cable. This required putting a hole in the roof to carry wires from the solar panels into the house. A hole was also needed on the side of our house so the cables could attach to the outdoor electrical junction box but also into the basement to our circuit breaker box. Only then did the crew on the roof haul up our twenty panels and put them in place, connecting them to the inverter box just underneath each panel.

Installing rails and inverters
Installing rails and inverters

It all went quite speedily, taking about six hours, one of which was spent waiting for the city electrical inspector to show up. However, having solar panels on the roof didn’t mean we could actually use them. Any attempt to do so would have caused a major problem, as we were not yet wired to put electricity back into the grid. So for a week the solar panels adorned our roof while we continued to draw power from the grid.

Wednesday found a man from the power company unexpectedly at our door. He came by to replace our meter. We needed one that would report power we contribute to the grid, i.e. one that would go backward. Happily this was simple to do: the old meter was unplugged and the new one plugged in. It took about five seconds, but it did shut off everything in the house. Still, I was reluctant to lift the switch that would start the flow of this green energy. I figured another inspection was needed first. Thursday night I finally heard from our project manager who said it was safe to turn the system on, which I did first thing Friday morning.

All done!
All done!

We’re not quite done. A building inspector still has to sign off on the project. In addition we are promised some tools. The Enphase inverters report on electricity produced but we need an account with them established so we can see real-time usage and get reports. We’ll have our own webpage and we can monitor our system in real-time anywhere in the world where there is Internet from the convenience of an app on our smartphones.

This time of year we are putting surplus energy back into the electrical grid. What we give back in electricity will count as credits during the darker months when days are shorter. If the engineers who planned our solar system are correct everything should even out. So unless we start adding power-hungry appliances we may never have to pay an electric bill again.

Of course nothing is free. Back in April when I first wrote about this venture, I detailed the costs. Our system cost $21,432.25. Subtracting healthy federal and state tax credits, our net cost is $14,002.58. With Solar Renewable Energy Certificate (SREC) income payable over ten years worth $9,262.50 the true net cost is $4742.08. In effect we are paying only 22% of the system’s cost.

How long would it take you to use $4742.08 in electricity from your power company? Electricity is expensive around here, averaging about 22c/kwh. This is actually good for justifying this investment. For us this is about 21,500 kwh which based on our projected usage suggests the system will pay for itself in four years. After that aside from minor maintenance that may be required, electricity should be free.

Once your system is up and running, it apparently fails to entertain. They tend to be very reliable and as they are solid state, so it’s rare for problems to occur. But I do plan to post updates from time to time, perhaps a year from now after we have some experience and metrics to look at.

Getting solar panels for your house is (usually) a no-brainer

The Thinker by Rodin

I recently wrote about my father’s death in February and my thoughts on what to do with his inheritance. On the latter, I opined I might just give it away. It didn’t seem like something I needed to worry about, as we saw a copy of his will. It left everything to my stepmother, provided she did not die within thirty days of his death. In that event we were to get five percent of the estate. My stepmother’s will was similar so providing she didn’t change it, it looked like it would be some time before we would receive any portion of the inheritance, if any at all.

So I filed away what to do with the money as an academic exercise. A couple of weeks after my father passed away I got a call from my sister. “We have a problem,” she said. Dad had made me and each of my siblings (there are eight of us) beneficiaries to the money in his Merrill-Lynch accounts. This consisted of a money market account and two Roth IRAs. And this trumped anything in his will.

The problem was: do we take the money and run? Or do we honor what appeared to be the intent of his will and give our share to our stepmother? Regardless we each would get an eighth of the amount, and it was a considerable sum. We’d all have to voluntarily agree to give our share to our stepmother. After much discussion we figured that this was likely not an oversight; our father probably intended us to get this money, possibly to respect our late mother’s wishes for his estate. There was still something like half a million dollars in other assets that our stepmother could draw on. It was strange though that Dad did not communicate these details with us before he died.

