IREA (our electric utility) has announced they will not be making changes to their net metering policy. However, they will be adding a "Load Factor Adjustment", which is essentially an extra fee aimed at customers with new residential solar systems, starting on January 1st, 2016.
Which means: we have 5.5 month window to install a solar system (which apparently will take about 3 months from signing the papers to flipping the switch) that can take advantage of net metering AND avoid the new Load Factor Adjustment fee.
The System:
We're looking at an 18-panel, 6kW system with a central inverter. This system should produce 95% of our yearly electric consumption. We're paying a little extra for high-efficiency SunPower panels so we can get all 6kW from one contiguous block of panels on a single plane of our roof. The quote includes rerouting four sewer vents away from where the panels will be installed, and upgrading and integrating our 100 amp main electric panel and subpanel into one 200 amp panel. The central inverter will allow us to purchase and integrate batteries when IREA inevitably changes their net metering policy in the future. And the 200 amp panel with future proof us for an electric vehicle down the road.
Finances:
The sticker price for the system is a smidge over $25,000. The federal Solar Investment Tax Credit is still good through the end of 2016, and will knock 30% off the sticker price (in a tax rebate), meaning we have to come up with $17,650 out of pocket.
It's not an ideal time for us: with the slowdown in the oil and gas industry, neither Brianna or I are working full time. And we're paying for child care for Lincoln. We did look into the financing options, but even the best long-term offer would ultimately tack on an additional 20% to the sticker price.
However, we were offered a short-term, same-as-cash loan. We would have twelve months during which the loan would not accumulate any interest. However, if the loan was not paid off within those twelves months, interest would accumulate retroactively at 17%.
The only reason we're considering this option is because of the 5.5 month time crunch and because we actually have the money to cover this purchase - it's just in accounts we really really don't want to touch except in case of emergency or retirement.
So, we're going to do our best to cash-flow these solar panels over the next twelve months, and dip into our savings if we need to at month 11. Renting out the basement bedroom should really help with this.
That means no new driveway or back patio, no air conditioning system, no remodeled bathroom in the basement, and definitely no new vehicles (unless insurance is paying for it) in the next twelve months. Sushi consumption might also have to be curtailed.
Brianna's 2 cents: I REALLY want to follow the Dave Ramsey plan of no debt and I HATE paying interest... and I see how the "same-as-cash" is a high risk option. The numbers for the other financing options really weren't much better. The 1.99% loan sounded really good until I understood that it had a $4k origination fee for an effective rate of 3.75% for the life of the loan (just over what the "same-as-cash" offer would charge in interest if we miss the 12 month deadline but paid it in 16 months). A HELOC (Home Equity Line of Credit) seems like a very slippery slope and has a $20k minimum but is only at 4.6% now but would float with prime. I do not want it to be easy to keep thinking that we could just keep upgrading the house and plopping it on the HELOC and then have prime make significant moves.
I do not want to have consumer debt. I feel like solar panels fall into this category but I am finding all sorts of excuses as I am excited. I feel that with sacrifices, we can pay it off before the 12 months and interest kicks in without tapping into our emergency fund. Solar panels are NOT an emergency... So it will be a 12 month lifestyle adjustment to go solar.
Summary:
Net metering will remain in effect for the immediate future - probably several years. If we get a solar system installed before the end of the year, we will be grandfathered-in and avoid an additional fee that takes effect in 2016. We have twelve months to pay the system off in order to avoid interest, so we will have to keep a tight leash on our money for the next year.
Oh, yeah: We're excited about this!
Which means: we have 5.5 month window to install a solar system (which apparently will take about 3 months from signing the papers to flipping the switch) that can take advantage of net metering AND avoid the new Load Factor Adjustment fee.
The System:
We're looking at an 18-panel, 6kW system with a central inverter. This system should produce 95% of our yearly electric consumption. We're paying a little extra for high-efficiency SunPower panels so we can get all 6kW from one contiguous block of panels on a single plane of our roof. The quote includes rerouting four sewer vents away from where the panels will be installed, and upgrading and integrating our 100 amp main electric panel and subpanel into one 200 amp panel. The central inverter will allow us to purchase and integrate batteries when IREA inevitably changes their net metering policy in the future. And the 200 amp panel with future proof us for an electric vehicle down the road.
Finances:
The sticker price for the system is a smidge over $25,000. The federal Solar Investment Tax Credit is still good through the end of 2016, and will knock 30% off the sticker price (in a tax rebate), meaning we have to come up with $17,650 out of pocket.
It's not an ideal time for us: with the slowdown in the oil and gas industry, neither Brianna or I are working full time. And we're paying for child care for Lincoln. We did look into the financing options, but even the best long-term offer would ultimately tack on an additional 20% to the sticker price.
However, we were offered a short-term, same-as-cash loan. We would have twelve months during which the loan would not accumulate any interest. However, if the loan was not paid off within those twelves months, interest would accumulate retroactively at 17%.
The only reason we're considering this option is because of the 5.5 month time crunch and because we actually have the money to cover this purchase - it's just in accounts we really really don't want to touch except in case of emergency or retirement.
So, we're going to do our best to cash-flow these solar panels over the next twelve months, and dip into our savings if we need to at month 11. Renting out the basement bedroom should really help with this.
That means no new driveway or back patio, no air conditioning system, no remodeled bathroom in the basement, and definitely no new vehicles (unless insurance is paying for it) in the next twelve months. Sushi consumption might also have to be curtailed.
***
Brianna's 2 cents: I REALLY want to follow the Dave Ramsey plan of no debt and I HATE paying interest... and I see how the "same-as-cash" is a high risk option. The numbers for the other financing options really weren't much better. The 1.99% loan sounded really good until I understood that it had a $4k origination fee for an effective rate of 3.75% for the life of the loan (just over what the "same-as-cash" offer would charge in interest if we miss the 12 month deadline but paid it in 16 months). A HELOC (Home Equity Line of Credit) seems like a very slippery slope and has a $20k minimum but is only at 4.6% now but would float with prime. I do not want it to be easy to keep thinking that we could just keep upgrading the house and plopping it on the HELOC and then have prime make significant moves.
I do not want to have consumer debt. I feel like solar panels fall into this category but I am finding all sorts of excuses as I am excited. I feel that with sacrifices, we can pay it off before the 12 months and interest kicks in without tapping into our emergency fund. Solar panels are NOT an emergency... So it will be a 12 month lifestyle adjustment to go solar.
***
Summary:
Net metering will remain in effect for the immediate future - probably several years. If we get a solar system installed before the end of the year, we will be grandfathered-in and avoid an additional fee that takes effect in 2016. We have twelve months to pay the system off in order to avoid interest, so we will have to keep a tight leash on our money for the next year.
Oh, yeah: We're excited about this!
That's GREAT. If it's any consolation, you got a lot more work done, than we did for a lot less money.
ReplyDeleteDid I hear "Electric Car" in there (some day).....I'm so proud.
Uncle Bill