Solar Panels Or Locking In The Cost Of Electricity. Energy Arbitrage In Time.

This blogpost is for purposes of education only. Disclaimer.

I am an owner of a modest 1,700 square feet house. My annual electric bill for about 5,200 kWh. Why did I decided to purchase a solar panel system for my house considering relatively small electricity usage? It is a rather longer story than it seems. I have subscribed to investment letter by Steve St.Angelo (link: https://srsroccoreport.com/ ). Mr. St.Angelo thesis is that the fossil fuel production is reaching peak and soon we will roll over with resulting increase in prices for energy. He claims that in 2007 the price of oil has risen to about $150/barrel on peaking of the conventional oil extraction technology. We have gotten temporary reprive as fracking move that moment into the future, and the future is now. I shall also add that Mr St.Angelo thinnks that this will be the moment when price of precious metals rises.

Right after installing my solar panel system, I bought an electric car, namely, Chevy Bolt LT 2017. I doubled my electricity consumption due to driving about 20,000 miles a year.

There were two threads which run through my decision to make these investents. I thought that cost of energy will be increased due to energy crisis caused by coming scarcity of fossil fuels. These I though would on the horizon in a few years as I have not even thought that the war in Ukraine would break out so soon, I finished aquiring both at the end of 2021. The second thread is in the name Build Back Better. If you parse the phrace you realize that it implise the destruction of current economic model. The most sthealty means towars this is inflation. The combined forces of supply chain disruption and the sanction lie at the root of the current bout of inflation. As was the case of many European countries, similar mechanism was at work by introduction of highly inefficent green energy technologies, which are going to be the infernal inflation machine in the Western world. I will give insight into these assertions in future posts.

I made a speadsheet with the cost of system minus the 26% federal tax credit, the Solar Renewable Energy Credit one time payment, plus the intrest paid on the loans for the remainder, and some allowance for maintaince. I spread the cost over 20 years of service with the diminishing production over those years to arrive at Levelized Cost Of Electricity of just $0.12/kWh. Due to the fact that my roof experiences some shadow during later part of the day my and the limit for the installed capacity as defined by my previous usage, before I bought the car, my instalation was limited to capacity of 4,810 Watts with anticipated one year production of 4,200 kWh, offsetting the 81% of my usage. At the current price of electricity and assuming 4% rise over next 13 years, my investment shall break even in just 12 years. This is because I have decent amount of shade and I selected a premium instaler and equipment.

When I am billed part of the produced energy goes into my immediate consumption and the reminder is sold to the electric utility company. I use more enrgy every month than I produce that I am not being given credits for the energy to be used during the less sunny months, I live in Illinois. Here is my anticipated production vs. consumption, before I purchased the electric car.

As you can see in the months of April to June I would produce more electricity than I would consume. In this case you need the electric utility company to purchase your temporary overproduction on both monthly basis as well as hourly. You have to check this with your utility company because your peak production can be just worth nothing. In this case the Levelized Cost of Electricity for you goes up.

If your overproduction is not purchaces by the utility, the solution becomes to install battery with the solar panels to store the electricity https://christian.solar/cost-of-solar-panels-and-battery/. If the cost of installing a 10kWh battery is additional $10k and during the period of 20 years you have to replace batteries twice since they last only 10 years, then the Levelazed Cost of Elecricity becomes $0.37/kWh, at least for me.

Sizing the battery for your system depends on your daily usage, its schedule during the day, the solar panel production during the day and by month. On average my usage during the month of December is 13.3kWh, the average production is 4kWh/day. This average production is deceiving since its just few sunny days in December which produce the gross of energy. Even with battery it is inevitable to draw the energy from the grid, unless I more than quadruple the solar panel area. In the month of July my average production matches the consumption on per day basis and with battery I can run independent of the grid (20/20kWh). But this hinges on the hourly schedule of consumption and production. The aforementioned 10kWh battery does not allow the sesonal storage, for which the presented graph calls for. I am currently using the grid for the “sesonal storage”.

At the latitude of Chicago you are reliant on the “sesonal storage” of you grid supplier. In sunny California, battery can replace the buying of your sesonal or hourly overproduction. As long as ComEd (my utility) buys from me the excess electricity I am practically locking the price of energy to $0.12/kWh. This surely will turn into a disaster once the buying ceases as only 1/3 of produced energy goes to my usage during the summer. But even in this contingency I could charge the car during the sunny time of the day, or I can during the dog day of the summer precool my house before 3 PM.

The philosophy of Build Back Better means only one thing when it comes to energy cost, and that is unrelanting increase in cost and decrease in reliability. See webpage link: https://corporatefinanceinstitute.com/resources/knowledge/other/energy-return-on-investment-eroi/

Solar panel also called Photovoltaic produce 2 time the amount of energy used to make them in the first place. If you just think about it, such system does not produce any netto energy just enough to replicate itself. So, your solar panels are just a clever way to conduct energy arbitrage in time, but that only works if the there is energy price inflation. That at least is the current state of technology with silicon based solar panels. Also, notice that that wind turbines just produce 4 times the energy used in making them. The threshold for viable energy system to maintain industrial civilization is 7 times the energy spent. The people who run the show are inteligent enough to know the difference between the energy choices but the policies have other goals than just viable energy system.

Notwithstanding the intermittency problem of these two main sources of the green energy revolution, there is the fundamental problem of Energy Return On Investment. The policy makers are aware of it as it is stares them in the eye. Yet, the goal of enviormental policy is to impoverish middle class in order to curtail consuption of almost everything known to man. The most comprehensive and surreptitious way of doing this is by enegy prices inflation.

Next post will be on the subject of postponing solar panel instalation in expectation of newer more viable techologies.