It was just over a year ago that we won the lottery. Well, it was more of a race of sorts – a race to get accepted into the Florida Power and Light (known as FPL around here) Solar Rebate Program. As it turned out, the solar rebate allowed us to install a photovoltaic system (solar panels on our roof) that would provide our house with its electricity needs for decades and get a very large rebate from FPL that would cover about half of the cost. Since Federal tax rebates cover 30% of the cost (and the rebates stack!), that meant that we would essentially be installing these solar panels at an effective 80% discount after the two rebates, slashing the payback period on them dramatically (to around 5 years instead of ~25 years).
But in order to get our rebates, we needed to act pretty quickly. The system had to be installed, inspected, and up and running within 90 days or FPL would pass our rebate amount ~$15K on to the next customer on the waiting list. And since FPL was saying that this would be the last year of the solar rebate program (which so far is true), we knew we wouldn’t have this opportunity again.
Probably as a result of the rush, some of our understandings of how our solar system would work with the grid haven’t really panned out exactly as I had anticipated, so the return on our investment isn’t *quite* as high as it might be otherwise. But it’s still pretty darned high, so we’re not kicking ourselves in the shins.
But first, the good.
Production Was Right In Line With Expectations
Our solar system went on line right in time for our May billing cycle, but our billing cycles end mid-month, so these numbers represent energy use and production for the period of April 15 – December 15, 2015.
During those eight months, there were some when our production was on the high end of the expected range our solar installer had provided us, and some when our production was on the low end of the expected range. But on average, our production was pretty much spot on the estimate of 1,027 kWh that our system was designed to produce on average. (The system was designed to produce enough to satisfy 100% of our average energy needs from 2013 and 2014, but not more.) In fact, our records show that over the course of those eight months, it was within 10 kWh of that value, recording 8,206 kWh produced instead of the 8,216 that were projected on average.
And if you want to get really detailed about it, our records probably undercount our production by at least that many kWh since there was about a week when our solar system was producing very well, but there was an error with our reader recording the output and it was only recording data from about two-thirds of our panels instead of all of them.
But Our Energy Needs Actually Dropped
Our energy usage actually dropped in 2015, from an average of using 1,010 kWh used on average in these months in 2014 (which was low compared to 2013) to using an average of 935 kWh, which was surprising, especially considering there were months in this period when we literally didn’t have walls due to our giant kitchen remodel.
From April through July, we didn’t have walls or a ceiling in our kitchen and dining room, a space that represents approximately 20% of the square footage in our house. And while I tried to keep the A/C off as long as possible not wanting to waste electricity cooling the outside, I lost that battle sometime in April after we stapled some of our new wall and ceiling insulation in place. Sleeping with the sliding door in our bedroom open was not a long term solution despite my not wanting to “waste” energy.
Our renovation also saw us increase the volume of the kitchen and dining room by ~35% due to us changing the ceiling line and moving a wall, transferring space that was inside our garage and attic to inside the house. So we had more indoor climate that we were using electricity to control the temperature of.
We knew we would be attempting to counter act that increased need for electricity by using more energy efficient materials (insulation and windows) than the builder used back in the mid-80s, but it remains a shock to us that they seemed to have more than made up the difference since after my initial protests against wasting energy by using the A/C when we didn’t even have insulation up and the house wasn’t really sealed at all, it seemed like we used the A/C pretty much as normal after that.
This meant that by the end of our December billing cycle, we had built up a whopping 729 kWh reserve of credits with FPL (and I was planning on letting Mr PoP crank up the heat without telling him he needed to put socks on first as soon as the weather started to get cold*), and this is where one of our solar misconceptions comes into play.
Misconception #1 – kWh Credit Expiration Dates
When I was doing all the research on solar panels and talking with our solar consultant, I was told: Some months you won’t use as much energy as you produce. When that happens, the excess kWhs are credited to your FPL account for you to use in months when you use more than you produce. But kWh credits expire after a year per Florida law, and when they expire they get paid out at the wholesale rate, which is much lower than the retail price.
It was because of this clause that it absolutely does NOT make sense to “oversize” a solar system down here since the cost of the additional panels would never be made up with reimbursements at these low wholesale energy rates.
With that description, which was about the same as the description that *was* on FPL’s site at the time, I assumed that meant that if I earned kWh in April, I had until the following April to use them, so they would expire on a rolling basis if we ended up with extras. But that was apparently incorrect (and FPL’s website has now been updated to more accurately reflect what happens to your kWh credits with the year end cash out).
In short, any credits you have left in your “reserve” at the end of your December billing cycle (whether they were generated during your December billing cycle or the January prior), get cashed out at the wholesale rate. And that wholesale rate is ridiculously low – even lower than the ~3cents/kWh I had been told had happened in previous years. I’m not sure whether this year was lower than usual due to declining oil and natural gas prices or what, but we were credited less than 1.87cents/kWh for our year end reserve balance. Our 729 kWh of credits disappeared from our account and were replaced by a whopping $13.63 credit.
