One year later: results from my home solar PV system (Part 2)
Late last year I posted a review of a year’s worth of solar PV performance at my home. In that blog post, I examined:
whether or not the PV system was performing as expected (short answer, yes; longer answer, it produced more than the installer’s modeling anticipated, and more than my household used during the same period) and
the impact of the PV system on my electricity bills (I saved slightly over $900 in electricity costs).
In this second part, I’m going to talk about payback and impact on GHG emissions.
Question #3 – what is the payback?
Payback. No, we aren’t talking revenge, here. Rather, we are considering financial payback – which is simply how many years must pass before the money spent on an action is recouped by the action’s savings. If an action saves $100/yr but costs $1000 to implement, the payback would be $1000/$100 = 10 years. Conversely, if the action costs $100 to implement but saves $1000, the payback would be $100/$1000 = 0.1 years (or a little over a month).
So, we know how much the PV system has been saving in electricity costs ($939, normalized over 365 days), and I know how much it cost to install the system ($18,500). A basic payback is therefore $18,500/$939 = ~20 years. However, I also have an EV (electric vehicle) that is charged exclusively at home, so we have to consider that, also. Unfortunately, I don’t know exactly how much of this is charged by the solar system, compared to being charged by the grid, as it isn’t metered separately. However, I know I am directly using about 32% of the solar energy that is generated, so let’s assume roughly 32% of the electricity used by the EV is also directly from the solar PV system. In which case, around 252.7 kWh of solar electricity directly charges the EV – providing 100% “free” transportation energy. This is equivalent to 154.5 L of gasoline, which would have cost around $180. This increases the annual savings to ($939 + $180) = $1,119, improving the payback to just under 17 years.
17 years doesn’t sound too great, but the solar PV system ought to last at least 25 years (the warranty period) and will probably last 30 or more. It’s a long-term investment. However, it’s also worth noting that this is almost certainly a worst-case scenario and there are several other factors that would improve the payback:
Reducing the installation cost – when my system was installed, there wasn’t an available grant in Calgary or Alberta to assist with capital costs. However, there are several grants available across the country, depending on where you live (check with your municipality, province and utility company). For example, the Federal Canada Greener Homes Grant, which allows up to $5000 to be spent on various measures, including solar PV. A $5000 grant would have improved the payback of my system from 17 to 12 years.
Using more of the solar electricity, instead of exporting it – as we discussed in Part 1 of the blog, every unit of electricity that is avoided is worth almost 3.5 times more than a unit of electricity exported. So finding ways to use more of the electricity – for example, timing washers, dryers, dishwashers or other large loads to run during the middle of the day, ensuring the EV is charged on and during sunny days as much as possible, etc – can make a significant difference.
Increasing cost of electricity and gasoline – I didn’t attempt to model this here (perhaps the subject of a future post) but electricity and gasoline costs are going to rise over time as Federal Fuel Charge and provincial carbon price escalates. At $40/tonne CO2e during the time period of this analysis, it’s anticipated to rise to $170/tonne CO2e by 2030. As the cost of these fuels increase, the attractiveness of generating your own electricity increases and will significantly bring down the payback.
Taking advantage of tariff structures – last but not least, there are some electricity tariff structures in AB that are specifically designed to reward exporting micro-generators. They work by allowing system owners to switch to a high-cost-per-kWh during exporting months. This may seem counter-intuitive (paying more for electricity can save you money?!) but remember that you are paid back for exported energy on the same cost-per-kWh that you pay, so as long as you are exporting more than you are importing, you will win this particular game. My installer estimated that taking advantage of the solar tariff could improve the payback to around 8 or 9 years, and I will certainly be signing up for that next summer.
And now, onto our final question!
Question #4 – what is the impact of the PV system on my annual GHG emissions?
To calculate this, we consider three areas of impact – self-used electricity, exported electricity and avoided gasoline consumption. Self-used electricity is more advantageous, as it avoids line losses in the electricity grid (estimated at around 7% for Alberta). According to the Alberta Government, each kWh of self-used electricity avoids 570 g CO2e, whereas each unit of exported electricity displaces 530 g CO2e. The results are shown below and are slightly under 4.6 tonnes CO2e/year.
As with the payback, note that this could be improved by ensuring more self-use of electricity. It’s also worth noting this impact will likely diminish over time as the grid gets ‘greener’ as more and more utility-scale renewables projects are connected.
So, in summary, payback is a little complex to calculate – there’s a lot of uncertainties associated with calculating any future prices, production, consumption, etc – but my system is probably going to payback in fewer than 17 years and, if I take advantage of tariff structures, could be as little as 8 or 9. In addition, it will be reducing my household's GHG impacts by around 4.6 tonnes CO2e/year.
That’s pretty good for a piece of infrastructure for your home that will last 25 or more years.
(Bonus question: what’s the payout on a new furnace?)