After much debate among our peers and ourselves, we have finally decided to get solar panels installed at home.
Most of the debate between us (or, more often, with myself) was whether we could afford solar panels. Even when we started talking to solar companies, I still wasn’t clear on this. It wasn’t until I talked to Western Solar that I got the key datum which settled the matter: we can get a solar loan from Puget Sound Cooperative Credit Union.
PSCCU offers loans that are very unique. As far as I know, no other financial institution in the area offers a loan like this. It’s pretty simple: Obviously, you use the loan proceeds to buy & install solar panels at your home. Most other banks just offer you a home equity loan for this. If you don’t already have enough equity in your house to cover the panels, you’re out of luck. But PSCCU handles it differently.
They recognize that the money spent on solar panels adds at least their own cost to the value of your home. As a result, they will fully fund the solar panel install, up to $35,000. They offer rates as low at 4.49% and terms of up to 15 years! This allows us to substantially draw out the initial cost of solar panels, which makes them worth the investment even sooner.
We have worked hard over the years at building and maintaining high credit worthiness; thus, PSCCU was willing to offer their best terms to us: $35,000, 4.49%, for 15 years. Our payments would be about $265.00. But, they won’t be that high for very long, because PSCCU is smart about something else.
Anyone who buys solar panels can get a federal tax credit of 30% of the total cost of the installation and panels. Of course, you don’t get this credit until you actually file your tax return next Spring. But we’re paying for the panels now and getting the loan now. So PSCCU decided that they will allow us, one time, to re-amortize the loan. This means that when we get our tax credit, we can apply an extra-large payment to the loan (about $10,000), then have PSCCU recalculate our payment amount for the remaining term of the loan. It’s kind of like refinancing, but for free!
So if we apply our full credit to the loan and re-amortize next May, our payments will drop to around $185/mo — for 14 more years. This is outstanding — because we’ll be getting a lot more than that back by having the solar panels.
I estimate that our panels will generate about 6,000 kWh per year. When we generate power, our power meter “spins backward”, and we save on our electric bill. Our electric rate is currently 11.35¢ per kWh. So we will save about $681 per year on our power bill. In addition to that, the State of Washington will pay use for every bit of power we generate. Because our panels will be made in Washington (right here in Bellingham, in fact!), but our inverters will not, the State will pay us 36¢ per kWh we generate. The annual total for this will be about $2,160.
So we’ll be making $2,160 + $681 = $2,841 per year. Our loan payments will be $2,220. We’ll be making a profit of $621 starting in the second year! And it’ll get even better as electricity prices increase (which is expected to be around 6% per year). The only catch is that currently the State is planning to end their incentive payments in July of 2020. This means after that point, our only savings comes from the power bill savings. But our payments are still only $185/mo, and only for a few more years after that. I think we’ll be able to handle that just fine.
In the long run (the panels and inverters have 25-year warranties), we’ll be coming out positive in every way. Not only will we be creating less pollution by not burning power from who-knows-where, but we’ll be actually making money doing it. I estimate after 25 years that our annualized return-on-investment will be 6.39%. That’s not such a bad investment, really, considering what else we gain from it.
What DO we gain from it? We are maxing out the $35,000 loan that we can get. This will give us 24 panels from Itek Energy, with a total generating capacity of 5.76 kW. The panels will be ground-mounted out in our field, where there is no shade; our house gets a lot of shade year-round. Each panel will have its own Enphase microinverter, which will report lots of data about each panel to the cloud, so we can view it on our computers or smartphones. If anything ever goes wrong, Western Solar (the installer), Enphase, or I, will be notified that there’s a problem, and it can get fixed right away.
Western Solar is very busy right now so we’re not expecting the install to happen for a couple of months. I will post more updates once that starts happening, so you can all see what we get and how it works out.