WHOA! What Happened to my Electric Bill??

I was just scrolling through the NextDoor app, checking out the latest info on the wild horses and the usual “Did anyone hear gun shots last night?” posts (by the way, they’re never gunshots!). I came across a rather vigorous chat about power bills and NV Energy rates. Hundreds of participants were ranting about their most recent power bill!

Since I am in the industry, I know that NV Energy has been raising their rates steadily over the past 5 quarters. Cumulatively they have raised rates 29.2% over the past 16 months! You can check my facts by going to your NVEnergy.com account and searching “bill inserts”. There you will find the pink notifications, cleverly named “Base Tariff and Deferred Energy Accounting Adjustment Notice” aka Rate Increase!

What’s happening to energy prices now is just the beginning. Oil, Natural Gas, Coal and all related fossil fuel prices are heading up over the next several years. And, since nearly 80% of our electricity here in Reno is derived from fossil fuel sources, our electricity will suffer the same fate.

With rising energy prices becoming a concern for more and more people, many are looking into taking advantage of solar, which is becoming more and more affordable.  I don’t want to get too much into the details here, but whether you are looking at a purchase or a lease, for many people solar makes sense. While solar equipment has fallen in price, the cost of labor has gone up, offsetting some of the savings. But overall the price is lower than it was even just two years ago. And with new programs available to homeowners, now may be the right time for you to look into it. Get the facts, and do business with someone you know and trust.

Don’t let higher energy costs catch you by surprise. Be prepared. Look into ways to become more energy efficient and energy independent!

Let it Snow, Let it Snow, Let it Snow!

Oh, the weather outside is frightful! So, should I clear off the snow on my solar panels? This is a very common question here in Reno, and a good one! What happens when there’s 6″ of snow on my solar panels?


The answer is, nothing. But that’s okay! The risk to you and your solar panels is not worth trying to clear away the snow to get more electricity. It’s icy and slippery up there, and there is no reason to risk injury for a couple of kWh. You also risk damaging the solar panels and voiding your products’ warranty.


The best thing to do is to let the snow melt off by itself. Because your solar panels are smoother than your roof, the snow will slide off fairly quickly as the temperature rises. Though your solar panels are not heated, the UV rays from the sun will also warm them sooner than they will warm your roof surfaces.


Does this mean I won’t have electricity while there’s snow on my PV panels? Again, another good question, and the answer is you will have plenty of electricity while there’s snow. Remember, when the sun is shining brightly during our sunny days here in Reno, you are banking excess kWh with NV Energy to be used on those days when the sun isn’t shining. Assuming that your system was sized properly for your home and your annual consumption of electricity, cloudy winters and snow storms have already been factored into your production numbers. Your net metering agreement with NV Energy, provides electricity from the grid whenever your solar panels are not producing.


So relax, whip up some delicious hot chocolate, snuggle up in a warm blanket and enjoy the snow, cause inside, it’s so delightful!

Think You’ll Never Get Your Solar Investment Back? Think Again!

Many homeowners are concerned that the investment they are about to make in solar will not be a good investment. They make a quick computation of the amount of time it will take to break even and leave out some important details. Although the break-even stated on solar contracts may seem like a long time to recoup your investment, it’s actually much better than that!

Let’s back up though and talk about the current climate of the renewable energy market. Many states are invoking strict regulations and tight timetables to switch over their grids to renewable energy. The enormous costs involved in making those wholesale changes is going to put pressure on utilities to raise prices even more aggressively than in the past. States like California have been feeling this for several years now, and are experiencing the highest electric rates in the nation. Nevada recently voted to amend their constitution, citing a 50% renewable mandate by 2030. The investment in upgrades will not be free, and Warren Buffet is not going to foot the bill for us. Higher rates are coming. In fact, NV Energy just announced a 7.71% rate hike to take effect in northern Nevada on Jan 1, 2021 [another 2.83% April 1st, 2021 and another 1.22% October 1st, 2021 totaling a staggering 12.15% for 2021 alone]

Let’s look at the numbers for a typical homeowner here in Reno. Typical electricity consumption in Reno is around 11,000 kWh per year. Middle of the road I’d say. We have four seasons here, so the AC isn’t always running, but summers are pretty warm. We also have great sun hours here, it’s one of the sunniest cities in America, so we’ve got that working for us. A system that provides 11,200 kWh is about a 7.00 kW system. On average, the cash price of a system that size is about $22,750. Some dealers charge more, some less, but for a quality system with great warranties, installed by a reputable company like Freedom Forever Solar, that’s a pretty good price. First off, if you earn a paycheck and pay federal income tax, (as of the date of this article) you will receive an Investment Tax Credit of 22% in 2021 [The Federal ITC has been extended. 26% in 2021 and 2022, and 22% in 2023]. A tax credit is different than a tax deduction. Tax deductions come off of your income before you compute your income tax. Tax credits get subtracted directly from the taxes you owe. For instance, if you owe $8,000 in Federal Income tax and have a $5,000 tax credit, you will owe $3,000 after you take the credit.

So, your investment tax credit money goes directly into your pocket, tax free. Not a bad start! That means you have now spent a net total of $17,750 for your solar system. Still a lot of money. But what about your electric bill? After you invest in a solar system, as long as you don’t exceed your electricity production, you won’t have a power bill. For the system we’re working with, you’re replacing a power bill of about $90 per month in Reno, or $1,080 per year. That’s $1,080 savings, which is better than income, because you don’t pay taxes on savings. So, $1,080 is a 6.08% annual return on your investment, tax free. Not accounting for any inflation of your utility bill, which will happen. What that means is that your 6.08% tax free annual rate of return is also protected against inflation. Not bad.

But what about your initial investment? How do you recoup your capital? According to Money.com, the average home with solar in the US can fetch an additional 4.1% over a home that does not have solar. What that actually represents is the present value of a series of payments, namely your power bill. When you think about it, there is definitely value in not having an electric bill when you buy a house! So the value of the system is the value of the payments for the remaining life of the system (a solar system today has a usable life of about 30-35 years). Interestingly, there is only one home improvement that has a better return on your home than solar. Steel doors. Yup, weird.

The average home price on Reno around $408,000, so the 4.1% premium for solar in Reno would be about $16,750+/-

Okay, let’s review.

  • It costs you $22,750
  • You get $5,720 back, tax free
  • You receive a 7.11% tax free, inflation proof, annual ROI for as long as you live there
  • You get a 4.1% premium on your home sale, or $16,750 on average
  • Rev 6/21

Here’s what that looks like after just 5 years:

expenseIncome6/21
Update
New System$22,750
Tax Credit$5,000$5720
Utility Savings
(5 years)
$5,400$6056
Home Improvement Premium$16750$16750
Net Profit / (Loss)$4,400$5776

In fact, you would only lose money on your solar system if you had it for less than one year! So you may think that your “break-even” for your solar system is years down the road, but the actual numbers tell a different story.

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