-Jim from Chicago-
I like your thinking, but would recommend a longer-term approach to implementing solar on your house. A strategy of energy efficiency, load shifting through geothermal exchange, and then solar will not only be more cost effective, but also better for the environment.
Using a typical Illinois home as an example, the residence requires almost 110 million Btu (British thermal units) of energy per year. Of this total, residents use about 75% in natural gas and 25% in electricity. Even with that breakdown of usage, the average customer will spend about $1,300 per year in total energy cost (depending on the age and systems within the house), which breaks down to about 40% (about $550) on natural gas and 60% (about $735) on electricity. From this, it is easy to see the allure of residential solar electricity since we do not get as much energy per dollar as with natural gas.
So let us look at a couple of different investments that a homeowner could make relative to energy and see how they stack up.
1. Solar photovoltaic system
A typical Illinois home would require a 5 kW solar array to supply the 9,172 kWh per year. That requires an investment of $29,450 at current prices of about $5.89/W, and saves the homeowner around $735 per year. (Ignoring any battery systems, interconnect fees, or creative pricing plans.)
That's the same as investing in a bank account and having 75% of that amount in the bank after 30 years. On the whole, not a great investment, and it only covers a small portion of the energy use in the home.
2. Geothermal heat exchange system
For that same Illinois home, we could install a 3 ton (1 ton = 12,000 Btu/hour) system to provide the heating and cooling energy transfer for the home. This has the benefit of providing air conditioning in the summer, and taking the heat from the house and storing it in the ground for use in the winter. These systems cost between $10,000 and $15,000 for a retrofit of a home, and can reduce the energy needed for heating and cooling by between $500 and $750 per year for the average home. For this investment, it would be the same as putting money in the bank and after 30 years, having 100% to 225% of the amount invested. That sounds like a much better economic model.
3. Energy efficiency
Lastly, we could implement simple energy efficiency measures at the house: insulate the walls and attic and any hot water piping ($2,000), retrofit all lights with LED or compact fluorescent bulbs ($2,000), and replace appliances with Energy Star rated appliances ($9,000). Performing all of these upgrades in a home would save the homeowner around $800 per year. This equates to an investment over 30 years that would be worth 240% of the initial value. Of all the options, that makes the most financial sense.
In reality, the best approach uses all three of these. A homeowner should start by taking advantage of all the energy efficiency options they can, then, with a reduced energy need, install a lower cost geothermal system. With the electricity use left (mostly lighting, computer systems, and other plug loads), then the solar system makes much sense. In the overall picture, if you have the $29,450 to invest in your home, it could be spent in this way:
$13,000 for energy efficiency
$ 5,000 for geothermal (based on the new reduced load)
$10,000 for solar electricity (based on the new reduced load)
None of these examples included grants or incentives, which are definitely available. In general, someone ends up paying for the incentive, so comparing options makes more sense without them. When actually choosing what to do, investigate all the available incentives and use that to pay down the amount you have to invest. Also, for the geothermal and solar pieces, it makes sense to look toward alternative financing mechanisms such as PACE, which uses increased property value to fund the improvement, or green mortgages that allow increased mortgage payments based upon decreased utility payments.
Calculation of typical residential energy use:
Annual IL energy use in residential: 417 Bcf natural gas, 48,583 MkWh (per EIA)
Total number of IL housing units: 5,297,318 (per Census Bureau)
Average size of housing unit: 2,000 sf (estimate)
Total IL residential living area: 10,594,636,000 sf
Average natural gas usage: 39.36 cf/sf
Average electricity usage: 4.586 kWh/sf
Typical home energy use:
78,720 cf of natural gas or 787.2 therms ($0.70/therm) $551.04
9,172 kWh of electricity ($0.08/kWh) $733.76
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