Happy Friday – A Happy Complication

Let's love some trees!

Let’s love some trees!

As if we didn’t have enough on our plate this year with the planned kitchen renovation, we had to go and add another complication. And one that is going to cause our 2015 spending to be significantly higher* and we couldn’t be more excited!

No, I’m not pregnant, silly. Jeez!

We’re getting solar panels!! We just got word that we’re approved for funds through our utility company, FPL, to use for an install of a photo-voltaic system that will cover the electricity needs for our little house.

Getting these funds was like playing the lottery (something we never do), but since it involved just a $0 upfront cost and some time and research, we went for it. And boy did we get lucky since not only might 2015 be the last year for FPL solar funds, but all the solar funds were awarded in record time this year.

The Numbers

We’ll write more about it later, but here’s approximately how the numbers are going to shake out for us.

Over the past couple of years we’ve used ~13,000 kWh/year, which costs us about $100/month ($1,200/year) (a little less after we signed up for FPL On-Call).

A solar system that generates that much energy in our area (we can’t profit off of net metering in our area, so it doesn’t make any financial sense to over-size the system) isn’t cheap. It’s actually pretty darned expensive. But the rebates that we were just approved for make it a much more compelling investment. Here’s approximately how the numbers will shake out:

  • Total cost of system: $30,000
  • FPL Rebate: $15,000
  • Federal Energy Rebate: $9,000
  • Net cost to us: $6,000
  • Number of Years to Payback: 5

So basically we’ll pay for ~5 years worth of electricity upfront after the rebates** and we’ll get a system with an expected lifespan of 25-30 years that should provide for all of our electricity needs over that time period.

It’ll be like the ultimate in maximizing a pre-payment discount!

This does mean that we’ll have some fancy financial footwork in the short term figuring out what the best way to pay upfront (we will need to shell out the full $30K in short order), but it should be one of our best investments over the long term.

You have no idea how happy this makes me. It’s like my inner tree-hugger is getting to sit around the fire and sing Kumbaya with the financial optimizer in me.

So Happy Friday, everyone!

 

Have you ever looked into a solar system for your house?  What are you happy about this Friday?  Want to step outside and hug a tree with me?

 

* Counting the $6,000 in net costs, our 2015 spending goal will be back around the $50K mark. So much for the audacious $45K goal! =)

** Since we’ll need to wait more than a year for the Federal rebate we’re technically out more than $6,000 for about a year, but the opportunity cost on that money isn’t huge.

37 comments to Happy Friday – A Happy Complication

  • Yay solar panels! It’s so great you were able to get so many discounts too. Very jealous.

    I’d go hug a tree right now in your honor, but it’s preeeeetty cold.
    Taylor Lee recently posted..TGIF: Stuffed DatesMy Profile

  • Love it! That’s fabulous, PoPs! Looking forward to hearing how the installation, etc goes for you. So awesome!

    I will look at trees and pretend I am hugging them because they’re all covered in snow & ice right now and I do not want to hug a freezing tree (unless it asks and it really needs a hug).
    Mrs. Frugalwoods recently posted..Weekly Woot & Grumble: Ate a Pancake, Lost a MufflerMy Profile

  • You don’t need to wait more than a year for the federal rebate. Just calculate your anticipated tax liability which includes the federal credit, look up the withholding tables that employers use, and then figure out how many allowances you need to claim to make the withholding match your tax liability. Remember that you can always owe up to $1000 in federal taxes without an underpayment of tax penalty.

  • Sweet! I am interested in learning more. My cousin and his wife and currently building a homestead on 15 acres they own and they are going full off-the-grid solar. Very curious to see how it works out.
    Holly@ClubThrifty recently posted..How I Save Money by Working at HomeMy Profile

    • We won’t be off the grid, so that’ll definitely be different than your cousin. My uncle has a cabin that’s off the grid and I don’t think he’s had any problems over the years, but it’s more of a weekend getaway. I’m curious how it’d be to be off the grid 100% of the time. You’ll have to keep us updated on your cousin’s progress!

  • Woo! That’s really exciting! I agree with Fiby – that’s what I usually do when I expect to have tax credits and deductions.
    Leigh recently posted..Goals for 2015My Profile

    • I’ll definitely bring it up with my tax guy when we go in to discuss our 2014 taxes. I’m sure he’ll figure out how to do it easily. =)

  • Wow that’s awesome that you got paid to get some solar panels. I would love to install some but they might not too useful here in rainy Vancouver. 😉
    Tawcan recently posted..Recent buysMy Profile

  • Awesome! Around here the rebates don’t seem to be worth it. Instead we’ve reduced our usage. It would be awesome to be off the grid in the suburbs though!
    Emily @ Simple Cheap Mom recently posted..Interviewed by Debt DisciplineMy Profile

    • We’ve reduced our usage over the past few years, too. (Our solar consultant congratulated us on that when we gave him our usage records, actually.) That really does make a big difference!

  • bluwater

    Wow, that’s awesome! As a new Florida homeowner I wasn’t aware of this but just noticed they opened up a supplemental application on the 21st. It looks like you need to select a contractor so my window of opportunity is small. Any tips for qualifying or is it truly a lottery system? Also, have you looked into any potential premium increases on your insurance and do you believe the system will be covered fully in the event of a hurricane? thanks :)

    • Call a local solar contractor today and see if the can get you an estimate in time for Wednesday since you can’t apply without a contractor on board! It’s a race when the application period opens but our contractor was great with prepping us to increase our odds of success.

