Tag: TDSF

Posted on

TDSF Power Plant: Year 5 report

At the end of year five the meter reading was 98767, meaning we have produced about 1240 KWh more than we consumed over the past 5 years. The first three years we were slightly in the hole, as the meter read 00387, so the gain has come in the last two years. At the end of year four it was 99602 so we came out ahead by 835 KWh this year.

What is surprising about this is that this was our lowest year of production yet, producing a rounding error less than 9 MWh, whereas the first four years we did a little better than 9 MWh. We generated our 46th MWh on March 20.

Is this because the panels are losing their production capacity? Probably a little bit. They are guaranteed not to lose more than 1/2% per year after the first year. However, weather probably plays a factor as well. This past summer we were impacted by smoke from Canadian wildfires. This past February we had two back-to-back snows with freezing temperatures, so the panels produced no power for about 10 days. Just adding what would have been 80 kilowatt hours over that period back into our totals would be enough to get back over the 9 MWh mark.

We had built up enough surplus over the summer and fall that I was sure we would cover the winter deficit. We did cover through January, but the 10 day February shortfall used up the surplus and left us with a small bill (about $22) for that month. Fortunately, we are back in surplus again in March.

As a review, the way our billing works, the March/April bills produce a large surplus (days are longer, sun is higher, no AC) but this gets zeroed out at the end of the April billing period and we get a check in May for the supplier portion of this surplus. The utility keeps the delivery portion.

(Incidentally, the delivery portion has roughly doubled recently, from 2.5 cents to about 5 cents per KWh so electricity now costs about 16 cents per KWh – it was about 10.7 cents early in our journey).

This means we resume building a surplus to carry us through the winter (October – February) starting in May.

I sometimes get asked about the ‘payoff date.’ This is the amount of time until the savings from not paying an electric bill equals the cost of the system. Honestly, I don’t know when that will be as one factor is the current cost of electricity. As that increases, now up about 50% from when we went operational, that date shrinks.

I have rather focused on what the cost of electricity will be for us over the 25 year guaranteed life of the panels. By the way, they keep producing electricity in year 26!

Assuming our panels generate at least 200 MWh over the 25 year period (which seems conservative, as they have generated 46 MWh in the first five years) and assuming the SREC market supports a price of $50/MWh (this is not guaranteed at all – it is currently about $4/SREC in Ohio and over $300 in New Jersey and DC), and that our March/April surplus averages about $60/year, the total cost of the power our panels will generate will have cost us about 2-4 cents per KWh. That is a good deal.

Of course we will have to pay market rates for anything we consume above what the panels generate, but that is to be expected. As of now though, our electricity use continues to decline, as evidenced by the meter continuing to run backward, compared to the same month of the prior year. Should we get an EV sometime in the future, or convert our heat and hot water to electricity this will of course change.

Whether solar panels are a good deal are very much dependent on site location, federal and local $$ help with the project and whether there is something like an SREC market. For this project specifically, it seems to be a great deal.

Here is the comparative overview of the past 5 years on a monthly basis:

Posted on

TDSF Power Plant: Year 4 Report

Our solar panels have been active for four years. In the first two years we used more electricity than the panels produced. I know this because I follow the electric meter almost obsessively. When the meter shows a low positive number, it means we are using more than we are producing, as of that moment in time since the panels went live. If the meter runs backwards (into the 99000s), then we have cumulatively produced more electricity than we have consumed.

I record the meter reading every March 26th around 1:30 PM, the approximate time we went live in 2019. Following are the readings and cumulative production totals at the end of each year:

Year ending March 26Meter Reading
(Kilowatt Hours)		Cumulative
Production (MWh)		Annual
Production (MWh)
2020004559.679.67
20210109818.779.1
20220038728.19.33
20239960237.259.15

After year’s one and two I had concluded that we should have installed a few more panels to be energy neutral. However, I also knew that over time we would probably use less electricity and that has proven to be true. We are now 853 KwH ahead (398 to get back to all 00000 + 455 above that.

