As of yesterday, October 13, our home solar system has been activated. AEP Texas, the Transmission and Distribution Utility (TDU), came and changed our meter to one that measures both in and out flow of electricity. Without that, any excess energy the solar panels produced would cost me money.
Home in South Texas with Solar Panels made with Bing Image Creator
When I purchased the solar panel system, I asked for only six solar panels. However, as they were having a promotion, I got an extra solar panel at "no cost". My goal was not to eliminate my electric bill completely. I merely wanted to lower it. The system cost is about $10,000. This does not include finance costs. We plan to pay off the financing quickly to reduce interest paid. I had quotes of $24,000. But the numbers don't make sense given the size and value of our home.
The solar system is expected to produce a little over 2 kW of electricity each hour. In south Texas, it works out to between 2,200 and 2,500 hours of sunshine per year. Adjusted for seasons, the solar system can produce between 14 kWh daily in winter to 22 kWh daily in summer. This does not completely cover our electricity usage, which ranges between 160 kWh and 450 kWh every week, which averages to about 29 kWh and 64 kWh daily. Roughly, that is between one half and one third of our power will be provided by our solar system.
In money terms, our electricity costs between $100 and $280 per month without the solar panels. Although our electricity provider only charges about $0.099/kWh, AEP Texas charges an additional $0.055/kWh for delivery charges. In Texas, AEP Texas manages the electrical grid, for which they receive $5.88 per month plus the $0.055/kWh to offset their cost of maintaining the electrical grid. With inflation, their cost of materials and hardware has increased, which gets passed on to consumers. While our cost of electricity remains at a contractually set $0.099/kWh, the delivery cost is not set. Then, of course, as the cost goes up, so does the sales tax. Another fee that we pay is a minimum usage fee of $10.95 if we do not use a minimum of 1000 kWh in a month, which is the basis of our contract.
Given all the variables and fixed costs, it made sense to create a spreadsheet to calculate our total cost for electricity for each billing period. These calculations range between $70 for 330 kWh in January to $197 for 1190 kWh in June and July. Compared to $100 to $280 we paid last year, we expect significant savings.
Although it might be tempting to add more solar panels to our system, it's not an assured win. Not all retail energy providers buy back excess electricity. Our current REP does not. Therefore, there is little incentive to have a system that produces excess power. If we do switch to a REP that buys back power, then we can expect to pay much higher rates for imported power and lower rates for exported power. Some REPS will bank excess power that we could consume back at a later date when our usage is higher. And, it is not clear whether AEP Texas will calculate delivery charges both in and out.
What this means, effectively, is that if we upgrade our solar system, we are better off upgrading to be net energy exporters during part of the year so that we can offset the higher cost of higher usage during the summer, combined with higher rates with a company willing to buy back power. Or, we could upgrade just enough to zero out our lowest use month while keeping our current low-cost retail energy provider (REP).
One limitation we have is how much physical space is available on our roof. We have used all of the south-facing roof space. All that remain faces north, east, and west. Fortunately, with microinverters, even low production locations are useable. However, your cost per kWh of production increases. Over the years, this cost becomes negligible. However, we're talking about today's dollars.
We will have to revisit potential upgrades in 2025. We need to establish a baseline for the year starting today. Then we can evaluate if it makes sense to add more solar panels or remain as is. It is important to have a baseline as the above calculations mentioned here are from reading the labels on the equipment. We all know that what is advertised is not always what one gets. However, the calculations give us a reasonable expectation for comparison.
The cost of the solar system hardware and installation are not included in any of these calculations as it gets messy with tax credit, interest, and rapid pay down. As we do not intend to move from this property in our lifetimes, we don't have to worry about a return on investment so much. Buying solar panels is a form of prepaid electricity. Therefore, it's not exactly an investment as we would have paid that money to the REP. The biggest benefit to us is the impact on our cash flow.
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