In an instant, we went from being kWh rich to being kWh poor. I was not thrilled! We even had to PAY for 77 kWh on our January bill… so sad. Granted, the cash out of our 729 kWh (even despite the crappy exchange rate) covered the cost, but there wasn’t a ton left over after that. Here’s hoping that we start to have sunnier weather and don’t have to buy any more kWh for the rest of the year! After all, our bills aren’t as small as I thought they were due to the disappearance of my FPL On Call Credits. Which brings us to misconception number two.
Misconception #2 – FPL On Call And Solar Panels
FPL On Call is another way to get discounts on your electric bills. I wrote about it here when we first had the system installed in our home, but the short summary is this:
In exchange for giving FPL limited authority to turn off the power to major devices in your home (A/C, heat, pool pump, water heater) during periods of high energy demand in your geographic area, FPL would credit your account a few dollars per month. For us, it amounted to $137 in credits each year and we never once noticed FPL On Call being activated. (If you’re not home or actively using that device when they activate your On Call, you’d never know if it happened or not.)
When we were researching the solar panels, we knew we’d still have a flat $8/month customer fee to keep us connected to the grid. But since we were earning an average of more than $11 in On-Call credits every month, we had thought they would cancel each other out and leave us without a cash outlay most months. In fact, I called FPL and asked if the solar panels would have any impact on our participation in the On-Call program, and was assured that they did not.
Even after our On Call credits disappeared from our bill the first month that we had our panels up and running, I called and they said that was a mistake and I would get those credits. And that didn’t much surprise me. After all, our having solar panels does not affect the FPL On-Call program at all. With our On-Call box, FPL can still disable our major appliances if they needed more energy. They would just be taking a higher proportion of the energy that was being produced by our solar panels at that moment than before the On-Call was activated.
But after 2 or 3 months of calling in like this asking “where the heck are my On-Call credits” and being promised that the error would be corrected, finally a phone rep in the On Call department informed me that the policy is that in order to be eligible for On-Call credits, you had to be buying a minimum number (n-hundred, where I can’t remember what the value of n was) of kWh per month. And due to our solar panels, we weren’t meeting that minimum purchase requirement. She said that had always been the policy but that we had always met the minimum so had never noticed it. I asked her to send me a copy of a document where this policy would have been in writing since I never saw it and several reps I had already talked to hadn’t mentioned anything of the sort, and received a flyer for On-Call that did NOT contain this policy, but of course contained language stating that FPL could change the policy at any given time. Sooo…I gave up fighting and calling in. I think it’s BS, but it’s BS that’s not worth my time for $8/month. So instead of a $0 bill like we thought it would be most months, our bill is $8 most months.
We still have the On Call system installed in our house, so FPL still accrues the benefit of having that usage flexibility, but without accruing any of their cost savings for it to us. In a way, that annoys me. But at the same time, I also think that it’s far more environmentally friendly to allow the utility company to shift the load and not over-produce in order to handle peaks or avoid brown-outs. So for now, the On Call system is still activated in our house and I choose to view it as something nice we do for the environment rather than an effort to save money. If it ever becomes a big inconvenience to us, I reserve the right to have it dismantled since we’re not getting any benefit from it.
The Numbers – Year 1
The combination of these two misconceptions (hopefully we’ve now found all the “gotchas”) means that our solar panels aren’t quite as good an investment as we thought they would be originally. But it’s pretty freaking close.
Instead of an average bill of ~$103 as it was in 2013 and 2014 (which includes our On-Call credits for most of those months!), our average bill is probably going to be close to $8.That amounts to an average decrease in our monthly bill of ~$95.
Using the Rule of 300 (CanIRetireYet has a good explanation here), a reduction of expenses to the tune of $95/month is roughly equivalent to having investments that you live off (using the 4% rule) totaling:
$95 * 300 = $28,500
Though the published price of our solar panels was pretty close to that, $30K, after our rebates, we will have paid much less.
$30.0K install price – $15.1K FPL rebate – $9.0K federal tax rebate = $5.9K net cost
So we paid $5.9K for the equivalent of having $28.5K in investments in our bank account (plus the increase in our property value). That’s not quite as good as it would be if we got the equivalent of $103*300 = $30.9K if our bills were $0 as I had thought would happen. But it’s still pretty darned good. And we’d do it again in a heartbeat if given the chance.
And that’s pretty much everything that we’ve learned in our first calendar year of solar panels. Feel free to ask any questions if you have them!
* Cold is relative, people. Also Mr PoP feels it’s his (in his words) “god-given right as a Floridian to not have to put socks on outside of work.”