Should we get an electric car or convert to electric heat/hot water (currently on natural gas), we would be under producing.

Under the current Maryland net-metering system, excess generation is paid out in May, based on the surplus KWh at the end of April meter reading. Since March and April are both good surplus months (days are longer, sun is higher, but no AC yet), this means the typical customer receives a check each May for the commodity portion of this surplus. Recall that the other major portion of a bill is the delivery fee. This is kept by the utility company.

There is one issue with this current system. Because the March/April surplus is paid out (albeit at about 2/3 the actual rate), we do not quite generate enough surplus May-September to carry us completely through the winter, although this year we came pretty close. This means we have to pay the full price for the energy consumed once our surplus is used up. Our first two winters this cost us about $135 each. We got better though in year’s three and four building up our summer surplus. These winters only cost us about $26 and $11 respectively.

A new law has recently passed the Maryland General Assembly that, if signed by the governor, will create an additional option, to accumulate this surplus indefinitely until the surplus is used up (for example by buying an EV) or until the account is closed.

Is solar a good deal in Maryland?

I continue analyzing our experience in light of the question, is this a good deal, and if so, for whom. Most people think in terms of payback time, which for us is looking to be about 10 years. Since the panels have at least a 25 year life span, this seems like a good deal if one has the money to install the system and one expects to stay in the home long enough to realize the benefit.

Another way to look at the problem is Total Cost of Ownership (TCO). My after tax cost for my system was $16,500 (This is documented in previous posts). To determine 10 year TCO we have to make some assumptions:

  • MWh generated : 90
  • SREC $$ generated: $4500 ($50/MWh)
  • May surplus re-imbursed: $600 ($60/year)

Subtracting the SREC payments and the May surplus checks from my after tax cost brings my 10 year cost to $11,400. Dividing this by 90 yields about $127 per MWh or 0.127 per KwH. This is about what rates are now. Will they go up over the next 6 years? I expect so, but I do not know.

Over a 25 year period, these TCO numbers look even better:

  • MWh generated: 200 (assuming a decline in output as the system gets older)
  • SREC $$ generated: $10,000 ($50/MWh)
  • May surplus re-imbursed: $1500 ($60/year)

This brings the cost down to $5000 for 200 MWh generated, which works out to $25/MWH or 0.025 (two and one-half cents per kilowatt hour). This seems like a great deal to me.

Note that we do not know how long the SREC program will exist or how the May reimbursement program will work – if we end up switching to the infinitely cumulative surplus, we could perhaps build enough surplus to power an EV for a long time, so these calculations are all subject to change. The point though is that the lifetime cost of the panels should be significantly less than the utility rates for the same amount of electricity.

Posted on

TDSF Power Plant – Year Two Report

(This post is now the latest in this on-going series. Here is Part 1).

The sales information on solar panels state that year two may see a loss of power produced of about 2%. Unfortunately, there is no way to tell if that occurred for our panels. In order to measure this, the weather would have to be identical each year, including the timing and density of clouds and rain. These two items play a much larger factor in how much this site produces.

This year snow was a small factor. Usually we have a warmer, sunny day after a snowfall. This year it snowed just ahead of the polar vortex that caused so much trouble in Texas and other places, so instead of melting off almost immediately, the snow stayed on the panels for several days, reducing output for those days.

Did I mention that my dog ate my homework? OK, enough excuses, here are the numbers:

Annual Electric Usage for March 27, 2020 – March 30 2021

Again we had 8 months of 0 billing and partial billing for 4 months. The sun does not provide much energy in the winter months.

Following are the meter readings at the beginning and at the annual anniversaries:

DateMeter ReadingAccumulated ProductionAnnual Production
03/26/20190001200
03/26/2020004559.67 MWh9.67 MWh
03/26/20210109818.77 MWh9.10 MWh
Data needed for calculating $ benefit of our solar panels. Readings taken at 1:30 PM on these days

The meter reading indicates that we are falling further behind (continuing to use more power than we produce.

