Our “Journey to Solar” is the story of how Mary and I learned about, researched and finally decided to have solar panels installed on our Florida home. The story is far from complete as this is written. My intent is to try to cover all the subtopics that make up “going solar”. There is a lot to consider – much more than I initially thought. Tomorrow (August 7, 2019), Solar guy #3 is coming out so we can sign the contract and give him the down payment. I will update this document as the project moves forward. I will also try to make longer-term updates on how the whole plan is going. “Are we seeing the benefits we expected?”
The journey itself goes back to some unspecified date. My earliest recollections of “going solar” go back years – ten or more. There are two points in time that solar was considered. I do not remember which came first, not that it matters. Likely the first of two was when my friend and investment club partner, Randy, and I researched and might have invested in a solar company called SunPower. It is still listed on the NASDAQ (SPWR). Looking at its fourteen-year stock price chart, it has gone nowhere and sits at $13.33 a share. I do not know if we bought any, but we do not own it today. Randy, even today, has always been forward thinking on his stock picks. The same reasoning applies to why we have owned a small position in Tesla for eight or nine years. Randy likely thought solar was going to be the next big thing. I will not go into the history of solar power here, but I will say I believe it has had many moments where “it is going to take off” only to fall back. This might be the time solar “turns the corner”, but as I discuss below, the federal tax credit is disappearing. The second point in time when solar was in my thought stream was back in the early 2000’s. We lived in the South Loop, Chicago in a condo. We were on the Finance Committee board and we were trying to think of ways to increase revenue or reduce expenses – the things all Finance Committees struggle with. We thought that adding solar to the roof tops of the four buildings might help reduce the complex’s electric bills. Now, almost twenty years later, I do not remember why but solar never got out of the idea stage. I mention these two points to show that “going solar” has been an interesting idea for me for years. I think it was not a viable answer back then.
Fast forward at least ten years. Mary and I bought our home in the “Sunshine State” in 2015. According to CurrentResults.com, Orlando gets about 80 cloudless days and 150 semi-sunny days. There are about 230 days a year that Orlando gets some sun – about 63%. (Having lived here for three months, 63% sounds low.) After we bought the house, it was mentioned we should look into solar panels, but nothing happened. Jumping forward another four years, Mary and I are residents. We moved in permanently in May 2019. Surprising to me, in hindsight, our initial list of projects we wanted to complete after moving in did not include solar panels. In my mind, a project to put solar panels on our roof was a 2020 or beyond project. Mary obviously thought differently because about a month ago I was at our dining table sitting across from a solar salesman. (I will not share real company or sales names mostly because this information is not crucial to the story. It is not a solar company review.) Solar guy #1 spent about three hours with us. Mary and I were sponges soaking up information. Almost everything he said was new information to us. He looked at a recent electricity bill. There was discussion about how electric/energy companies have incredible power (pun unintended) in Florida. He spent a lot of time discussing layout of the panels – how many, where, etc. and not much on technicals like panel maker, inverter type, brackets, etc. Topics like how long the company was around and warranties were discussed. Warranties itself could be a standalone document. There are warranties for the panels, inverter(s), installation, and roof. Each needs to be understood at some level. Lastly, he provided a quote that showed the total cost. The quote Solar guy #1 provided was in the middle of the other quotes we would get. The meeting met my expectations – we learned a lot and we would think it through. In my mind, it was still a future project. Learning more about the tax credit it became more apparent it should be a 2019 project. The federal government is offering a 30% (of the system cost) tax break. Apparently, it has been in place for several years, but after 2019 it is reduced. It goes down until it expires completely at the end of 2021. It might be renewed by the government but there is no guarantee obviously. This was an area of initial confusion. One of the Solar guys made it sound like the government sent you a check and you could apply it to your solar panel loan, if you had one. It is, in fact, a tax credit. When you file your federal income taxes you can use the 30% as a deduction. This is an important point. Essentially, the government is paying for nearly a third of the system cost. Too good to pass up, in my opinion, if all the other decision factors were positive.
