Sell Solar Power Into Your Grid and Make Money
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A recent New York Times article blasted solar energy systems as making “no economic sense.”[1] The truth: solar photovoltaic systems aren’t cheap but they do payback. Sales of solar photovoltaic systems have been rising up to 50% annually in some states and it’s not just environmental do-gooders who are investing in the renewable energy. For many homeowners, solar energy is about dollars and cents.
Solar systems incur significant upfront costs but both federal and state governments offer incentives. The Energy Policy Act of 2005 included two ways to receive a tax credit for solar energy from the federal government. You can qualify for 30% of the system cost (up to $2,000) for either solar water heating or for solar photovoltaic (PV) electricity.
At the state level are more incentives. Over half of the states in the nation offer solar energy rebates offset the cost of solar power systems –New Jersey rebates cover more than 50% of retail costs. An additional income tax incentive is offered in 17 states. Add it all up and some homeowners are installing PV systems for a third of the retail price.
The cost-effectiveness doesn’t end with installation. Federal law allows independent power producers to connect to the utility grid and requires utilities to purchase excess electricity. Over 30 states allow net metering which accounts for a PV system’s electricity production and allows homeowners to receive the full value of the electricity by selling excess back into the grid.
The most common method for net metering is a single, reversible meter. As a PV system produces electricity the kilowatts are first used to meet on site demand for lights and appliances. Instead of into a battery storage system, extra kilowatts feed into the grid turning the homeowner’s electric meter backwards. At the end of each metering period, the utility company credits the homeowner for the extra kilowatts, paying out either monthly or annually.
The cost of installing a PV system depends on the kilowatts needed to power your home – the more power needed, the larger the array and the bigger the costs. An average homeowner can expect to pay $40-50,000 for a photovoltaic system. Add in the rebates and tax credits and the upfront costs drop, in some cases 50%.
The time frame for a PV system to be paid off and start paying back can be anywhere from 8 to 25 years. It depends on the initial costs of the system, the available rebates and the cost of electricity. In some instances, homeowners who finance their system find loan payments to be less than their monthly electricity bill, which no longer exists.
The kicker is that when the system is paid off, the net metering keeps rolling and homeowners keep getting paid for extra kilowatts. In other words: positive cash flow. Another bonus to solar photovoltaic: energy-efficiency equals increased resale value. Even if you don’t see your solar system through to payoff, the next owner will pay you for your energy saving efforts.
[1] Damon Darlin “Financially, Solar Power for the Home is a Tough Sell” New York Times, April 14, 2007.
*Note: The information in this article is general advice and not meant as a substitute for personal guidance from a financial advisor, real estate professional, home improvement contractor or legal counsel. Although the author is a licensed realtor, the advice given in this article does not constitute any client contract or agreement between the author and the user. The author is not responsible for any losses, damages or claims that may result from your decisions.
Helpful Links
- DSIRE: Database of State Incentives for Renewable Energy
The Database of State Incentives for Renewable Energy (DSIRE) is a comprehensive source of information on state, local, utility, and selected federal incentives that promote renewable energy. - Findsolar.com
Find pre-screened solar professionals for solar power system installation, service. Estimate cost, price and benefits, savings of solar energy power systems for home, house or building. Find solar incentives, rebates. Find a solar contractor, install - The Solar Estimator at Findsolar.com
- Federal Tax Credits for Energy Efficiency
- Interstate Renewable Energy Council
Mostly wind energy, but follows other sectors - Department of Energy - Tax Breaks
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I think it depends where you live. I have land and recently tried to find out if I could impact my electricity bills in my house in any way using photovoltaic cells. I hoped to sell anything I didn't use back to the grid. I found out that due to the the lack of light in the UK in the winter, (short days), and the general lack of full on sunlight, I could not generate enough to run my house let alone sell back to the grid. And the cost of the photovotaic cells made it cheaper to do nothing at all, and leave the lights on for the rest of my life.
Of course that is looking at it from a purely financial standpoint. You have to pay to save the planet.
That said, the grants available in the UK (for individuals) are too small to make any real impact on the cost of what I wanted.
You cannot tap into the grid and SELL electricity back to the energy company. If you could, everyone would be doing it. If you are backfeeding the electric grid you would kill a lineman unless you shut it down. How could they contact everyone who was backfeeding the system to shut their system down, if there was a power outage.
actually, I feel fairly comfortable saying that the above statement by sprinklerman is incorrect- at least in some cases.
see http://www.nreca.org/Documents/PublicPolicy/DGWhit for information noted below
"Most states have adopted rules implementing PURPA § 210.2 PURPA required utilities to interconnect with "qualifying facilities" (QFs),3 to sell power to QFs,4 and to purchase QF power at avoided cost.5 ... Under PURPA, QFs include only qualifying solar, wind, waste, or geothermal facilities with a power production capacity of no more than 80 MW and qualifying cogenerating facilities."
