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Solar Panel ROI & Payback

Does solar really save money // Is solar really worth it?

These are some of the first questions we hear from folks who are just starting out on their solar journey. When talking about a technical product with a “payback” like solar power – it’s easy to get confused.

We’ve seen solar companies promise the world to gain business.  As Ohio’s oldest installer, we are committed to integrity. With the recent growth and popularity of solar, driven by improved technology and more public awareness, we have seen a growing number of national companies and small installers moving into Ohio. While we recognize that healthy competition is welcomed and is ultimately beneficial to consumers, we are also concerned about some of the deceptive and misleading claims.

We’ve broken down some of what we’ve seen below to help you:

  • $0 Down Solar – While there isn’t an initial out of pocket cost, obviously there will be monthly payments on the loan. Just like a car loan, if you choose a $0 down loan, your monthly payments will be higher than if you put some money down upfront. All of our clients are different, and some are ready to pay for their solar upfront and some choose to finance all or part of the system.
  • Free Solar – Some solar companies misleadingly use the word “free” but what they’re actually referring to is a long-term low-interest loan. Often, they offer what appears to be a very low-interest rate, but they secretly add 15 – 25% to the cost of the system to buy down the rate from their loan partner.
  • Ohio Statewide or Local “Program” – There is not a special statewide program or special grant or subsidy. Again, this misleading advertising is purposefully deceptive.

We are happy to answer any questions you have: questions about things you’ve read or seen. Or help you evaluate the difference between solar quotes.  Now that we’ve addressed some of the misleading claims about solar payback, here is what we know is true…

 

What is solar payback?

Solar systems are investments. Unlike many of the purchases we make – there is a return on the investment that you make when you purchase solar panels.

Think of it this way: right now you’re renting the electricity you use every month. You pay a monthly bill to your electric supplier. And, that is how it will be… forever. Solar energy systems give homeowners another option for how they purchase electricity. Owning a solar system is like owning your power. The money you pay each month goes towards the payment of the system that is generating the energy for your home. You will eventually break even on that purchase. And, from that moment forward the solar energy system you own will generate clean, free, and abundant solar energy for your home.

Your “solar payback period” is the time it takes to make back your initial investment in solar.

 

How do you calculate payback for solar panels?

Below we have listed the elements that you need to consider when determining the ROI or payback.

  • Total Cost of Solar Installation
  • Local + Federal Tax incentives that you will be able to take
  • Average monthly electric use
  • Estimated solar system generation
  • Electricity cost escalation over time

Do the math: add up the cost of your solar system and subtract your incentives to give you a true cost. Then add up your avoided electricity costs for 1 year. Divide the true cost by the avoided electricity costs. This will give you a ballpark idea of the number of years it will take for you to achieve payback. This number does not consider annual energy rate escalation, fixed rates on your utility bill, and other charges, however. So, it is important to take this equation with a grain of salt.

Keep in mind: any solar quote you receive will likely include a summary of your Return on Investment.

An payback on your investment, a smaller carbon footprint, and decades of clean solar electricity make solar a smart option for many homeowners.

The advice we hear our current customers give their referrals: just get a quote! There is no cost, there is no pressure, and you will get a lot of useful, detail-rich, and site-specific information.

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How Solar Energy Helps the Environment

The road to treading a little lighter is full of opportunities. From green habits like recycling, gardening, and carrying a reusable water bottle, all the way up to bigger projects like installing a solar system at your home. Utilizing solar energy is a big win for the environment. Going solar is a big step in the right direction if you intend to minimize your environmental footprint.

This post intends to help you understand the magnitude of carbon savings a solar system has on an individual or family every year.

Solar Case Study

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Source: Vox, What’s causing climate change, in 10 charts

The average American household produces 19.3 to 91.5 tons of CO2-equivalent annually. As those numbers have risen over time, familites increasingly consider their options for reducing their carbon footprint at home. Solar power has begin to stand out as a meaningful way to achieve that household reduction.

Take environmental impact information from a recent residential solar installation. Pictured above is an 8.3 kW solar installation in Duncan Falls, Ohio. This solar system was designed to offset the home’s annual energy consumption by 100%. The environmental impact of this solar system? Over 30 years the system will have saved the Carbon Dioxide emitted from burning 227 tons of coal. This is equivalent to driving the perimeter of the United States 48 times. Or, preserving 268 acres of forest. This solar system demonstrates how residential solar is good for the environment.

