Let us explain. There is a misconception that solar is for the rich and fancy. It is, but not exclusively. The only real economic barrier to getting solar is homeownership. If you are a homeowner, you need to get solar as soon as possible. Why yes, we’ll explain, gladly.
Before we start, can we agree again that we need electricity to survive? Yes, you, Mr. Off-Grid Nomad, Mrs. Van Life Lady, Perpetual Primitive Camper Dude, you will be fine, we know, please tell us again what palmetto bugs and road kill taste like and the best way to cook them. Everybody else, can we agree? Experts measure the survival of society without electricity in weeks. If you think you are an exception, take one cold shower and realize that awful experience is the least of your worries if electricity goes away.
Right now, most people buy electricity from a power company. Duke, FP&L, the *ECO’s, you’ve seen them around. Let’s talk about why that is a bad idea. We’ll focus on reliability and expense. We won’t focus on things like environmental concerns, monopolies, or independence. Not because those aren’t important, but because the first two should be enough.
Reliability.
How reliable is the grid in Florida? Right now, it is pretty reliable. According to AI Floridians suffer about fifty-one to a hundred power outages a year. The majority of those are barely flickers and we don’t notice them. Some, especially during and after a storm, can last much longer. But, what does the future hold?
Also according to AI, over twelve hundred people move to Florida every day. Day. AI said DAY. Every. Day. That’s over four hundred thousand a year. How many years like that can the Florida grid handle? Are those fifty to a hundred outages a year a sign of what’s to come? Are we going to get brown outs like other states have had? Full-on blackouts? Experts are saying that Florida’s ever-increasing population might soon be a factor in making electricity unreliable.
Infrastructure.
Until the aliens teach us how to do it a different way, electricity comes from the power source to our homes through wires. How old are those wires? How old are the connections? The transformers? All the other components that are required to get electricity to us? How old are the power sources themselves? Aging equipment is another factor that will affect reliability.
Weather.
It’s Florida. Hurricane is a season here. We won’t bore you with a deep dive here. It’s an issue and if you disagree, we can’t help you. (You must be one of the twelve hundred who moved here yesterday. Welcome. Talk to you next year.)
At this point, let’s take your temperature on this. Can we agree that power company, or grid, supplied electricity can get pretty unreliable in Florida? Can we further agree that this problem is going to get worse, not better? Good, we will cease beating that dead horse.
Let’s talk about expense. No matter who your power company is, you are paying them more this year than you did last year. It’s a small amount more, you barely notice it, but it does this every year and adds up. The average residential power bill in Florida in 1995 was $62. How does that compare to what you are paying today? If they increased the price from $62 last year to what we are paying now this year, we would all revolt. They are crafty.
Power companies have raised their rates and fees every year since Eve shared her food with Adam. (Yes. We know, nitpicker, but you get it. Right? We mean for a very long time. Relax.) Depending on who and when you ask, the increase is usually a minimum of 5% with some banner years at over 10 and even 20%. Sometimes it is a rate increase. Sometimes it is a fee increase. Sometimes it’s both. It’s always an increase though.
These rate increases compound. 5% next year is on top of the total after the 5% increase this year which is on top of last year. If you want to play with these numbers, we made a site that does the math for you. www.costtodonothing.com will let you put in your average electric bill and see what your electricity will probably cost you next year, the year after, and the next thirty years. It will also do all the relevant math for you.
This takes us back to the bold statement I opened up this post with. No matter your financial position, you can’t afford NOT to go solar as soon as possible. Why soon? Because every year you wait, your power company’s rates will go up. Most solar contractors design their solar systems to freeze your rates at current electric company prices. What’s that mean?
Let’s go back in time a little. Just five years ago, when the average power bill was about $164 (According to Google.) we could install a solar array exactly sized to compensate for all of that bill, finance it over thirty years, and the payment would be $164 or less. Solar paid for itself. The customer did not have to take a dime out of their pocket. All they did was change who they were paying their $164 to from their power company to their finance company.
The payment to their bank would not fluctuate. They would pay the same in August as they did in January. Next year, when their power company raised the rates and all their neighbors were paying an average $172.20 for the same amount of electricity, their electric bill would still be $164. Most importantly, one day they would have no more power bill. At the end of their term their system will continue to function at close to 100% and their energy cost will be zero. Their neighbors? That $164 electric bill grew to over $700 a month for them, for the same amount of electricity consumed.
Let’s jump back to the present. Due to interest rates and payment factor fluctuations, it is a challenge to match a solar payment to an average electric bill exactly. We can get pretty close. We sized a customer for solar yesterday and their average electric bill was around $141/month. We were able to get their payment to $173/month. $32, AKA about a dollar a day, is what they will have to pay in addition to what they were paying their power company anyway.
“See! It’s not worth it! Solar doesn’t pay for itself! Haha!” you say? (Probably not. You seem like cool people. We doubt you would jump to such an erroneous conclusion and then be so snarky about it.)
Using the same calculator at www.costtodonothing.com we put in $141 for the bill and the conservative 5% increase. We look down the monthly bill column and see that that extra $32, diminishing a bit every year, would be caught up with by rate increases around year four. The remaining twenty-six years would be savings and return on investment. Then free electricity. Solar paid for itself and then some.
Most solar finance companies offer thirty-year loans for solar. Most manufacturers of components offer thirty-year warranties. Solar is thought of in thirty-year terms. Some solar customers don’t. The rich and fancy ones we spoke of before, they pay cash for their solar because they can, and I suspect those types are allergic to paying interest unnecessarily. Some bite the bullet on temporarily higher electric payments and only finance for fifteen years to avoid some interest. I admire both of those groups, but I don’t understand them.
Let me start this next part by saying, this next part is not financial advice. It is how we look at the cost of solar though and why we recommend financing solar even if you don’t have to. Interest rates for solar are in the 7 to 9% range right now. Some might look at that and grit their teeth and make a hissing noise. If it was for a car loan, yes. Not for solar.
Remember the trick we did earlier to discover that the customer would have to pay an extra $32 a month for the first four years? To us, that’s the real interest on a solar loan. Remember how we started? We all need electricity. It’s a bill we will pay, no matter what. High or low, we are going to pay it anyway. Interest on a solar loan is any amount more than you were going to pay for electricity anyway.
Four years (48 Months) times $32/month comes to $1536. After that it’s twenty-six years of putting way more than $32 back in your budget. Let’s just use $32 to put it in perspective for you and stay conservative. Twenty-six years (312 Months) times $32/month comes to $9984. If that customer goes solar and pays an extra $32 for the next four years, our conservative example has them turn a $1500 investment into $10,000. Again, we are not financial advisors, but those sound like Bitcoin numbers!
BTW … the real savings for that customer is over $67,000. That’s what it is going to cost them if they choose not to go solar. We also call that their budget for solar. If we can put solar on their home for less than that $67K then it makes sense for them to do it. And we can. We can fully eradicate $141 of consumption for much less than $67K. A lot less. About a third. That’s a fraction. We can do it for a fraction of $67K. That there was some fancy sales lingo.
So, there is no excuse. Many people are not going solar for the very reason they should. It makes no sense. There are exceptions. Some homes are not solar feasible. (Choppy roofs with not enough southern exposure, shade trees, etc.) Some homes aren’t ready yet. (Leaky attics, ancient energy hog AC units, etc.) Finding out is free. We will gladly determine solar feasibility and do an energy evaluation for no charge. Why isn’t our phone ringing yet?