Year 1: 9.67 + 0.433 means we used about 10100 KWh

Year 2 the meter went up 643 KWh over Year 1 (01098 – 00455). So year 2 usage is 9.10 + .643 = 9743 KWh. So we cut our usage by about 357 KWh for the year, but due to some combination of weather and normal 2nd year reduction, production dropped 570 KWh. Clouds got in the way.

Here is the full spreadsheet:

Two years of BGE electric bills after installing our solar panels.

Our cumulative spend for this period is $469.07. Subtract out about $200 for the meter costs (typically $8.32 a month) for an adjusted cost of $270.

BGE zeroes out any accumulated surplus based on the end of April reading. They pay us for the supply price of the surplus we generate in March and April. We will not have this number until late May. The cumulative total of the previous 2 checks was $83.50.

Assuming for the sake of discussion we get about $40 this coming May, these checks total about $123.00.

The price of electricity all in (supply, delivery, taxes) has actually gone DOWN since we installed our system. It was a little over 0.12 per KWh in year one and a little less than 0.11 per KWh in year 2. For a quick calculation, let’s use .1125 to see how much we have saved:

18770 KWh * .1125/KWh = $2112 – estimated value of energy produced.

Our last data point is the dollar value of the SRECs produced. To date we have received $895. In May we will receive $55 for the SREC produced in March, bringing this total to $950.

Approximate dollar value realized to date – $3185:

$2112 + $950 + $123 = $3185 – This is how much we did not pay ($2112) + real checks we got from BGE. Our installation cost after incentives was $16500. To date we have recovered about 19.3% of these costs (3185/16500). Because electricity costs have gone down (and perhaps because of those persnickity clouds) we are on track to recover our costs in a little over 10 years now.

The following chart shows that weather may play the most important role in power production:

Monthly Generation – Predicted vs Actual
Predicted2019 Actual2020 Actual2021 Actual
January487.8326.78302.78
February607.3516.92376.02
March944.8848.071020
April1095.49491010
May1231.511101150
June1295.412601260
July128413101320
August1121.711301040
September950.2831733
October765.4463428.86
November473.3349305.71
December392.9254231.54
adjustment*354
10649.780109170.88
*Note: April, May 2019 had some reading errors so totals are really higher
About 355 KWh readings not recorded properly
Predicted generation vs actual, by month

As noted above, April and May of 2019 had some monitoring errors (corrected by the company that collects the data) so these numbers are not necessarily comparable against 2020. It is clear that this past fall we had much poorer conditions than the previous fall. But then look at March 2021 – Much better readings than March of 2020 and much higher than the predicted number.

Last year I concluded that if we had installed two more panels that produced at least as well as our poorest producing panels we would break even. That still seems to be about true:

Two years of solar production per panel.

The worst panel shows a two year cumulative production of 513.62 KWh. The best panel produced 621.13 KWh during this period. So, 2 panels producing somewhere in-between would have broken even more or less.

As the surplus generated in March and April is paid off in May instead of crediting against the following fall/winter shortage, it would take another panel or 2 to avoid having a bill at all, except for the meter cost.

Posted on

What the 4% rule (of thumb) really needs to cover

How much invested money do you need to cover your expenses in retirement?

The general rule of thumb is that you need at least 25 times your annual expenses to be able to safely withdraw, cover your expenses, and not run out of money before you die. This is known as the 4% rule of thumb.

Others have written about the merits and complexities of this rule (and this is just the starting point for determining ‘how much is enough’).

In this post I want to cover a specific aspect of this calculation that changes from pre-retirement to post-retirement.

