Tie Dye Senior Fi

September 17, 2020September 22, 2020

Gone Fishing, er Retiring

Determining when to retire is in part a math problem and in part a time problem. Retire too soon and you can end up with lots of time, but not enough money. Retire too late and you can end up with lots of money but not enough time.

Years ago I tuned into Suzie Orman every Saturday. In one of her segments she would coach a viewer regarding the question ‘when can I retire.’ She often advocated working until 70. If the viewer had a nice pension or other reliable income streams, sometimes she would ‘allow’ the viewer to retire earlier.

Having failed at my earlier attempts to produce enough income to supplant my job (real estate being one example, but I will cover others as well in another posting), I internalized this idea of working until I was 70. I could see our retirement accounts growing and knew by then we would have more than enough money.

The issue for me was time. My wife’s health is not great (more chronic than life-threatening issues), but if I am to spend time with her, even just to enjoy her company, than I needed to rethink this.

Enter FIRE. I have no specific recollection on how I found the Financial Independence Retire Early community. One day I found myself reading a Mister Money Mustache article and one thing led to another.

As I was already 60+, Retire Early did not really apply to me. Retire on Time became the goal. Of course FIROT is not the best acronym out there!

I had recently paid off my house (took 22 years, like others, I had other priorities as well) and was trying to figure out what to do with this money. When the student is ready the teacher appears. Between JL Collins, ChooseFI, Retirement Answer Man, Big Ern, and others in the community, I started making those 1% changes that make so much difference.

I opened a Vanguard account, moved some money into their money market fund, VTSAX, and their total bond fund. I set up regular transfers and increased the amounts over time. In less than 3 years I had increased my savings rate to well over 50%.

I focused on my after-tax savings, as I had spent most of my working life building up the pre-tax savings.

I also worked on reducing expenses. Some of this occurred naturally as the kids moved out into their adult lives. Our house is about 26 years old. Almost two years ago I replaced the roof, having saved into a fund for that purpose.

The next decision, to add solar panels, took some research, which I have documented in this series. That lowered our energy bill. We also reduced down to a single car. The story on how that came to be deserves it s own post.

By the beginning of 2020 I realized I was probably in good shape to retire by the end of the year. I had joined and was helping to lead a local ChooseFI chapter and I consulted with some folks who had come before me in this journey. They agreed.

In March I told my boss of my plans, giving her plenty of time to adjust. I was the leader of a team with members in two countries and I knew this was going to be a difficult transition. I have been with my current company for over 20 years and wanted things to work out in a mutually agreeable way.

I talked with my boss’s boss about this and she in turn talked with her boss and they made me a great offer, including a date we could mutually agree on. My workload then increased for a bit, as I spent more than a month training my replacement in addition to my normal duties.

The day before I left they threw me a great Zoom retirement party with some nice gifts. I put some thought into the those last emails one sends before leaving a company (a couple recipients commented that they were the best good-bye emails they had ever read). I felt good about the way I left.

Now, at 63.5 years young, it is time to attend to the next season of my life. Writing this blog and improving this website are two of my goals. I am soliciting feedback and suggestions for improvement. I also hope to be of help to others on this journey.

A note of gratitude to many in the FI community:

Brad Barret and Jonathan Mendonsa , thanks for building out the ChooseFI community – you inspired me to focus my efforts these past three years to get to this point. Jonathan, just one comment you made in one podcast made a huge difference.

JL Collins – your stock series and longer term perspective encouraged my to focus my asset allocation and to create my bucket strategy.

Big ERN (Karsten) – thanks for your explanation of the sequence of return risk. Those of us who spent our lives accumulating now have to learn how to decumulate, a topic which is not discussed as much.

Roger Whitney – each month you break down a complex subject into four smaller pieces, so we can all learn to rock retirement. Many thanks.

Dan Soltys, Alex Wong, Michael Scepaniak, and Dave Schlappich – fellow members of our local ChooseFI group who have advised and inspired me.

My thanks to all who gave advice and helped me to walk this journey.

April 4, 2020April 7, 2020

TDSF Power Plant – One Year In

(This is the latest in an on-going series. Here is Part 1).

In my 9 month update I predicted the following:

As the days get longer and the sun gets higher, here are my predictions for the next 3 months:

January we will still be in the red, using more than we produce, but less than December. I am hoping we cut the December overage (475 KWh) in half.
February we will do even better, and I hope we cut the overage in half again.
That would mean we get billed for about 240 KWh in January and 120 KWh in February, or 360 KWh total.
In March I expect we will generate a surplus.

So, how did the year turn out, and how good were my predictions?

Not as good as I had hoped. I got January very wrong (240 predicted, 416 actual), was closer for February (120 predicted, 169 actual), but we did have a surplus in March. It was a very cloudy winter and as the song says, ‘clouds got in the way.’

The full year looks like this:

Annual Electric Usage for first year with Solar Panels

Total cost for the year was $233. About $100 of this was for the meter, which we would have had anyway, so the net cost was about $133. After factoring the $39 that BGE paid us in May (this is an annual payment that zeroes out the surplus each year), our cost was $94.

I logged our accumulated production on 3/26 at 9.67 MWh. Adding this to our meter reading, it appears we used 10,120 KWh and produced about 9670 KWh this past year.

Using 0.13 per KWh for an average cost of electricity delivered to our home this year, without solar panels our annual electric cost would have been 10120 * .13 = $1315.

This means our savings this year was $1315 – $94 = $1221.

Understand that each year’s savings may differ due to the amount of solar output, our consumption, the cost of electricity delivered, and the value of SRECS.

