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Financials
Residential Rooftop Photovoltaics in the Chicagoland
The big question is “how much does it cost?” And more specifically, “would it cost more or less than the electricity it would offset?” The price of the electricity from the grid varies in each region, but it in the suburbs of Chicago there are users who are already saving money with this system. In an article titled Lake Park High School District 108 Celebrates Completion of Solar Project, Vanessa Revelli describes the March of 2017 completion of the high school’s two rooftop solar PV systems which are “expected to generate 1.86 megawatts of clean energy.” Resulting in an “estimated net savings of $5.1 million over 25 years.” Which “make it one of the first public school districts in Illinois to adopt solar power on a large scale.” This sounds promising so let’s look at the price of electricity and the cost of the system for an average home.
Illinois Electricity Rates & Consumption, an informative page published by Electricity Local, states that “Residential electricity rates in Illinois average 11.38¢/kWh, ... and those users’ electricity consumption averages 767 kWh/month. ... Which is about $87/month.” With these average prices, extrapolated for the next twenty-five years that a rooftop PV system is operational (see description page), we can compare the difference in cost.
That being said, we cannot exactly multiply that monthly bill for the next 25 years, if you compare your electricity bills from those of a few years back you will notice that there is a difference in the price you pay for each kWh of electricity. Overtime, the price is constantly going up. It went up over 3% during January of this year. As published on the website of one of the largest cities of the Chicagoland western suburbs: In an article titled Electricity Rates, the city of Naperville, IL. published the data for the January 2018 residential customer’s rate increase of 3.6% on their electricity bills.
If we add up the next twenty years, at an annual growth rate of 4%, this ‘average homeowner’ would have disbursed over $23,000.00 in electricity bills to the grid provider. Whereas, with a 5kWh PV system (which would generate a yearly average of over 750kWh a month in Illinois) this homeowner would likely source 100% of his electricity from the sunlight shining on his roof.
The main cost of going solar is the equipment itself, such as this one: “(5kW) DIY Solar Install Kit w/Microinverters (sold for $11,197.68)” on an article by the same name published on Gogreensolar.com. Add to that a transportation fee of around $500.00 and then hire an installer who’s estimated charge is $5,000.00 for a system this size (as stated on the price, transportation and installation sections of the afore mentioned page). If you then add an 8% sales tax you end up with a total price of $18,036.00. Which is already lower that the $23000.00 that it would off-set in twenty years of electricity bills. Though, the cost is actually lower once you take into account the 30% tax credit.
As explained in Residential Renewable Energy Tax Credit, an article by the Database for State Incentives for renewable Energy (DSIRE) “taxpayers may claim a credit of 30% of expenditures for a [PV] system on a dwelling unit... used as a residence by the taxpayer. Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year.” (Emphasis added). This is excellent news because when the final price is lower, more users are likely to obtain one.
The average homeowner obtaining the $18,036.00 installed PV system would receive $5,410.80 back which would bring the price down to $12,626.00. This means that homeowners with this amount of cash to invest would be seeing savings far greater than 30% as compared to their total energy bills had they kept buying their electricity from the grid. While a homeowner who borrowed the money would need to pay interests, which would amount to an additional bill of perhaps three thousand dollars over the life of the loan. Nevertheless, these interests, just like a mortgage, may actually be tax deductible as a home improvement’s expense.
All this information tells me that there are probably many homeowners who would be interested in obtaining a PV system on their house, but they haven’t done it because they haven’t been informed and offered the chance. They don’t know that it will save them enough money to motivate them to do it and they are not aware of how to obtain it.
Illinois Electricity Rates & Consumption, an informative page published by Electricity Local, states that “Residential electricity rates in Illinois average 11.38¢/kWh, ... and those users’ electricity consumption averages 767 kWh/month. ... Which is about $87/month.” With these average prices, extrapolated for the next twenty-five years that a rooftop PV system is operational (see description page), we can compare the difference in cost.