If you are earning a paycheck before you retire and you take the time to document and analyze your expenses you may have a list that looks something like this:

  • Housing costs (rent or mortgage, property taxes, utilities, upkeep, insurance)
  • Food costs (eating in and dining out)
  • Non-food supplies (toilet paper, tissues, laundry detergent, etc.)
  • In-home entertainment (internet, TV/film subscriptions)
  • Phone
  • Transportation costs (car upkeep, gasoline, insurance, registration, commuting fees)
  • Outside entertainment not covered already (vacations, event costs, hobby costs)
  • Other Insurance (Umbrella, other policies not mentioned)
  • Medical costs for doctor visits, medicines, dental care and vision care

What is not covered typically are health insurance premium costs and taxes. This is because these costs were previously taken out of your paycheck and you were looking at costs using your checking account and credit card statements. Honk your horn if you agree.

You were looking at:

SBITHC: Spending Before Income Taxes and Health Care

(When I look at some investment opportunities EBITDA comes up: Earnings Before Income Taxes and Depreciation. Somehow I connected these two concepts. Strange, huh?)

If the money you spend in retirement comes from after tax savings, from a Roth IRA or an HSA, you do not have to pay income taxes on these funds as you have already paid them.

On the other hand, if like many of us baby boomers, a substantial portion of your spending will likely come from your pre-tax investments (IRA, 401K, 403B, etc) or from interest, dividends and capital gains on investments held outside a tax-deferred account, you will probably be paying some income taxes.

In the past, your taxes were withheld from your paycheck and you just reconciled with the IRS every spring. Now, you will have to learn how to estimate these taxes and pay them quarterly, or pay someone to do this (and add that cost to your expenses).

Simple Example for a married couple who are at least 59.5 years old (or otherwise able to withdraw from their retirement accounts).

Suppose life (all the expenses mentioned at the top of this article – your SBITHC) costs you $50,000 a year. Multiply this by 25 and your minimum needed to retire is $1.25 million. (4% of $1.25 million is $50,000 – that’s how this rule of thumb works).

Now suppose all of that money is in a tax deferred vehicle (IRA, 401K, etc) and you must pay taxes on it.

As of this writing, a married couple would have to pay about $2600 in federal taxes on $50,000 of income. State income taxes would of course vary by state.

If federal and state income taxes were not in your budget, your real costs are now closer to $53,000 per year and the amount needed is now at least $1,325,000.

As the TV announcer says, ‘but wait, there’s more.’

You are probably on an employer subsidized health care plan – the subsidy is often 80-95% of the premium and the benefits may be better than what you can get from the ACA market place.

So now we have to add in the cost of the premiums and the extra out of pocket costs, remembering this is not just for medical, but for dental and vision as well.

So again, for simplicity we will add $24,000/year for these costs. This number will be high for some, but may be low for others.

It appears now that life costs about $74,000 per year before taxes. To have $74,000 left after taxes, a married couple might need something closer to $90,000 per year to have enough left over after federal and state taxes to be able to afford the extra medical costs and still have about $50,000 left over for their ‘normal’ SBITHC spending.

$90,000 per year in taxable income requires a minimum of $2,250,000 invested to cover this amount.

This was a simplified example. Different types of income are taxed differently, or not at all. Consider:

If $1 million of your investments were in a ROTH vehicle, and you are already 59.5 years old you could choose to use up to $40,000 towards your annual expenses without paying taxes on them.

If you managed to save $1 million outside of retirement funds altogether, ie, in your brokerage and savings accounts, you could choose to fund another $40,000 per year from savings. Alternatively, assume $700,000 of these funds are in fully qualified dividend investments paying on average 4%, generating $28,000 per year in dividend income.

If you can use some combination of these examples, your spending might still be $74,000 per year, but the taxes needed to support that spending might be much lower, maybe as low as 0. (I am not a tax professional, do your own due diligence – anyway tax law changes continually so this paragraph will lose some accuracy over time).

If you have started collecting social security, note that it may be considered partially or fully taxable income, depending on how much other income you earn.

If you are hoping that Medicare will reduce your health expenses that may be true, but it will not reduce them to $0, or anywhere near it. There are many choices to make, so each couple will have a different experience (location matters as well), but do not be surprised if you are still spending as much as $12,000 a year or more once your are both enrolled.

Roger Whitney, the Retirement Answer Man, does a great job exploring this (and scaring me) in his series of podcasts of September, 2020.