We will receive $455 for our SRECs (the check for the Jan-March quarter comes later).

This makes our first year’s net gain work out to $1221 + $455 = $1676. That is just over 10% of our net cost (after tax credits from the federal, state, and local governments).

All things being equal we are looking at a payback of around 9-10 years.

Since trends never continue perfectly any change in the above factors will change this date. But the panels are supposed to produce well for at least 25 years.

It appears the net cost of electricity delivered is trending down towards 0.12 per KWh, so the payback might turn out to be a bit longer.

Still, it is nice to have no electric bill 8 months of the year, a small bill for 2 months and a reduced bill the remaining 2 months.

The picture above shows the lifetime production of each of my 34 panels. I remembered to take it a day or two after I hit the one year mark. There was also a software error in the application that captures this information, so in both ways this picture shows approximately what each panel produced.

The best panel produced over 318 KWh. The lowest producer was about 264 KWh. In general the best producing panels were at the top and on the right (east) side of the array.

It appears to me that if we had installed two more panels that were in this range, we would have broken even for the year (meaning we would have produced as much as we had consumed).

Please let me know if you have any questions about solar panels or any related topic you want me to cover.

January 1, 2020January 7, 2020

TDSF Power Plant Part 10: 9 Month Update

(This is the latest in an on-going series. Here is Part 1).

As 2019 wraps up, I have some good news and some not-so-good news to report.

First, the good news: in November we got paid $213.32 for the 4 SRECs we generated in the 3rd quarter (July – Sep). These were SRECs 4 – 7. (1 SREC = 1 Megawatt Hour of electricity generated. )

Now, the not-so-good news: in the 4th quarter (Oct – Dec), production dropped off drastically. It took us until Dec 21, 84 days, to generate our 8th SREC.

Megawatt (SREC) History
Date	MWh	Days	Cumulative
3/26/2019	0
4/21/2019	1	27	27
5/21/2019	2	30	57
6/14/2019	3	24	81
7/6/2019	4	22	103
7/30/2019	5	24	127
8/26/2019	6	27	154
9/28/2019	7	33	187
12/21/2019	8	84	271

From the table above, you can see that the time to generate each of the first 7 SRECs ranged from 22 to 33 days. Comparatively speaking, that 8th SREC took forever.

So, what happened? As mentioned in Part 9, the sun got much lower in the sky and the days got shorter. The oak trees on the south side of my house (some of which are in my neighbor’s yard) did not drop their leaves until early December. Finally, we had a lot of cloudy days. These factors all combined to lower power production greatly. Shown below in picture form:

Through the end of September’s billing period, we had built up a surplus of almost 600 KWh. By the end of November’s billing period we had used it all up, and then some. We owed our electric company about $5 above the $8.22 charge for the meter. So in December, we were billed for all of the electricity we used, less the 255 KWh that we generated. See the chart:

Date Due	Billing Period	Current Reading	Previous Reading	Metered Usage	Carryover Applied	Accrued Carryover	Amount Owed
5/20/2019	3/26 – 4/24	99566	12	-446	0	-446	8.26
6/20/2019	4/24 – 5/23	99265	99566	-300	0	-300	8.26
7/24/2019	5/23 – 6/26	98971	99265	-295	0	-595	8.22
22-Aug	6/26 – 7/26	98982	98971	11	11	-584	8.22
9/23/2019	7/26 – 8/26	99009	98982	27	27	-557	8.22
10/21/2019	8/26 – 9/25	98967	99009	-42	0	-599	8.22
11/22/2019	9/25 – 10/28	99262	98967	295	295	-304	8.22
12/19/2019	10/28 – 11/25	99608	99262	346	304	0	13.21
1/22/2020	11/25 – 12/27	83	99608	475	0	0	65.86

In picture form, here is our electricity usage (from our utility) – solar panels went live 3/26. Our billing cycle begins about the 26th of each month (varies slightly).

Agreeing with the Judy Collins’ song, I really don’t like clouds, at all. Here is what cloudy/rainy days in December look like compared to more normal days:

The really short lines around the 1st and the 15th of the month (and a few others) are examples of very low production on cloudy/rainy days. On good days in December, production tops 10 KWh. Compare that to the summer months, where a good day produces over 50 KWh. Big difference!

So what is the take away from this post? When we went live on March 26 our meter read 00012. When they read the meter for our Dec 27 billing, it read 00083. So in 9 months, we have used a net 71 KWh from our utility. In other words we have produced all of the electricity we need to run our house from our solar panels over this 9 month period, less about 3 days. Not too shabby.

As the days get longer and the sun gets higher, here are my predictions for the next 3 months:

January we will still be in the red, using more than we produce, but less than December. I am hoping we cut the December overage (475 KWh) in half.
February we will do even better, and I hope we cut the overage in half again.
That would mean we get billed for about 240 KWh in January and 120 KWh in February, or 360 KWh total.
In March I expect we will generate a surplus.

I will let you know how it turned out in future posts.

If you enjoy reading these updates, please drop me a note. I will be happy to respond to questions as well.

December 22, 2019

Choosing your electricity provider – real choice, or scam?

The idea that I could choose my own electricity provider made me laugh when I first started getting those pitches trying to get me to convert to another supplier. The more I look at this today, the more I wonder if this isn’t a giant scam. I don’t often use hyperbole, but in this case, it may be apt.

To recap from my solar panel series, your electric bill is divided into 3 parts:

Supplier Charges
Distribution (or delivery) Charges
Taxes and fees

In theory, you are choosing the supplier for your electricity and paying them a rate based on your sign-up agreement (which often comes with a low introductory rate and/or some incentive to switch, such as a gift card).