So now we are assembling forms to try to claim our share of these accounts. As you might expect it’s a hassle. All inheritances are tax-free. Dear old dad had at some point paid a bunch of taxes to put much of his money into Roth IRAs, which made his withdrawals tax-free. If we moved our share of these funds into our own inherited Roth IRAs, we could let these funds accumulate tax-free. It’s almost like having a tax shelter but not having to go to the Cayman Islands!

Thus my hypothetical thoughts on basically giving the money away now turned more concrete. First of all, the amount of money was more than I expected. My dad turned out to be a good investor, which meant that he found a financial adviser he trusted and he turned it into a pile of cash. (Much of the startup money came from his parents.) Second, it made me think of what I might actually want to spend the money on. It turned out that only two things mattered and there would still be money left over to give a lot away.

First, I wanted us to be debt free again. We would get there in a year or two but with a windfall it seemed like a sensible way to spend Dad’s money. There is about $18K on the new mortgage. We actually were debt free for a few months after we sold our last house and waited for the new one to be constructed. It was surreal. I wanted that feeling again.

Second, I wanted to reduce our carbon footprint even more. Basically, I wanted solar panels. Our house is new and super tight, so it’s energy footprint is already minimal. We already pay extra to get our electricity through renewable wind power. But if we went solar we would probably pay nothing for electricity, once we paid for the cost of getting a solar system installed. Besides, about a third of the houses in our subdivision have them already so we are feeling the social pressure to go green.

So I started dialing around. It was strange that our condo association cares about your doorknockers but not solar panels. No permission was needed. If you have the money, solar tax credits make going solar a no-brainer. Uncle Sam will give you a 30% tax credit and the state of Massachusetts (where we live) will give a $1000 tax credit. Moreover there are the SRECs (Solar Renewable Energy Certificates). Basically the power company will give us money for our solar system because they must show that they are getting an increasing amount of their power from renewable energy. The credits expire after ten years, but the first year we will earn $1635 from our SRECs, which will taper down to $545 by the tenth year. (SRECs are not available in all states. See if you qualify.)

The estimates were all pretty close pricewise. We ended up signing with Direct Energy Solar mainly because they seemed the best capitalized. It turns out that we don’t need to cover the entire southern facing side of our house with solar panels. Based on our usage we need them just over our garage, twenty altogether. It’s actually counterproductive to generate more solar energy than you use because you end up with a credit you never can fully spend.

Not every house is ideal for solar panels. Lower latitudes certainly help. You need a roof that faces south and if there are trees in your way it probably won’t make financial sense. You don’t necessarily have to buy a system to go green, like we are doing. There are companies that will let you lease solar panels they put on your roof. You still pay for electricity, but usually at about five cents a kilowatt-hour less than what you would otherwise pay. If you run the numbers it makes a lot of sense to own your own panels. You can in theory take them with you to your next house if you want. We figure that our system will pay for itself in about five years. And we’ll get a cool app that will show us in real time how much electricity we are generating. Direct Energy Solar will even guarantee that we will generate the energy we need and will pay us in the unlikely situation that we don’t.

Going solar is really a no-brainer and probably worth taking out a home equity loan to finance it if necessary. You will get tax credits if you buy your system, earn income from SRECs that you will sell (if your state allows it), reduce carbon pollution and minimize your carbon footprint. Since these systems tend to cost $20-$30K to install, the only question is why builders don’t offer solar panels as an option for every house where it is appropriate.

The only downside I can find to solar is that you can’t get it quickly. A whole lot of coordination has to happen between various parties. We expect to have ours installed and turned on in 90-120 days. There is likely much that could be done to hurry up this process but the power companies don’t make it a priority and worry about whether all this “net metering” will stress out their power grid. They would like to charge solar customers for costs to maintain the grid. There is a bill to this effect in front of the Massachusetts legislature at the moment.

I’ll let you know how it goes in future posts.