Thinking about adding solar panels to your home?

Thinking about adding solar panels to your home?

With the cost of renewable energy sources going down, it is getting more affordable. Read on how good it can be.

I am concerned about the effects of climate change and was eager to investigate an alternative to the power we are getting from our electrical supplier, Minnesota Valley Electric Cooperative. But, I always wanted it to make economic sense, so I did a lot of investigation.

I received quotes from 5 companies (and ultimately, multiple quotes for different makes and models of panels from two of the most competitive installation companies). The cost per “nameplate” watt ranged from $2.82 to $3.81. I did the comparisons on “nameplate” watts (the watts per panel times the number of watts) because the quotes had widely varying estimates of electrical production based on percentage loss of production due to snow, shading, clouds, degradation rates of the panels, etc., making comparisons meaningless based solely on the sales proposals.

Ultimately, I selected to have 49 LG-SOLAR LG335N1C-A5 NEON-2 panels with two SolarEdge inverters installed. LG is one of the top 5 “Premier” rated companies supplying panels, located in South Korea. Using monocrystalline cells (better than the polycrystalline cells or thin film cells some manufacturers use), the efficiency is higher than most – 19.6%. The panels are warranted to degrade less than 2% the first year and no more than .5% each year thereafter, allowing LG to guarantee at least 86% of initial year production in year 25. So, they will be productive, and they will stay productive for 30 years or more.

These panels are very competitive with ones manufactured by Panasonic, another excellent solar panel maker. There are cheaper models, but in the long run I have found it less expensive to buy high quality products, rather than “cheap” quality, and followed that philosophy here.

I sized the installation to slightly exceed the last 12 months’ electrical use through our main panel. It did not make sense to replace the electricity used through the interruptible power panel, which power is a lot cheaper. A consideration we needed to make is the age of our roof, which we estimated would need to be reroofed in about 10 years.

I constructed a spreadsheet using the installation company’s estimate of initial production (19.793 mW, vs. SolarEdge’s (the company supplying the inverters) estimate of 22.77 mW), a 1% annual increase in electrical costs (vs. a bit over 8% that Xcel is getting over the current 4 year period, but well below the 5% assumed by the installation companies), the guaranteed maximum degradation rates from LG, and a $4000 extra cost for reroofing in 10 years to remove and reinstall the panels.

Conclusions:

It will take almost 15 years to have a “return OF investment”, but I calculated a 3.65% pretax (using a 28% marginal rate) internal rate of return over 20 years and 7.48% over 30 years. This is not too bad, considering the low interest rates on other fixed dollar investments.

So, I consider this a "win" for the environment and a "win" as an investment alternative. 

I assumed that the net metering plan where you can sell to the utility company the excess production (when in excess) at the total cost of production and delivery – currently at 11.74 cents per kwh - into the future. Staying on the grid which serves as your back up is much more economical than a battery system.

I also felt that if we were to install solar panels on our home, we needed to do it now, due to the age of our roof and the fact that the federal tax credit for renewable energy is 30% in 2019, dropping to 26% in 2020 and 22% in 2021.

Another consideration is whether to use a system mounted on the ground, rather than mount it on your roof. I would prefer a ground mount system, but we determined a ground mount system was not suitable for our lot, as it would mess up our landscaping, a great feature of our home.

If you have any questions, feel free to reach out, as I have identified two excellent companies to work with for roof mounted systems in Minneapolis/St. Paul Metro area.