In fact, you are only choosing what your energy biller does with the money you send them – who they send the supplier portion of the proceeds to (for a fee I am sure).

You may think if you choose a 100% wind energy option that the electricity you consume comes 100% from wind.

You would be 97.37% wrong – if you live in my part of the country, anyway. At least for the year 2018 (a table further down in this article will show this).

In order to explain what I think is really happening, and what, if anything, you should do about this, I will need to use an analogy, explain some terminology, and conduct some thought experiments.

Ready?

The Analogy – how do you get your water?

Turn on any water or shower faucet or flush any toilet in your house and what happens? Water instantly starts flowing into the sink or shower, or after a few seconds into the toilet tank.

How does this happen? If you go camping and use a well at a campsite you may have to prime a pump. Not in your home though. The water flows instantly at the turn of the faucet.

Somewhere near you there is a water tower. It is a large reservoir of water high off the ground, probably higher than any floor in your house.

Large pipes come out of this tower and span out in all directions (we will assume this tower is central to all of its customers for simplicity). As the pipes get closer to specific neighborhoods or business districts the pipes probably get smaller and split off again. A smaller pipe runs beneath your street. A smaller pipe connects through a water meter, under your yard, into your house. From there pipes run to each cold water faucet and toilet. One branch of the piping runs to the hot water tank (or tankless system) and then connects to all the hot water faucets.

At any point in time the system is under pressure from the water tower all the way to each of your faucets and toilet tanks.

Unless of course they have posted those signs warning of ‘flushing of mains’. In this case when you turn on the faucet, you hear spurts and sputters and air.

That exceptional time aside, there is an unbroken connection of water from the tower to you, making this instantaneous draw of water possible.

Thought Experiment #1

Suppose the water tower gets its water from 3 suppliers. Suppose also that you are allowed to choose your own supplier.

Knowing that the water in the water tower tank is mixing in the water from its 3 suppliers, do you really think there is any way possible that the water you receive could come from just one of the three sources that you choose?

I hope you are not going to suggest that the water company build 3 separate output systems that run all the way from your tower to your house so you can choose which water you use!

As absurd as that is, let’s say they did. Now a 4th supplier shows up. Uh Oh. Now we have to build a fourth set of pipes to your house so you can ‘choose your supplier’.

So it goes with electricity. There is a regional ‘highway’ that suppliers feed electricity into. The highway distributes electricity to substations (akin to our local water towers), which in turn electrify the local lines leading to our homes. You see this highway as the high-voltage power lines that sit above tall towers.

In the Mid-Atlantic area (roughly) the owner of this highway is called PJM. It is named for the three original states it was originally designed to distribute electricity in: Pennsylvania, New Jersey, and Maryland.

PJM supplies your local electric utility, which in turn has the responsibility to monitor the local grid to ensure that your electric outlets (and everyone else’s of course) will produce electricity when you plug something in or turn something on, much as your local water utility keeps water running to your faucets.

PJM has grown to include other states. Per their web site:

PJM Interconnection is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.

So if you are a power producer in this region, you file the appropriate paperwork, pay the appropriate fees, conduct the required engineering studies, and upon acceptance, PJM installs the proper equipment to connect your power to this highway (aka, the ‘grid’).

The point is that your electricity comes from this highway, and all of its sources. So what do these sources look like? Each of these companies files a report in the state of Maryland to explain what the sources of electricity are in this state. They all look remarkably similar (there are minor differences due to the exact date range of the report). This is because, in fact (in the fine print) they are all getting this information from PJM. Here is what the report looks like (just picking one example, but they are all similar to this):

In this specific example, about 94% of Maryland customer’s electricity comes from Nuclear, Natural Gas and Coal. Less that 3% comes from wind, 1.5% comes from Hydroelectric, and just over 1% comes from all other renewables.

The point is that the table above seems to only change a small amount year to year. So you may pick a ‘provider’ that advertises that it is a wind or solar producer. The supply portion of your bill will be funneled to them through your local electric utility. That may provide them with the revenue they need to stay in business and even expand. All of this may be a good thing. I am not trying to discourage anyone from picking one of these suppliers. But if you do, please, do not make the claim that your energy is provided by a wind or solar company.

This is simply NOT the case.

Thought experiment #2

You campaign vigorously and get everyone in Maryland to choose the same wind farm as their supplier. Does anyone believe for a moment that the nuclear, natural gas, and coal plants would all simply shut down so that this wind farm can supply 100% of the electricity in Maryland?

This is not technologically possible today. First, the wind farm would have to be huge, large enough to supply all of Maryland’s needs. Second, the wind is not always blowing where the wind farm is located, so the wind farm would have to invest in a storage system large enough to provide the state’s customers with energy 7*24*365. There are stories about this happening in Australia and California to a limited extent, but as of this writing it is a very expensive investment.

In the unlikely event this happened, the nuclear, coal, and natural gas plants might still not shut down. PJM would still allow their power to feed the grid, as it is supplying energy to the large region described above. As PJM’s highway system of high voltage lines runs near your local substation, these local plants are going to in practice still energize these nearby substations, as well as supplying energy to all of the states covered by this company.

So, keep up with the news, pick the supplier of your choice, and perhaps one day we will all be supplied by renewable energy most or all of the time. Understand though that this is a long journey.

September 29, 2019October 1, 2019

TDSF Power Plant Part 9: 6 Month Update

Making the electric meter spin backwards!

