Solar | Understand the Process

With all the hype out there right now about going green and adding renewable energy to your home or business, we wanted to give you some things to think about and also give you some information that might be helpful in deciding if you want to utilize renewable energy.

First, here are a few terms you might hear:

Distributed Generation
DG for short. Small electricity producing projects that consumers can install on their facilities. These can include solar, wind, hydro-electric, biomass, and others types of generators. These renewable energy generators are connected directly to the customers home or business and each unit of energy that they generate is one unit that the customer does not have to purchase from the power company.

Distributed Generation Systems are small-scale, on-site power sources that can be located on a customer's home or business. Distributed Generation Systems often utilizeĀ a two-way flow of power on the electric system.

The most commonly recognized is rooftop solar. Once installed at a customer's address, these systems are connected into the local electric grid. In most cases, customers are able to utilize the grid like a battery to store their excess energy. There are several methods to buy a system like this, ranging from a direct purchase to a scenario where a third party owns the system and leases it to the customer or sells them energy at a predetermined price.

All of these distributed generations systems must connect to the utility through a process call net metering. Net metering is the billing system NV Energy uses so customers are able to send excess energy generated by their system out to the gird. When a customer-owned system generates more electricity than NV Energy delivers to the service address, the customer receives a credit on their bill that they can use later. If more electricity is delivered by NV Energy than is generated by the customer's system, customers are charged for the energy they use in the usual way.

Net Metering
When you install a DG system on your facility and begin generating your own electricity, there may be sometimes when you are making more electricity than you are consuming. Say you have a solar system on your house.

Now, imagine it's a sunny day and you are away from home. You don't have the air conditioning on and you're not using any appliances like your washer or dryer. There are only a few things are running like your refrigerator and clocks etc. On this bright, sunny day while you are away, your solar system may generate more energy than the house is consuming. If it does, then your system will push the excess energy that it is making backwards through your electric meter and out on to the grid. That energy is measured and shows up as energy credits on your bill.

Later that day, after the sun has gone down and your solar system is no longer making electricity, you come home and turn on some appliances and maybe even your air conditioner. Now, you are drawing electricity from the grid. But since you put some electricity out on to the grid earlier in the day, the first thing that you do is consume those energy credits that you made earlier in the day.

Over the period of a month, you might generate the same amount of energy that you use, or maybe even more. In that case, those energy credits remain on your bill so you can use them later.

Photovoltaic
PV is the type of solar energy that makes electricity directly out of light; specifically the light from the sun. Here's a picture of a PV panel.

Now here's some things for you to think about when you are considering using renewable energy, specifically Photovoltaic solar.

Almost all solar panels require that you stay connected to the utility grid. Unless you have a big bank of batteries, you cannot store solar electric energy. If you generate more electricity than you need, remember, through net metering you can use the utility grid as a battery. That means that you will always get a monthly bill from NV Energy. If you generate all the electricity you need over the period of a month, your bill will only be for the monthly service charge and for the costs that go to pay for the programs that the utility offers to our customers to help them with things like energy efficiency and renewable energy. If you are connected to the grid, your monthly bill will never go away entirely or be zero dollars.

Every house is different. Two identical houses, right next door to each other may have very different electric bills. This can be due to reasons like more people in one house or more electrical appliances, or even something as unique as one home having an electric car. So, every house requires a different size solar installation to meet their electrical needs.

Solar energy is not free.

While the sun that shines down on us all is free, collecting that energy and making it in to electricity is not. In fact, it is quite expensive when compared with the electricity that you get from the Utility. It is not uncommon for a PV system to take well over 10 years to pay for itself. But, if you think about it in terms of a return on your investment, it is not uncommon to see returns of 7-10% on your investment. That's pretty good these days, especially when you compare it to savings account at your local bank.

If you are going to put solar energy on your home, an upfront investment in the tens of thousands of dollars is likely. Here's a very simple analysis for a simple home. Let's say you have a house that has an average monthly electric bill of $100. That's $100 just for the energy part of your bill, not the meter charge or program costs. That bill is likely higher in the summer and lower in the winter but over the period of a year, it totals $1,200. Let's assume that you want to reduce that bill by 90%. Here's how you would figure that out.

PV systems are sold by sizes, and those sizes are measured in kW. kW means kilowatt, and that means 1,000 watts. Each kW of solar that you install on your home will generate around 1,850 kWh per year. kWh is the unit of energy that makes up your electric bill. Remember that your yearly electricity bill is $1,200. Now, each kilowatthour costs around $.11, so you are likely consuming around 10,900 kWh per year. Remember that each kW of solar can produce around 1,850 kWh per year, so you would need a PV system that is 5.9 kW.

Over the last few years in Nevada the cost of these types of systems has come down a lot. The average cost of PV right now, in May of 2015, is around $4,500 per kW. So, that means to reduce your electric bill by 90% over the period of a year, it is going to cost you around $26,550. In other words, if you spend $26,500, you can reduce your monthly electric bill from $100 to around $10. So your annual electric bill, just for the energy part, could drop from $1,200 to around $120, a savings of $1,080 per year. Remember that you will still have to pay the meter charge and program costs every month. Now, to figure out the simple payback on your project, you just divide the total cost of $26,550 by the annual savings of $1,080 and you get a 24 year payback. But that's not the whole story.

Now, the Federal Government has a 30% tax credit for this type of project. So, for the sake of this example, let's say that you can qualify for and get the tax credit. That would reduce your total project cost from $26,550 to $18,585. Now if you divide the total cost of $18,585 by the annual savings of $1,080, you get a simple payback of 17 years.

And now here is where NV Energy comes in. NV Energy has an incentive program called RenewableGenerations. The program is funded by those program costs that you see on your electric bill and through it, you can get an incentive to help you reduce the cost of adding renewable energy to your home or business.