In summary, remember to add income taxes and additional health care costs (premiums and larger deductibles and co-pays) into your calculations when determining how much you will need to have saved before you retire.

Posted on

Gone Fishing, er Retiring

Retirement is Under Way
Gone Retiring, Actually

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.

Posted on

TDSF Power Plant Part 10: 9 Month Update

Got an electric bill again

(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
DateMWhDaysCumulative
3/26/20190
4/21/201912727
5/21/201923057
6/14/201932481
7/6/2019422103
7/30/2019524127
8/26/2019627154
9/28/2019733187
12/21/2019884271

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 DueBilling PeriodCurrent ReadingPrevious ReadingMetered UsageCarryover AppliedAccrued CarryoverAmount Owed
5/20/20193/26 – 4/249956612-4460-4468.26
6/20/20194/24 – 5/239926599566-3000-3008.26
7/24/20195/23 – 6/269897199265-2950-5958.22
22-Aug6/26 – 7/2698982989711111-5848.22
9/23/20197/26 – 8/2699009989822727-5578.22
10/21/20198/26 – 9/259896799009-420-5998.22
11/22/20199/25 – 10/289926298967295295-3048.22
12/19/201910/28 – 11/259960899262346304013.21
1/22/202011/25 – 12/2783996084750065.86

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.

Posted on

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!

Posted on

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:

  1. generation of electricity that is wasted when no one wants it, or
  2. 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:

  1. no west facing panels
  2. 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.

Posted on

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

TDSF Power Plant installed – 34 panels

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?

  1. 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.
  2. 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!

Posted on

TDSF Power Plant is now operational!

TDSF Power Plant is Now Operational

Part 1: How do at-home solar panels work?

When I mention with not a small amount of enthusiasm that we have installed solar panels on our roof, I get a lot of questions:

  • How do solar panels work?
  • Am I using the power from my solar panels?
  • What happens if I generate more power than I need?
  • What happens when the sun goes down (or if it’s cloudy, rainy, etc)?

Let’s start with the basics…how do solar panels work?

As the sun shines on solar panels, the panels create DC (direct current) electricity – the same thing a battery creates. However, you need AC (alternating current) electricity to run your house. So the panels are wired to a box called an inverter, which converts DC -> AC. The inverter connects to your home’s power panel (where your circuit breakers are located).

Your house continues to operate as it always did – when you need electricity, you draw it from the power panel. 

All of this is illustrated below:

http://clipart-library.com/clipart/8TxrRX5nc.htm

This drawing came from an Australian site so the terminology is a little different. What they call the switch board we think of as the circuit breaker box or power panel. What they call the mains grid is our electric utility company. So it flows like this:

Power Panel is where your circuit breakers are located.

Am I using the power from my solar panels?

If the power panel is getting enough power from your solar panels, you do not use any electricity from the grid (your utility company). You are using the electricity you generated on your roof.

What happens if I generate more power than I need?

If the power panel is getting more electricity from your solar panels than you need right now, the excess electricity goes back to the grid – which means you are now a power plant! Your neighbors will use this power (and pay the utility company for it). You get credit for this excess power – your electric meter runs backward!

What happens when the sun goes down (or if it’s cloudy, rainy, etc)?

If the power panel is not getting enough power from your solar panels, the grid will supply the difference (and you are charged for this). Your panels can absorb sunlight even when it’s cloudy or raining (though much less than on a sunny day) – UV rays get through even when it doesn’t appear sunny out. It’s possible that you’re using more power than your panels are generating under these conditions. In that case, the power to your outlets is a combination of the solar power you are generating and power from your utility company. 

At some point, as it gets dark, the panels stop producing power and all of your power needs are supplied by the grid. Basically, your house works just like it does before you had solar panels – the power flows from the utility company through your meter to the power panel and to your outlets. 

In Part 2 I’ll explain how solar panels can save you money on your monthly electric bill, and maybe even generate income – stay tuned for Part 2 next week!