We went live on March 26, 2019. Just got our latest electric bill for the period ending September 25th:

Six months in: no bill and a surplus of 599 KWh to date (months 2-6) – see next image below.

Over the summer, for the two months prior, our air conditioning usage caused us to use more than we produced, but barely. With this most current bill we made up for it and are back to generating all of our own electricity and supplying a little bit to our neighbors – not that they can tell of course.

Actual surplus is 599 + 446 – already paid for the 446.

We received a check for the 446 surplus generated our first month already, so that zeroed out the account. Adding the 599 for months 2-6 to month 1’s 446 means we have generated a surplus of 1045 KWh (just over 1 MegaWatt Hour) since we went live.

A few more numbers for readers who are so inclined. On Aug 29 we got our first check for our generation of 3 SRECs. SRECs, you may recall from earlier postings are Solar Renewable Energy Credits – one SREC = 1 MWh of electricity generated. This check was for the second quarter (April-June). It was $131.85.

On Sep 28 we just hit 7 MWh generated to date. For the 3rd quarter (July-September). This means we will get a deposit around the end of November for whatever price 4 SRECs are going for. The site srectrade tracks the daily prices, currently around $62 per SREC. Note that the broker gets $5 per SREC for their troubles and the price will undoubtedly change between today and when the transaction occurs, so it is hard to predict how much we will receive.

Our 6th month savings to date then is something like this:

BGE Payment for Month 1: $ 39.20
SREC Payment for Q2: $131.85
6 months of avoided billing: $800.00*

Total earned and saved: $971.05

*Avoided billing is an estimate based on amount of electricity generated (a little under 7 MWh) minus the surplus we generated (a little over 1 MWh). This means we used a little less than 6 MWh during this time, at a cost of about $135 per MWh (13.5 cents per kilowatt hour). We hit the 7 MWh mark Sep. 28th, 2 days after the 6th month billing period.

6*$135 = $810, so I rounded to $800.

The SREC payments will always be 1 quarter behind, so I will include the Q3 payment in another posting.

As we enter the darker days of fall and winter, our power generation will decrease, but so will our usage, so hopefully we will continue generating extra power. I am hoping that for the second half of our first year (Sep 26, 2019 – March 25, 2020) we are able to generate another 5 MWh, but it is not exactly under my control!

A shout-out to my salesman Daren Weatherby: we walked my site together and he pointed out the trees that would be an issue. The one he focused on was south and east of my roof and a decent distance away, but tall and with a wide spread of branches at the top.

I am an observer of how the sun moves over my house throughout the day and found it hard to believe this tree would matter much. How could this guy who was just seeing this for the first time, but with some years of experience selling solar systems know more than I, a 25 year owner of this property? Well, to some degree we were both right.

In the summer it does not have a great affect, as the sun rises quicker and more directly over my house. Now that we are in the fall though, the angle of the sun is lower in the sky and yes, that tree is filtering a significant amount of sunlight out for a longer period of the morning.

Hopefully over the next month or so these leaves will fall and the branches, being thinner up at the top of the tree, will have less impact. Still, props to Daren, as he knew what he was talking about!

August 18, 2019August 19, 2019

Who Do You Work For?

Who do you work for? This question is not meant in its literal sense. I am not asking who your employer is. I ask myself why I am still working and my thoughts invariably run to this question.

Let me give you some examples of the people I work for:

My wife – so she can have the health care and other things she needs and deserves.
Our dentist (and the staff) – the fillings and other items installed when I was young have been wearing out and are being replaced.
Our primary care physician
Specialist physicians – varies by year but seems to include something every year.
Our veterinarian – health care for animals is not cheap
Our eye doctors
Our pharmicist – Rx costs for me are trivial, but for my wife they are significant.
Our auto mechanic – we tend to keep our cars a long time. Apart from installing new batteries, I prefer to let the professionals do the work.
Coming over the next year or three – all the contractors who will be helping us with various home improvement projects. There is a lot to do around here but frankly, our minds have not been in that game – but I can see it coming.
Verizon – we get internet and entertainment from this bill – it is one of our 4 largest monthly bills – the one area we have not optimized.
Insurance – probably some savings to be had here as well. We are helping to support an insurance agent who for whatever reason, has not been up to par recently. Action required.
My county – property tax is one of my 4 largest bills – reduced this year due to our solar panel installation credit.

What I have not mentioned is debt – we use our credit cards to order online and to get rewards, but not more than we can pay off immediately. I supposed Amazon could go on the list. That said, we are debt free.

I also did not mention our utilities. As we return our water to the ground, our water bill is about 1/2 fees (to the county) and 1/2 for water coming in. It is a low quarterly bill. As we have no electric bill now (apart from the meter rental), we only pay for natural gas to heat our water year round and our house in the winter – so a few months of high bills and the rest is noise.

Reviewing the full list, I can put real names on a number of the people I am working for. While I am just one small slice of their income, it makes me feel good to know that most of these folks deserve the money we provide. For the ones who do not deserve it, we should probably make some changes.

Finally, and most importantly, I am working for our future. Our savings rate is high. Trying to calculate the exact rate hurts my head (and I am a numbers guy). Suffice it to say that less than 20% of my gross pay ends up in our checking account. The remaining 80+% goes to tax withholding, 401K, medical, etc. premiums, ESPP* (proceeds all end up in savings), HSA, and after tax savings. Looked at another way, slightly over 1/3 of my net pay ends up in our checking account. It is fair to say that working for our future is our number one expense.