That being said, we cannot exactly multiply that monthly bill for the next 25 years, if you compare your electricity bills from those of a few years back you will notice that there is a difference in the price you pay for each kWh of electricity. Overtime, the price is constantly going up. It went up over 3% during January of this year. As published on the website of one of the largest cities of the Chicagoland western suburbs: In an article titled Electricity Rates, the city of Naperville, IL. published the data for the January 2018 residential customer’s rate increase of 3.6% on their electricity bills.
If we add up the next twenty years, at an annual growth rate of 4%, this ‘average homeowner’ would have disbursed over $23,000.00 in electricity bills to the grid provider. Whereas, with a 5kWh PV system (which would generate a yearly average of over 750kWh a month in Illinois) this homeowner would likely source 100% of his electricity from the sunlight shining on his roof.
The main cost of going solar is the equipment itself, such as this one: “(5kW) DIY Solar Install Kit w/Microinverters (sold for $11,197.68)” on an article by the same name published on Gogreensolar.com. Add to that a transportation fee of around $500.00 and then hire an installer who’s estimated charge is $5,000.00 for a system this size (as stated on the price, transportation and installation sections of the afore mentioned page). If you then add an 8% sales tax you end up with a total price of $18,036.00. Which is already lower that the $23000.00 that it would off-set in twenty years of electricity bills. Though, the cost is actually lower once you take into account the 30% tax credit.
As explained in Residential Renewable Energy Tax Credit, an article by the Database for State Incentives for renewable Energy (DSIRE) “taxpayers may claim a credit of 30% of expenditures for a [PV] system on a dwelling unit... used as a residence by the taxpayer. Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year.” (Emphasis added). This is excellent news because when the final price is lower, more users are likely to obtain one.
The average homeowner obtaining the $18,036.00 installed PV system would receive $5,410.80 back which would bring the price down to $12,626.00. This means that homeowners with this amount of cash to invest would be seeing savings far greater than 30% as compared to their total energy bills had they kept buying their electricity from the grid. While a homeowner who borrowed the money would need to pay interests, which would amount to an additional bill of perhaps three thousand dollars over the life of the loan. Nevertheless, these interests, just like a mortgage, may actually be tax deductible as a home improvement’s expense.
All this information tells me that there are probably many homeowners who would be interested in obtaining a PV system on their house, but they haven’t done it because they haven’t been informed and offered the chance. They don’t know that it will save them enough money to motivate them to do it and they are not aware of how to obtain it.
Personal Loan AdviceIf you don't have the cash on hand, talk to an accountant; you will discover that your loan is probably tax deductible.
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Retirement PlanningThink of a future in which your electricity bills have been payed in advance at a lower price.
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Investment StrategyInstead of paying for electricity every month, pay to add valuable equipment to the total value of your home.
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Works Cited:
“5200-Watt DIY Solar Install Kit.” Gogreensolar.com. GigaWatt Inc, 2018. www.gogreensolar.com/products/5kw-diy-solar-panel-kit-microinverter. Accessed 3 Apr. 2018.
“Illinois Electricity Rates & Consumption.” Electricity Local, 2018, www.electricitylocal.com/states/illinois/#ref. Accessed 8 Apr. 2018.
“Electric Rates.” City Of Naperville, 2018. www.naperville.il.us/electric-rates/. Accessed 15 Apr. 2018.
“Residential Renewable Energy Tax Credit,” DSIRE. N.C. Clean Energy Technology Center. 23 Mar. 2018. http://programs.dsireusa.org/system/program/detail/1235. Accessed 6 Apr. 2018.
Revelli, Vanessa. "Lake Park High School District 108 Celebrates Completion of Solar Project." Tech Directions. Vol. 77 Issue 8, pp. 6-7. PR Newswire, 15 June 2017. Environmental Studies and Policy Collection,
link.galegroup.com/apps/doc/A495622673/PPES?u=cod_lrc&sid=PPES&xid=908874b4