As you can see, states in compliance with PURPA require that utilites connected to privately owned generators purchase any excess power generated by such systems. Whats more, some states have also adopted "net metering" or "billing" which allows owners of private power generators (I believe only renewable energy generators) to sell back excess power to the utility at the actual retail price for electricity charged by that utility. In these cases, the meter will actually spin backward as customers accumulate "negative load" and, though the power will continue to be generated during a power outage as you have noted, it is apparently not a prohibitive problem for the utility to have linemen working given that situation. The customer loses power to their grid-connected house just like any other customer.
Renewable energy is both eco-friendly and, if chosen by careful consumers, can be extremely cost-effective. I fully expect to see U.S. legislative support for it increase dramatically in the new future.
Thats great :D
Thanks for the hub
Great article. I recently posted a similar article on my site, <a href="http://www.solarwattblog.com">Solar Watt Blog</a> and it's such an efficient way of implementing and encouraging the use of solar power.
the problem for me is that the utility companies only give you a credit. Not cash money. This is not right. If I sell something to you, you pay me. Try and pay for your electric bill with credit. They will turn you off.
Actually, my local power company WILL pay you if you produce more than you use.
Problem with that is my system would have to be probably 5 times it's current size ( 3kw ) before that 'profit' point would be reached.....I'd have to invest 60k to make a few cents.
Selling power back to the grid depends on who you are connected to. Two things should be considered, how much power you can put out and what the power company's policy is on selling power. For instance, some company's take your excess power and give you a check at the end of the month or year, as others give you credit for your power on your next bill. I encouage anyone to look at the "Public Utility Regulatoies Policies Act (PURPA)1978". Also consider where you buy your equipment. I am a do it yourself person. So I am makeing my own windmills and solarpannels out of junk; scrap steel, sheet metal, wood, you name it. You can also buy solarcells in a lot of places on the net, just look around you are sure to find some. Use this link to see PURPA http://www.absak.com/library/utility-intertie-powe . I hope I was able to help. Remember "Money saved is as good as money earned!".
Abu Dhabi is putting $20 billion into building an entire city that's run solely on solar/geothermal/wind energy and it's supposed to be the first carbon neutral city in the world. now there we might be able to learn something about how to interface with the grid. for the rest of us, there's always the DIY option! http://www.squidoo.com/diy-solar-panel-for-home-us
Find out if your state has a feed-in tariff program. Feed-in tariffs allow you to connect to the grid and get paid at a higher than market rate for the electricity that you supply. In Ontario, Canada, for example the Feed-in Tariff is about ten times higher than the market rate for electricity.
Feed-in tariffs are explained in the book "making money from renewable energy", available from Amazon and Barnes and Nobles plus other booksellers.
Nice hub! Truly the use of solar power is very beneficial. Aside from saving money from your monthly electric bills, you can also sell the excess power that you gathered which is also a great income if your location do accept this trend.
Hey Sprinkle Man, You can sell back to the grid easily in Australia, they pay well as well, almost half the amount they charge those that pay for electricity. It totally depends on where you live and the demand, in Australia the demand is for green power and many are doing it as well.. Its great to see, i hope in the future it becomes more and more common..
I really want to stress on it depends on where you live, like i said australia is totally excepting of this and is supported of the pay back plan, not credits, a solar house owner does not need electricity credits, they need money.. There power is already free lol.. That is no incentive. I think who wrote this article is referring to australia that has a proper solar plan, no offense to anyone anywhere else where it is difficult... :)
Here in the UK you can sell energy back via the feed in tariff, but at present home owners can only claim if they install PV panels.
www.solar-power-home.co.uk
Great hub. Solar products have come a long way over the last few years. I have a solar charger that I use for my cell phone. 10 years ago who would of thought that you could charge your cell phone without having to plug it in to an outlet, especially if you are out at the beach or far from any electric source. Keep up the great work and I will check out your other hubs.
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Hey, am deeply encouraged by the article and the many comments I have read above. I am seriously interested in investing in selling solar energy back to the grid. I am from Kenya and here such an investment would be very beneficial. In fact there are so many power outages and power rationing programs that more often than not bring activities to standstill in offices and companies.
The good thing is that here, there are sunny days almost every 12 hours a day. I think putting up such an investment would bring amazing returns . Anyone to partner with please reach me here (ochionline247@gmail.com )
Actually, my local power company WILL pay you if you produce more than you use.
Hector Gonzalez 5 years ago
Where could I find more information on how to make money off solar energy? What if I owned large tracts of undeveloped land and wanted to convert them into profitable cash-flow? I know that in countries like Germany something similar is offered through governmental incentives....any information would be much appreciated.