Some reasons the savings rate calculations are difficult:

My wife’s pay, which is modest but helpful is not included in the above – she uses this money to cover specific household expenses and for some personal needs.
Rental, interest, dividend, and royalty income are not counted – they are not even mentioned in the articles I have read on calculating savings rate. I do save the royalty income for other investments.
I typically save/invest my annual bonus – I never know how much it will be.

One simple method of calculating savings rate is a matter of determining a numerator (amount saved) and a denominator (amount earned less taxes). If one only earns income from a paycheck, this is simpler to do. For our situation, I am just happy to say that it is high.

Therefore, it is fair to say that for the most part, I am working for us.

My question to our readers is this: who are you working for? Please respond with some answers.

*ESPP – Employee Stock Purchase Plan – employee benefit only available to those working for US stock-owned corporations. Rules vary – for my company the rules are great and come close to guaranteeing a 60+% return – let me know if you want more information on how this works.

August 4, 2019August 6, 2019

TDSF Power Plant Part 8: Lesson Learned – RTFP (also some updates)

If you work in the IT or Engineering fields you are probably well aware of the expression RTFM – Read the Fine Manual (google it for the more vernacular translation).

I am coining a similar term: RTFP – Read the Fine Print. No vernacular needed.

Truth is, I got this expression from my wife – the next three paragraphs are a (meant-to-be) humorous explanation of how this occurred.

In the Jewish tradition, a marriage has a legal document called the Ketubah, which is the document given by the groom to the bride that lists his obligations. It is written in Aramaic, my understanding of which is a bit rusty.

The Ketubah often comes up in those memorable discussions a married couple have whereby my wife explains to me that I will end up doing something she wants because, you guessed it, I didn’t read the fine print.

As in ‘Why am I the one who always has to take out the garbage?’ “It’s in the Ketubah,” she tells me. Apparently I didn’t RTFP.

Back to our main topic.

In previous posts I had mentioned that Anne Arundel County offers a $2500 property tax credit for installing solar panels. My salesman did ask me if I am paying that much in property taxes (which I am – but here comes RTFP).

I received the following letter from the county:

RTFP: taxes levied on the building, not the land,,,

In case you have not seen an AA County tax bill, it looks something like this:

Homestead Credit and Land value reduced the solar tax credit.

The portion of the bill attributed to my county tax starts at $3859. This first gets reduced by my homestead credit by $1465, leaving $2394. (The homestead credit limits increases in property taxes for primary residents, to avoid forcing owners from having to sell due to higher taxes – very beneficial to retirees on a fixed income.)

As the letter states, the tax is only on the building, meaning it is not on the land. Our house holds just over 59% of the value of our property. So the math looks something like this:

Initial Property Tax: $3859
Subtract Homestead Credit $1465
$3859 – 1465 = $2394 — remaining property tax
Calculate Building to Total ratio: 243,600/412,800 = 0.59 rounded.
$2394 * 0.59 = $1412 — the value of our solar credit

As the letter states, this is a one-time credit – no carry over into next year. So that is it. Because of the fine print, our county property tax solar credit is $1412, instead of $2500.

In other words, the price we will end up paying after incentives will be about $1088 higher than the roughly $15,400 we projected, or closer to $16,500.

Note that we did not lose anything here – this was always how the tax credit was going to work. The only change is in my less-than-perfect break even calculations. That number is a best guess anyway, and will only be revealed as we take this journey. The information on how this tax credit works was probably available from the county. My calculations are only off because I did not RTFP.

Two updates regarding previous posts:

The web site where you can track SREC values is here. The price has varied a bit in the last few months, rising as high as $67.50 for a couple of days, but settling in around $50 as I write this. It will be a few months before we receive our first check.
The July bill came in. We almost broke even this month, consuming 11 KWh more than we produced. This was subtracted from our roughly 1/2 MWh surplus to date:

AC is expensive: first month we used more than we produced – but barely

June 23, 2019June 25, 2019

TDSF Power Plant Part 7: What is the Social Utility of Going Solar?

Googling ‘social benefits of solar power’ or something similar retrieves a large number of solar company articles talking about things like local jobs, less pollution, less fossil fuel generation, blah, blah, blah.

While there may be some truth to this, mostly it is an appeal to the tree-hugger in you to entice you to sign a contract.

To be clear, as outlined in previous posts, we installed our panels to help ourselves. We are lowering future budgeted costs to reduce the amount spent from drawing down retirement savings on these costs, perhaps if we so choose, to spend them on something else. When was the last time you heard someone express joy upon paying their electric bill?

This is nothing more than the invisible hand at work. However, as with most tax policy, the government has deemed it socially desirable to reward higher earning taxpayers for doing something they feel benfits society, in exchange for reducing their taxes. In effect, the government has added a few fingers to the invisible hand.

The combined Federal, State, and County purchase incentives account for over 42% of the purchase price for the system we bought. The combination of electric bill reduction to near zero (about $100 a year for the meter) plus the potential for $600 – $800 per year in income for the next 25 years, justifies the purchase in and of itself.

About that $600-800 number. This comes from estimating our production overage at 2 MWh per year (worth about $176 at today’s rates) plus the current SREC rate of about $50 per MWh * 12 MWh output estimated per year generates this yet to be proven number. Note that all items here are variables subject to change, so the cash flow is also likely to be volatile.

When I first started journaling this effort, SRECs were only worth about $15 each after brokerage fees. The Maryland legislature has since mandated an increase in renewable energy incrementally over the next decade or so, including an increasing amount from solar. The day the legislation passed, the SREC market in Maryland jumped to $55 ($50 net to owners after the brokerage fee). We will probably generate about 12 MWh per year.