Being a terrible sleeper, I had a lot of time to think through what we learned about solar panels. The night after Solar guy #1’s visit, I mind-raced through countless subtopics, but ended up unconsciously prioritizing how did solar energy work. Meaning, I did not understand the basics. For example, the sun shines during the day so it powers the house – easy, right? What happens at night or overcast days? There was no battery to store excess energy which could be used at night. All the talk was we would not require any energy from the energy company. That is why our energy bills would be low – rarely zero – except for mandatory grid fees. I was not getting it. In the morning, I started an email to list these questions. It turns out, during the day you use energy from the panels and excess energy generated goes to the energy company. Giving energy to the energy company builds an energy bank up of sorts. At night, you pull energy from the energy company. The energy you pull comes from the bank you built during the day. So, we need to stay ‘on the grid’ to pull energy back at night. Separately, but related, a battery system can be added, but today they are very expensive. All three sales guys said we do not need one, although the last guy said we can consider a battery system after gathering a year’s data on energy generation, energy use and energy costs after the panels are functional.
In my sleep-missing time, I tried to think what is important and what was not. For example, there was a lot of discussion about brackets used to secure the panel to the roof. I decided this was not important to me, at least, because of warranties. If the panel(s) flopped off the roof in a storm, the company would have to replace them and fix my roof. On the other hand, I decided understanding the inverter(s) was important. There are micro inverters – one per panel – or a string inverter where there is one inverter for all the panels in the garage usually. An inverter converts energy generated by the panel (DC) to energy used by the house (AC). Micro inverters convert at the roof level and the string inverters convert in the box in the garage. The micro inverters are more efficient and are better for panel management. If one micro inverter fails the panel array will still work. With a string inverter, if it fails the entire system does not generate electricity. Again, in my awake hours, I also thought through why are we doing this. The easy answer is to save money, eventually. In sync with this is the idea of a (almost) fixed cost for power. A semi-known number that changes in a limited range is better than a widely varying number that will almost definitely increase is a no brainer, especially as we move to true retirement. The other benefit is we are helping the environment. Admittedly, this is secondary but I like the idea we are helping. Over its life, the system will eliminate 302 tons of CO2 from our footprint. This, according to the proposal, this equates to planting 7000 trees or driving 600,000 fewer miles. That is a nice secondary reason.
Solar guy #2 had a different approach – he was very technical. He spent a lot of time discussing the panels themselves. They were 330kW panels by Panasonic. The first guy didn’t say the panel maker but they were 270kW. There are many panel makers – most, if not all, come from China. My opinion after research is, panels are important, but not a make-it-or-break-it decision factor. Sure the technology is different and you pay for the more advanced technology, but they are guaranteed to produce X amount of energy with predictable and guaranteed degradation. I could not find anything that led me to believe panel was a critical decision factor. As stated above, the inverter is probably a more important decision factor. Solar guy #2 did the same energy company bashing they all did. This is important from the perspective that it is unlikely energy costs will get less expensive from the energy company. In fact, the forecast is a 4% increase per year. This means in twenty years energy will be about $0.35kW vs. $0.13 today. With solar our long-term forecasted rate is $0.10 for the life of the system. To oversimplify, in twenty years, assuming we use 50kW a day we will be paying a maximum of $5.00 versus $17.50 if we did not have the panels. Solar guy #2’s quote came in almost 30% higher than Solar guy #1. He had a good story, but his number was staggering. The other thing that became evident was pressure from the companies to sign. Solar guy #1 said the price was good for a week. Solar guy #2 said seven working days “so it is really like ten days”. I was not going to be pressured into a decision. There are hundreds of solar companies to jump to if we felt pressure. The viability of the various companies needs some research too. Will the company be around ten or twenty years from now? There are no guarantees here but due diligence should be done. A company with twenty year history has a better chance of being around in the net twenty than a company with a two or five year history. (This idea is what I remember from reading The Black Swan by Nassim Nicholas Taleb.)
After we met with Solar guy #2, I put a post out to our retirement community Facebook page asking if there were homeowners with solar panels and what their experiences were. I received thirteen responses on Facebook, but more importantly, we received three phone calls from people with panels installed. Mary then reached out to a few neighbors that she has met. These six conversations generated a lot first-hand experience information. There were new tidbits uncovered, but the general idea was people were happy with their experience. The solar systems were meeting and exceeding their initial goals. In one of the conversations, a third solar company was mentioned. Two of the callers used this company. The point is that we leveraged community experience to help make our decision. I believe it was these discussions that pushed my thinking over to solar was a good thing.