      As for insurance, call your homeowner’s insurance agent. We did and our system (Tier 1 < 10kW) will be covered under our current policy without any special deductibles or policy riders, though we're due for increasing the replacement value on our policy so will likely keep the solar system in mind when calculating the new replacement value. (But that won't add too much to our yearly insurance costs.) But definitely act fast if you're really interested! Our solar contractor was surprised there were funds for 2015, so they're not sure there will be another round (well, except for next Wednesday to make up for the glitch this week). 2016 funding is an open question. Oh yeah, and check with your HOA (if you have one) to make sure you're allowed. A lot of communities don't allow solar systems, sadly.

  • Congratulations! I can’t wait to hear about your system and installation. I looked at solar panels on our home in VA, but we were more interested in paying off debt than saving for a solar system to handle a peak of 3200kWh/mth (electric heat). I’ll be looking into it again once our new home is finished and I know what our new cash flow situation looks like. Although, we’ll have gas heat for the new place, so I suspect we won’t need as many panels – reducing the price for us.
    Mom @ Three is Plenty recently posted..Detailed Financial Picture – January 2015My Profile

    • 3200kWh/month? Ooof! We have electric heat, too… but luckily we don’t use it all that often. =)

      I wonder if it’d be cheaper to install them on the house as it’s being built… maybe something to ask your contractor? Or do they not recommend it since you won’t have a baseline for how much power you use in the house yet?

  • How funny that you posted that today. Tonight, Margie and I are going over a friends’ house for dinner and they started having solar panels installed today!

    The difference is that they are doing a lease. I have a kneejerk reaction that the lease is a really bad idea, although I didn’t have any numbers to back that up. Thanks for giving me some firepower :). New York definitely has rebates and tax credits. I’m not sure how much, but they don’t amount to 80% like yours. With rebates like that, you’d be foolish not to purchase them!

    The idea of free energy in five years is very exciting. I’d be tracking the payback timing and have a celebration at the end.
    Norm recently posted..SeinopsisMy Profile

  • Congratulations!

    I briefly looked into it back when we were deciding about renovations, but it didn’t seem worth prioritizing over the bathroom floor (done) or the kitten-destroyed bathroom (next) or even the kitchen (put off another few years).
    nicoleandmaggie recently posted..Google QuestMy Profile

  • Sue

    Solar panels-exciting! I have been trying to talk my husband into getting them but he thinks they will take away from the look of our house. I may have to wait until they get a tad smaller. I’m all about doing away with monthly bills and to be off the grid or close to it is an added bonus. BTW, a little one would be exciting too : )

    • Personally I think solar panels look cool, but sadly most of our neighbors won’t even know how cool we are by having them since due to the orientation of our house they’ll be on the part of the roof that faces back. So only our neighbors across the lake will be able to see them!

  • FE

    Mrs POP,

    I read your blog and this is the first time that I am commenting. I want to let you know that I made a similar enquiry with our local utility here, one of the item that they mentioned to me was that I would have to pay taxes on the rebate amount that utility provides, in your case it is on $15,000.

    Please enquire with your installer or the utility.

    Thanks
    FE

    • Thanks for the heads up, FE!
      I’ll definitely talk to our tax guy about that since googling the issue it seems like it depends where the money is coming from. And since we didn’t have to pay taxes on the FPL rebate we got from our A/C purchase a few years ago, I’ll hope that we won’t have to pay taxes on these rebate funds, either since they’re from the same source. If we do, well… that would push the payback term out to probably 7 or 8 years… still worth it, but not quite as amazing. I’ll definitely include that info when we do a follow-up post on how install and everything goes.

  • That’s amazing! Such a win of a situation all around.
    C@thesingledollar recently posted..How’s the New Year Going?My Profile

  • Congratulations on getting panels installed. How much square footage were necessary to cover your 13,000 kwh/year?

    Our HOA doesn’t allow solar panels–ridiculous.

    Eric

    • The install hasn’t happened yet, but the plans call for 28 panels, which would cover most of one of the 3 sections that make up our roof. Not sure how many sqft it is, but significant! =)

  • Awesome news for you! Although it feels like you are starting off the year by ‘blowing’ your budget, what an investment for you! I think that is one of the big differences with being smart about your finances, and only planning to spend $45,000 for the year, and being hindered and only being able to spend that much. Financial freedom allows us to jump at those long term investment opportunities that will pay off big in the end. Congrats!
    Mrs. Maroon recently posted..December 2014 UpdateMy Profile

  • jestjack

    Pretty cool….Please keep us informed as to how this pans out. I have played with the numbers and it doesn’t make a lot of sense for me. But then we don’t have the generous subsidies that you have … MAN. Plus your electric seems cheap to me. If you lived where I do your electric bill would be over $140 a month….easy. $6K seems like a pretty sweet deal!!!

  • Great idea to get involved in solar especially in the sunshine state, can’t wait for the write up!
    Even Steven recently posted..Have You Ever Been Excited to Fail?My Profile

  • EL

    Congrats on getting your utilities covered for 30 years. IT is a big upfront cost, but it will be worth it. How fast do the rebates arrive? In my area we can sell the extra juice back to the utility company.
    EL recently posted..My High Income Investment AccountMy Profile

  • That’s incredible, and a great illustration of how government spending can nudge us to do things that are beneficial for society long term.

    So excited for you. Please let us know how it goes!
    Done by Forty recently posted..Shifting the SpendMy Profile

  • Amy K

    I hope you can get in on the SRECs, they’re what makes our system viable.

    We’re paying $20K for a 5000 kWh annual production system. After state and federal tax credits it’s $14K which would take forever to break even. The SRECs are projected to be worth $1,000/year taking the break even to 5.5 years.

    This large (small?) of a system would have covered half of our electricity needs, except I bought an electric car in February. Now it will cover the car and about 25% of our household needs. Solar powered car!