Spelling that out:

SRECs: 12*$50 = $600
Excess Power = 2 MWh * $88/MWh = $176
$600 + $176 = $776

SRECs trade in a marketplace subject to supply and demand. The utility companies buy SRECs in lieu of producing their own solar power – this is the demand. The supply of course are the rooftops (and any solar farms communities might deploy). If this legislation results in a large increase in deployed solar panels in Maryland the market price of SRECs will drop accordingly.

The paragraphs above explain how the government is incentivizing high earning taxpayers to install solar. That does not really answer the original question, what is the social utility of going solar – it just describes the economic price the various government units are willing to pay.

To understand the benefit to society in real terms, understand this very important fact about electricity – it is used immediately upon generation.

You may read about some battery storage systems in Australia or some water pumping schemes to move water uphill when demand and rates are low and flow it through generators when rates are high.

These storage or time of day arbitrage efforts are real but to date represent a small percentage of electricity generation. For the most part, as of today, electricity is generated and used. Or not. If the electricity is generated and not used it is for the most part wasted.

To complete the thought we will use a traffic analogy. Picture any of the various loops (beltways) that surround many of our cities. They may be 6 lane in some places, 8 lanes in others, maybe even more in some larger cities. No matter how wide they are, there is still a time of day when traffic is very dense and moves very slowly.

There is typically other times of the day (or weekends and holidays) when these roads are under used. An accident can realy mess things up, especially at rush hour. (Why do they call it rush hour anyway? – no one is moving very quickly – an oxymoron if there ever was one!)

It is impossible to build these roads to perfectly accomodate demand. Some highways are adding time of use tolls, HOV lanes and reversible lanes to accomodate and/or shape demand. These can help, but there are limits to what they can accomplish.

Electric utilities have their own time of day usage patterns. Demand rises as people rise in the morning, levels off as they go to work, increases again when they get home, and lowers greatly when everyone goes to bed.

Just as it would be economically and practically foolish/difficult to build enough highway capacity for the worst rush hour traffic, it is similarly economically and practically foolish/difficult for the electric company to build enough capacity to satisfy the highest demand.

Electricity plants (whatever their source) are expensive. So is electricity storage – maybe that will change but it is true today. So building enough to supply at the highest demand results in either:

generation of electricity that is wasted when no one wants it, or
building plants that sit idle much of the time.

Neither option is smart.

Instead, utilities generate enough of their own power to satisfy some reasonable amount of demand and then buy the rest of the electricity from external suppliers as needed. This is known as the spot market.

Spot prices can vary – as mentioned above, unused electricity is wasted. So when the larger market (beyond the local utility) is not demanding much electricity from external suppliers, the spot market is inexpensive.

Given all of this information, here are some ways that rooftop solar systems help utilities and their neighbors:

to the extent we are using our own electricity at times of high demand, the utility has that much less it needs to supply and therefore that much less it needs to buy on the spot market at high prices.
if we are generating more electricity than we need at times of high demand we are effectively supplying our neighbors with our surplus, as it goes back through the net-meter, reducing the amount utilties may have to buy fromthe spot market.
to some extent, these first two factors must be reducing the load on the wires from the nearest substation to our neighborhood, hopefully reducing the likliehood of transformers or other components failing.
to some extent, these first two factors are also reducing the likelihood of brownouts and blackouts, assuming they reduce the peak demand on transmission components.
in some markets the utilities can sell excess capacity to the spot market and will do so when the spot market is buying for a price higher than what they sell it their customers. So the electricity generated by rooftop solar frees up additional capacity for them to sell. This helps the utility make more money, which benefits its shareholders, but should have some impact on keeping rate hikes for customers down, either by amount or by frequency.

This line of reasoning supports something we did not do, but something utilities should encourage: installing panels on the west side of a house. One counter-argument to my reasoning above is that solar panels produce less as the sun is setting, when demand is rising. This is of course specific to certain times of the year.

If the sun is not setting until 8:30 or later, this is past the surge point, although to be fair, solar power is dropping off for me at 5 PM, though it continues at a lower rate until close to sunset.

There are two factors at play in our situation:

no west facing panels
generation 1 solar system – we have a large tree on the west side of our house that is close enough and large enough to provide the original solar power – shade, and lots of it. So as we pass 5 PM the ever lengthening shadows cover not only the west side of my house, but the southern roof where my panels are.

During times other than the peak summer days, when leaves are not on this tree and the sun sets more to the southwest, we are still providing power when people come home from work and at a minimum, we are not contributing much, if anything to the increase in demand.

In summary, install solar if you benefit economically from it. If enough people make this selfish decision, the community as a whole will benefit. All the other arguments about fossil fuel reduction, cleaner air, etc. are nice, but are not germane to helping you achieve your financial goals.

June 15, 2019June 16, 2019

TDSF Power Plant Part 6: 81 days in, a status report

This is an ongoing set of posts about our experience going solar. For those of you reading this series for the first time, if you would like to start at the beginning, here is the link to Part 1. BTW, I have not figured out how many posts there will be. I keep figuring out more things I want to say about this.

The story so far: we signed a contract on 2/8/2019 and went operational on 3/26/2029. On June 14, 81 days in we achieved two interesting milestones.

But we will get to these milestones in a minute. First great words of thanks for the support of energysage.com for playing the part of educator and honest broker. (This link contains an affiliate code that pays me, at no cost to you, should you choose to use it).

Second, many thanks to the great folks at Solar Energy World, who sold us our system and have done a stellar job supporting it.

You may wonder what the big deal is regarding post go-live support?