So much of what we learned was little better than hypothetical – our panels will produce X kW’s, the energy costs will increase 4%, panel degradation is 5%, our panel structure will replace 86% of our energy costs, etc. Pretty much the only static, truly known number was the final cost. Every other number was a best guess, a forecast, or, I hate to say it, influenced to make sales. There was one ratio that can be used to quickly judge the quote a company provides – cost of the system over the kW’s the system will generate. For example, a 10kW system that costs $30,000 has a result of 3. A good ratio outcome to look for is around 2.8-3.0. Solar guy #1’s proposal was about 3.3. Solar guy #2’s proposal was nearly 4.5. The system we ended up signing a contract for is 2.6. It was this number – an objective measure – and the subjective measure that people were happy that solidified our decision. I became a believer.
We found the third solar company website and Mary made a cold call. Solar guy #3 called back within an hour. Over the next week or so, we exchanged emails and had three calls. By this time, we were able to decipher the proposal pretty well. I researched the panels. I learned a lot about the inverters they recommended. Solar guy #3’s initial proposal had us producing too little power (about 10kW) so we asked him for a proposal that would eliminate needing the energy company. The second proposal was for a 13+ Kw system with a hefty price tag. Acknowledging this is what we asked for we quickly realized it was overkill. He then provided an in-between system of about 11.5kW. This should, conservatively, replace 86% of our today energy costs.
My reading the final proposal and supporting documentation uncovered additional areas I needed to learn more about. Every sales guy said “it is illegal to off the grid” in Florida. I mentioned this to my friend Randy. He was adamant that you can go off the grid in Florida. Admittedly, I researched this to prove Randy wrong – why would three sales guys be wrong was my thinking. It turns out they are wrong and Randy is right. The Salon.com and Snopes.com links listed below cover this in detail so I will not go into detail. This research led me to ask what happens when the “gird goes down” say because of a hurricane? The Snopes link says Florida Power and Light (FLP) suggests “powering down solar panels if the grid goes offline”. They say “The system must shut down when FPL’s grid shuts down in order to prevent dangerous back feed on FPL’s grid.” I don’t want to harm/kill a lineman. Solar guy #3 clarified this by saying the system he sells will automatically shut off when the grid goes down. This is good in that I will not harm a lineman, but it did not solve the issue of needing power if the grid goes down. There are two ways to address this – add a battery system to the solar panel system or get a generator. Both are future decisions, but on the early contender list is the natural gas powered generator. The battery system, right now, is crazy expensive and the technology continues to evolve. Either way, this decision does not need to be made now. The thinking is to take several months or a year to see how the panels are performing. Use this data to understand what is needed, if anything.
This morning I read through the proposal and supporting documents, including the contract. Solar guy #3 was on his way to our home to have us sign the contract. Of course, I had a few more questions. He arrived on time. After the initial introductions, we jumped into answering my new questions. Apparently, we will have two tiers of panels on the south side of the house. (Order of preference is south, east, west, then north.) I learned that county permits and a subsequent inspection are required. The system requires a wired internet connection. The installation company will figure that out. The timing is a few weeks for engineering and permits, a few days for the actual install, a week for the post inspection by the county, three weeks or so for the energy company to switch the meter, and then finally the system will be turned on. The energy companies have been known to drag their feet in changing the meter so that is an unknown. We’re on vacation until September 14, so our turn-on date will likely be mid-to-late October. Finally, the contract was signed. We wrote a check for the down payment (20%). Solar guy #3 and Mary did a quick tour of the property. Lastly, as he left, he asked if he could put a sign out on the lawn. We said yes, but after we saw the sign we took it down because we do not know the rules for signs.
The deal is in flight. As I mentioned in the opening paragraph, this just covers the history, research and steps leading up to the contract signing. My intent was to try to cover all the subtopics that make up “going solar”. Did we do the right thing? I believe we did. Only time will tell. I am confident in our decision based on all the research, Q&A and input that went into the decision. I wrote this mostly so I remember what we did, but it might be a good starter document for someone else considering “going solar”.
Tax credit link:
https://turbotax.intuit.com/tax-tips/going-green/federal-tax-credit-for-solar-energy/L7s9ZiB4D
Sunshine in Orlando link:
https://www.currentresults.com/Weather/Florida/annual-days-of-sunshine.php
Details on legality of going off the grid link:
Solar and hurricane link:
The Black Swan: The Impact of the Highly Improbable link:
https://en.wikipedia.org/wiki/The_Black_Swan:_The_Impact_of_the_Highly_Improbable