What other savings does this system include? Over the lifetime of their system, will save the homeowners over $16,000 in utility savings.

Fortunately, solar systems appeal to both our idealistic and pragmatic motivators. Sustainability is often defined as where beneficial environmental impacts meet with cost savings. Cost savings is a cornerstone many of us consider when making adjustments that benefit the environment.

Solar and the Environment Myth Busting

There are lots of solar myths out there. Are solar panels bad for the environment? Does it take more resources to produce a panel than that panel will produce in its lifetime? The simple answer is no.

The materials used in obtaining and manufacturing solar cells and modules is a hot topic. And anyone who is considering going solar for environmental reasons will look critically at the materials used in their energy choices. As with anything these days – do your research. Choose an information resource that you trust and ask questions, read, and understand the latest news and technology. Much has been “green-washed” or made to look sustainable when it’s not- over the decades. So, it’s good to look at sustainability claims with a critical eye.

  • Embodied Energy – How many years will a solar module need to be generating energy to offset the energy that went into mining the raw materials, transporting, manufacturing, etc.? About 2 years on average. Panels usually have a 30-year design life, 25-year warranty, some last longer. Solar Panels will net out more energy than was used in production.
  • Supply Chain – rare earth minerals exist in many of the electronics we use every day. Solar panels are not exempt from this. However, comparing solar panels against the standard energy utility, in the big picture we believe that fossil fuel resources have a dirtier supply chain than solar. Do your research, compare, dig deep and we think you’ll agree.

The Environment + Your Home

There is a whole lot you can do – from daily habits to big changes to your home – to be greener. Simple things include biking to work instead of driving, buying locally grown food, and remembering to turn your lights off and thermostat down when you leave for work in the morning. Bigger changes might include replacing your windows, adding insulation, or adding solar panels to your home. Wherever you are– we’re glad you’re taking the time to think about changes you can make to support the shift to clean energy. Reach out f you’re interested in learning more about the environmental and cost savings potential at your home with solar.

 

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Columbus Zoo and Aquarium

Project Overview

In the fall of 2020, Third Sun Solar installed a ground-mounted solar array as part of a larger microgrid installation at the Columbus Zoo and Aquarium.

From the beginning, Third Sun Solar worked closely with Worley and Claypool Electric to design and present a microgrid solution to the Columbus Zoo and American Electric Power (AEP). After many meetings and presentations, the group was a finalist and ultimately awarded this project through a competitive selection process. A microgrid is a grouping of electrical loads that are normally connected to one grid but can also disconnect to an “island mode” where it functions independently. When on “island mode,” the microgrid at the Columbus Zoo and Aquarium will be powered by solar and battery systems. The 134.4 kW ground-mounted solar array, designed and installed by Third Sun Solar, provides power to the microgrid system. Worley contracted Third Sun Solar to construct and design the solar portion of the array. Worley designed and engineered the battery energy storage system, and Third Sun Solar partnered with Claypool Electric to build and install the entire system. The ground-mounted solar array powers an extensive battery system behind the meter of the Polar Frontier complex. The energy from the solar panels is used in the batteries and helps to power a portion of the polar bear exhibit, and the entire system works like a backup generator, providing renewable energy when needed.

A Groundbreaking Project

AEP Ohio is a subsidiary of AEP and commissioned the microgrid project. The microgrid at the Columbus Zoo and Aquarium is the first of its kind for the company. The microgrid is a “demonstration” system that will allow AEP Ohio to monitor the applications and functions of a microgrid at this scale. AEP Ohio will learn how independent, customer-sited, behind-the-meter microgrids can help the customer and the utility grid alike. In addition to AEP Ohio, utilities across the country will be eager to understand the value the microgrid provides.
Third Sun Solar is proud to be a partner in this innovative project, in collaboration with Claypool Electric, Worley, and AEP Ohio.

More about Third Sun Solar

Third Sun Solar is Ohio’s leading full-service solar installation company, providing top-quality design and installation since 2000, serving residential and commercial clients in Cleveland, Cincinnati, Columbus, and beyond.

More about Worley

WorleyParsons Limited, branded as Worley after completing Jacobs’ Energy, Chemicals & Resources division, is an engineering company that provides project delivery and consulting services to the resources and energy sectors and complex process industries.

More about Claypool Electric

Claypool Electric, Inc. is the preferred provider of electrical and communications infrastructure projects in Central Ohio. Family-owned since 1954, they have maintained a reputation for excellence in the craft and integrity in dealings.