They did all the paperwork they had committed to and they did it right. I should also thank BGE, our local utility and Anne Arundel county, as everyone cooperated to get this project operational in less than seven weeks.

I am also receiving communication from Sol Systems, the folks who are tracking and will be brokering our SRECs (Solar Renewable Energy Credits – see previous posts). The timing was helpful as the period we went live was sunny and very solar productive.
There is a web site and a phone app I use to monitor the production. They set me up with this even before the panels were live. The app depends on communication from the inverter. In effect a cell phone is installed in the system, though just for transmitting data (and receiving software upgrades).

One of those upgrades happened about a week after installation and caused an issue. The system would stop reporting information for hours at a time, sometimes more than a day. The folks at Solar Energy World maintained contact with me the whole time. They came to the house a number of times, even on the weekend to reset the system and get it functional again.

To be clear, there was never a malfunction with the panels. They never stopped producing energy and sending it to my house and sending the excess back through to BGE. They just stopped reporting what they were producing. Really they just stopped reporting the hourly/daily/monthly statistics. The actual production meter, located inside the unit, never stopped working. The problem for me was tracking what was produced.

I was not the only person experiencing the problem, other customers were as well. Solar Energy World had a meeting with the inverter manufacturer and it turned out to be a software bug. After a few tries, they finally came out with a stable version. The maintenance support guy came and installed it on my system and we have been getting data steadily ever since.

This post-installation support, resetting my system several times, and keeping in touch with me and getting a stable version installed was why I chose a full service local company. I feel like they did a great job.

Now, about those milestones

Check out the Lifetime energy box in the upper right corner of the picture above – sometime June 14th we passed 3 MWh of production! This was day 81 of operations. This was an important milestone in that this was the 3rd MWh this quarter and we should get paid for this a few months from now.

I wish this would scale. If we produced one MWh every 27 days (3*27 = 81), we would produce over 13 MWh per year. It is reasonable to assume that we will not produce as much during the winter months, when there is much less daylight.

The following picture shows our second milestone:

99005 – this means we have sent over 1 MWh back to our utility!

When we went live on March 26th, the meter read 00012. Since then we have produced more electricity than we have consumed. In fact, we have produced about 1 MWh more! (Read this like an odometer going backwards – from 00000, as we produced the next KWh, the meter went to 99999 – since then it continued backwards to 99005).

So some very simple, rounded math:

Total electricty generated by our panels in 81 days: 3 MWh
Total electricity sent to our Utility in 81 days: – 1 MHh
Total electricity used by us in 81 days: = 2 MWh (or 2000 KWh)
Our KWh daily usage 2000/81 = 24.69 KWh/day

If we were to keep at this usage rate all year long we would only use about 9 MWh per year (24.69 * 365 = 9012). Of course the big air conditioning season is just ahead of us and we both like it cooler than most people, so our usage this summer will increase a bit.

On a humorous note, we just replaced the two light bulbs in our refrigerator (old ones were 40 watt each) with LEDs that are 1 watt each, but seriously, how often is the refrigerator door open?

Still, our rolling 12 months prior to panel installation showed us using 10.5 MWh per year, so maybe we will end up driving that down. This is one of those ‘time will tell’ items.

One last surprise

Our utility, BGE, pays any surplus production once a year in May. Since we went live March 26, our first billing period was through April 25th and we had a surplus of 446 KWh at that time. They sent us a check last month for this surplus:

In Part 2, Show me the Money, I predicted they would pay us less than retail for this electricity, as we were a vendor and they make money by buying low and selling high. I predicted this amount would be about .05/KWh or $50.0 per MWh.

As you can see from the check above, they paid us full supply retail, about .087 perKWh. This is motivating. The more we conserve, the faster the payback.

And finally, and proudly, here is our most recent bill, showing two months of no usage:

Electric bill first two months post-installation.

So 81 days in, I am a solid fan of our decision to go solar!

I have several thoughts on the next topic I want to write about:

The social utility of going solar (how it helps the neighbors and the utility company)
Some samples of daily graphs to show how much power we generate under different weather conditions
Some whimsical thoughts in the form of rewritten song lyrics about my changing attitude towards the weather. (this one may be the hardest)

If you have any ideas for future posts or other feedback, please leave some comments, or drop a note to tiedyeseniorfi@tiedyeseniorfi.com. Thanks!

June 8, 2019June 11, 2019

TDSF Power Plant Part 5: Installation, Step by Step

In Part 4 I explained why we selected Solar Energy World as our vendor. This post is about the fantastic job they did end to end to get this system installed and operational. I tried to document each step and I am including the dates (where I can document them) to give you some perspective on how long a project like this can take.

Solar Energy World handled all steps of the process (except where a government person, e.g. an inspector or a utility person are required as noted below). This is not true of all solar power companies. Some of them consist of mostly a sales team with all other services, including installation, are contracted out.

The major steps occurred as follows:

We Signed the Contract – 02/08/2019

agreed on a system and a price (with understanding that it might be modified when reviewed by the experts). In our case that was 34 300 watt panels.
payed the deposit (I used a credit card for the points)

Solar Expert comes to house, measures dimensions, takes photos, prepares report -02/19/2019

In any solar installation project the salesperson does the upfront work to qualify the customer, answer questions, create a preliminary proposal which is encapsulated into the sales contract and close the deal. From that point on a team takes over to shepherd the process to completion. It is possible for example that the specific installation details may need to change based on a number of factors and the contract indicates that a review will take place, a report will be prepared and a final sign-off will be requested from us.

