We have solar power at home Part 2

Previously: We have solar power at home Part 1.
Next: We have solar power at home Part 3.

QuestionEstimate from April 2022
How much electricity will we use between 2023 and 2032?between 3217 and 5835 kW·h per year
How much will PG&E charge for that electricity?$0.43 per kW·h, increasing 7.6 percent per year
How much will the system cost to install and operate??
How much electricity will the system generate??

How much will the system will cost to install and operate?

I had no idea. I knew solar panel prices had collapsed since my childhood; I’d seen graphs like this:

Evolution of solar PV module cost by data source, 1970-2020.  X axis is timeline from 1975 to 2020.  Y axis is USD (2015) per Watt, from 0 to 120.  Data points start around 105 in 1975, drop linearly to about 45 in 1978, and then in a curve down to about 8 in 1987, and then mostly linearly to 4.2 in 2008, steeper to 1 in 2015, and then linearly to 0.2 in 2020. The dots are colored; most are yellow but after 2010 they are blue.  Some years have multiple dots, some mostly overlapping and some further apart, but none are inconsistent with the pattern.  Blue is Bloomberg monocrystalline, Yellow is Swanson.  Other colors are rare, and include Bloomberg multicrystalline, Maycock, Reichelstein, and Pillai.  Small text at the bottom: Appears in Clean Energy Innovation.  Sources: Kavlak, McNerney and Trancik (2018); Bloomberg LLP (2020).
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So I had a vague hope that the panels would be under $10,000, which felt extremely cheap, at least relative to other home improvement projects. Note that a 1980 dollar is worth six times more than a 2020 dollar, so any intuitions about cost over decades are very tricky. The batteries on our electric bike were over $500 each, so I knew battery storage could easily be another $10k. At the same time, I assumed we would never be able to offset all of our usage with solar. My brain was still calibrated to Jimmy Carter’s White House panels2, and a general sense that solar power is very weak3. But even if solar only took a medium-sized bite out of the electric bill—which was shaping up to be hundreds of dollars a month—it could still pay for itself.

It turns out that the panels themselves were never even half of the cost.

Figure 17: NREL residential PV system cost benchmark summary (inflation adjusted), 2010–2020.  Y axis is 2019 USD per Watt DC, from $0 to $8.  The 2010 bar is $7.53, which drops steeply to 4.67 in 2012, and then slowly to $2.71 in 2020.  The top bar is black and white cross-hatched, labeled Soft Costs ­Others (PII, Land Acquisition, Transmission Line, Sales Tax, Overhead, and Profit), and drops from about $3.5 in 2010 to under $2 in 2020, going from one third to one half of the total.  The yellow bar, Module, goes from about $2.60 in 2010 to about $.30 in 2020. Other bars include Soft Costs – Install Labor, Hardware BOS – Structural and Electrical Components, Inverter, and Additional Costs from Model Updates*.
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Panels got 90% cheaper in a decade, but total cost only dropped 60%, so the overall project savings are diluted compared to, say, giant TVs. On the other hand, modern panels are very efficient. If we covered the entire roof, we’d generate far more energy than we could use. You might think generating more clean power is a good thing, because if we can’t use it someone else can. This is our cue to talk about regulatory capture.

No, just kidding, you can read about regulatory capture from many better sources. Just take it as given that the leadership of the California Public Utilities Commission has favorites among its constituencies5. California passed a law in 20136 that created NEM2. The meaning of NEM2 for our purposes is, we can connect solar panels to the grid, and PG&E has to let us, and they have to buy back our excess electricity if we have any. I’ve heard that they have to pay market rate for it, which would between $0.3 and $0.6 per kW·h, but I’ve also heard they only have to pay a few cents for it. The power companies got NEM2 replaced with NEM3, which is a much worse deal for solar panel owners, but we—meaning the vendor—got our paperwork in half a year to spare, so we will remain legacied7 under NEM2 for 15 years. Either way, it’s apparently in our financial interest to make exactly as much solar as we need, so we don’t want to get the 30 or more that would fit in the square footage of the roof.

We—meaning the vendor—sketched numbers for 9-panel and 12-panel arrangements, and their roof guy came with a big ladder and climbed around taking notes.

A flat roof surfaced in dirty gray material.  A person in the middle ground wearing a dark jacket, dark jeans, boots, a gray baseball hat, and a black facemask, with light-colored hands and neck and ear visible, looking down and holding a yellow tape measure extending diagonally to the roof surface. Fairly shallow, very sharp shadows are visible to the left of the person and around of few pieces of pipe tops on the roof.  Two skylights are visible on the right foreground. The roof ends about 10 feet beyond the person.  Another building extends further on the right, about half a floor taller.  A tree fills most of the background.  Behind the tree a ridgeline with some trees and many terraced houses is visible, stretching from the right edge of the photo, behind the tree, to a hill in the top left corner, topped by a few trees, a green and brown area, and then multiple concentric rings of terraced houses.  The sky is very light blue and cloudless.

As it turns out, the skylights, pipes, vents, access walkway, and setbacks8 together block more than half the roof …

A rooftop fills the bottom third of the rooftop, with a dirty gray surface and a scattering of shiny metal pipe tops and exhausts.  Above the roof, a thin line of houses and patches of tree extends across the picture.  Aobev that, on the left side, a stretch of blue water with a flat horizon.  On the right side, the water disappears behind hills, and on the far side of the water, a ridge line emerges from the water and extends above the nearer hills to the edge of the picture.  The top half of the picture sky shading from light blue up to a medium and rich blue at the top.  The sky is cloudless except for one contrail streaking faintly from the top left corner, fading out before reaching the middle of the picture.  Very dark shadows extend briefly below some of the tops of the roof objects.

… so we can’t go much above 12 anyway9.

A black-and-white plot of a rooftop.  A rectangle filled with many smaller squares and circles.  A number of big blue squares sit in clear areas.

With NEM2, if you have no battery, the solar power goes directly back to the grid. You don’t actually use your own solar power; you just have something on the roof that lowers your bill. If PG&E goes out, we go dark. We can accept that for now, but if PG&E’s already mediocre reliability drops further10 ….

The vendor provided two cost estimates, 9 panels for $17,000, and 12 panels for $20,000, and we planned for a 24% non-refundable tax credit, so the cost would be $12,920 or 15,20011. The systems generally don’t need cleaning or any other maintenance, so operational costs should be um … zero? If we need to do something to the roof, the company will remove and re-install the panels at no extra charge. Once.

So $12,920 or $15,20012 $17,000 or $20,000 is the third of four answers. Tune in next week for the last question, How much will the system offset our usage?. Bonus: I’ll tell you a Homeowner Horror Story. It’s called, The Dryer That Didn’t Get Used For Six Months.

Next: We have solar power at home Part 3.