|Part of the original impetus to
install solar panels came from my experience of watching proposed
feed-in-tariff legislation get strangled to death by well
intentioned members of the Maine Utility and Energy committee. I
testified and then spent many long afternoons in the committee room
observing the deliberations. The original bill was drafted by the
grassroots organization that I am an active member of here in Maine.
Midcoast Green Collaborative has been very proactive in raising
awareness of sustainability in our region by organizing an annual
I had hoped that the bill would pass as drafted and as-such would offer
a significant incentive by requiring the electric utility to purchase
our power at a very attractive rate for at least 30 cents/kW. In late
May, Vermont became the first state to pass exactly such a bill.
Gainesville, Florida also enacted a similar bill that created a boom in
residential solar installations. Maine's bill does not offer any real
incentive at all, but it is a stepping stone toward a realistic goal.
In the process of preparing my testimony for the committee I began to
realize that even if the bill did not pass there was another option.
Maine has a net metering law in place that credits the customer the full
retail value of the electricity they export to the grid. So if we were
to install a system that generated all of the electricity that we need
then our annual bill would be reduced to the minimum connection fee of
around $8.00/month. In fact it is more prudent to undersize the system
so that we would not be giving away any surplus - the utility does not
pay for a surplus, just credits for the excess generated power generated
in any given month.
Below is my bill from Central Maine Power for March/April 2012 - using
26 panels (about 4.0kW peak AC power):
Note that since all net metering bills are hand processed, they actually
highlighted my credit for me!
I looked up the last 12 months of our electric bills and then
anticipated energy production for a system comprising 21 175-Watt
panels and from this determined what our electric bill would be on a
monthly basis. As you can see below our average bill will be much
The way that net metering works is that we would bank any surplus credit
in the summer and use it in the winter. As we eventually add more
panels, the credit will be greater.
(You can see how my installation is performing compared to the
estimated solar power on the Real Time
Stats page of this blog.)
We began by looking into re-financing our house to lock in a low rate
during the "economic downturn" (depression) in March 2009. We had an
ARM mortgage with a MegaBank that would go from the fixed to adjustable
rate next year (2010) and we figured that it was a good time to lock in
a 20 year fixed mortgage. We also decided to go to our local bank for
the re-fi to keep the money in the local economy. I watched the
economic indicators and published mortgage rates carefully and then
locked in the loan rate at the lowest point in the cycle in late May.
We originally budgeted $26,000 for 27 panels that would fill the roof,
but decided to reduce our initial overhead and scale the design back to
a more prudent 21 panels. (Panel prices have dropped significantly
since 2009 and in 2102 are nearly 50% lower due to the Chinese jumping
into the market with massive government subsidies and decimating the US
manufacturing capacity by dumping their cheaper products). By asking
for an additional $21,000 on the re-financing we were able to lock in a
very attractive rate that works out better than an equity loan or line
of credit. We also explored the option of a Maine State Housing
HELP (Home Energy Loan Program) loan. But they limit these loans to
15 years and $30K so despite the better interest rate, the net monthly
payment would be about the same as the cost rolled into a mortgage. Our
loan officer also advised us that the paperwork for these loans is
significant and there are a lot of restrictions that could preclude my
installing the panels myself.
We determined that the added $21K on our loan would cost us about $180
more per month over 20 years than what we were currently paying. When
we account for the fact that our electric bill will drop from an average
of $100/month (for Clean Power at 18cents/kWh) to about an average of
$58.00/month, so I estimated that our monthly budget would only increase
by an average of $122 ($89 to $146 depending on the seasonal solar gain
-- see below). This is not an undue burden for us. After the loan is
paid off it's all positive cash flow!
(after adding more panels our net bill
in the spring of 2012 was negative - until we purchased a
The Federal Residential
Energy Efficient Property Credit (form
5695) allows us to deduct 30% of the cost of the system from our
taxes, so we will avoid paying around $6000 in taxes.
Maine's Efficiency Maine program has a
Solar Rebate program, Solar PV systems qualify for rebates of
$2.00/watt for the first 1,000 watts, capped at $2,000. Check the
DSIRE database of
state incentives to learn what you can expect in your state.
Update on tax breaks:
We got our taxes done by our accountant in 2010, and got a nasty
surprise. I had thought we would get the full $6185 off our taxes
(on form 5695 - Residential Energy Efficient Property Credit) which
gives a 30% tax credit, but all we got was $1772 with a carry forward
credit of $4413 that applies for 5 years. This is because we are both
self employed (filing jointly) and have to pay a lot of self-employment
tax. So this may not be an issue for "regular wage earners".
Check with a tax accountant before you plan on
that big tax break!
However we did get the full $2000 Maine Solar rebate. That program
had run out of funds just before we committed to our system, but then it
was re-funded by the Federal Stimulus deal - just in time for me to be
the first to file for the refund!
So here's how our net system cost works out to date:
|Estimated system cost
|30% Federal Tax break
|30% Federal Tax break
|30% Federal Tax break
|Maine Solar Rebate
|Net system cost
Note that our total federal tax break add up to $7038 because we
continued to add to the system and got credits each year we added