The first person on the scene is someone who begins the process of validating that the number of panels agreed to in the preliminary design is valid and realistic. For this to occur, this person has to take some measurements. A sample from the report that was prepared based on these measurements is shown a few paragraphs below.

In our case, the guy who came had a great sense of humor. He measured the obvious south-facing roof section over our bedrooms and used a special camera that gets a roof based perspective of the sun – it is used to identify possible shade issues and to project how much sun falls on the roof at different times each year. He climbed onto the roof and took the pictures from several places at several angles.

When he was done, I asked if he was going to measure an additional section over my garage. He said that would be $100 extra. He waited a second, then grinned big. Almost had me.

Installation experts review report, possibly recommends changes – 02/21/2019

The data collected by the guy on the roof is fed into a software program that prepares a report which is used to validate or modify the proposal mentioned in the contract.

The report that came back for us suggest that 34 panels was just about the right amount to cover our electric bill. My salesman reminded me that the software they used could not tell dark shade from light shade, so the results were probably a bit pessimistic. (A few more paragraphs below you will see one of the photos from this report.)

Dark shade? Light shade? To help explain this, let me propose this thought experiment: suppose I drape a towel over a solar panel – how much electricity can it generate? If you said zero, you are still with me. That would be dark shade. No light gets through.

Now if I take that towel and move it 100 feet up and towards the sun from my house, how much electricity will the panel generate? I don’t know, and neither does the software. Clearly the sun will move through the sky and light will filter around the towel, such that some light is always hitting the panel. That is what I am calling light shade.

While it may not produce the most it could if the towel were not there, it will always produce something. So the installed system is likely to outproduce the amount predicted by the report.

There are trees at the edge of my yard (about 50-100 feet and further from the house) that are perhaps as much as 80 feet or more tall. Some are thin scraggly pines and some have seasonal leaves. So depending on how high the sun is in the sky and whether it is summer or winter, there will be some filtering of the light, but most of the light should still get through. (I am finding this to be true by the way).

The contract estimated the proposed system would produce 9.7 MWh per year but after review, the estimate was upped to 10.649 MWh. I think they are still under but time will tell. As I showed in Part 2, we used about 10.56 MWh the twelve months prior to installation, so the proposed installation appears to cover us right at 100%.

Following is one example of the perspective from one part of my roof, showing how much sun should fall throughout the year and the effect of the distant trees – the yellow area is the sunshine, the green area the shade:

View of the sky from my roof and estimated solar amount throughout the year, as affected by shading. 100% would indicate no shade.

Contract is finalized, approved – 02/23/2109

I reviewed the report and approved the final design .

Permits, other paperwork filled out

There is a lot of paperwork that must be done prior to and even after installation and the folks at Solar Energy World did a great job. I don’t show dates for these items as they occurred through the life of the project, but the first two below were needed for installation work to begin. Some Items of note:

Construction Permit
Interconnection Agreement – for our utility company
Tax paperwork (for both state payment and county tax property tax credit)
Final inspection
SREC agreement – for payment of Solar Renewable Energy Credits post installation

Installation 03/08/2019 – they tell me it was record time. A slot opened up, they had all the equipment ready, they called me Thursday March 7, and the installers were on my premises on Friday, March 8th. Normally it is a month or more from final approval before installation begins.

The installation team consisted of 4 people. Two were up on the roof installing the panels and two worked on the inverter and all the electrical connections.

The guys on the roof were tied into harnesses and ropes they had secured to the roof at the outset. Everything about this installation was done with safety in mind. Nothing was left on the ground. This was an end-to-end professional job.

Note the safety harness – no one is falling off this roof!

The inverter, shutoff, and connection to our meter.

Testing, validation 03/11/2019 The installation is supposed to take one day but it snowed a small amount that afternoon so they were not able to test. They returned on the 11th to do their testing, which just took a few hours.

Final Payment – 03/12/2019 – I received a notice that my installation was substantially complete and I needed to make my final payment, which I did. Once that was received, Solar Energy World contacted my county to do the inspection.

Inspection – 03/20/2019

The county inspector confirmed both the outside installation and the hookup inside my power panel in the basement.

For those of you who may be curious about how the inverter is connected to our power panel, the inspector explained to me how the 4 wires that came into this panel were connected (1 ground, 1 neutral, and 1 each to the two 100 amp feeds coming in from the utility company).

More importantly, he passed the inspection!

Utility notification – 03/20/19 Solar Energy World sent the completed paperwork to our utility company.

Meter Installation – 03/25/19 – around 7:30 am we heard a knock on the door. Our utility person was on our porch holding the new meter. Amazingly, he was able to swap out the old meter with the new net-meter without us losing power. He set the new meter at 00000.

I asked him if I could turn the solar panels on when he was done – not yet, he explained – they still had to set up the billing properly at the utility company. They had to close out the old reading for a final bill on the old meter and start us on our new billing cycle with the new net-meter. This would happen after he returned to the office. In the meantime, I am chomping at the bit – we are this close (picture me holding my finger and thumb about a quarter inch apart).

Notification to turn on – 03/26/19

The next day I received an email permitting me to activate the panels. I was busy at work and did not notice it for several hours. When I finally read the email, I rushed home, asked my wife to come with me and together we threw the cutoff switch to the on position. By this time the meter had advanced to 00012, meaning we had used 12 KWh on the new billing cycle.

It was a sunny day and even though it was about 1:45 PM, we still got about 20 KWh that first day. By the next day we had rolled the meter back into the 99999s and have never looked back. We have been producing more power than we have been consuming most days since.

In my next post I will talk about some post-installation operational challenges and will show a picture of the completed system.