But Why Cant The Utility Just Pay Me Money For The Electricity I Produce
Utility net-metering regulations are another reason why this scenario is not possible. In most areas, utilities will exchange kilowatt-hours one to one when their customer produces electricity through the use of solar panels. However, utilities also have regulations on how much production can come from a solar system in comparison to how much electricity is used directly by the customer. In most cases, this production ceiling is under 100% of the total yearly usage for the customer. If a customer would overproduce on an annual basis, the utility may pay them only a nominal percentage of their typical cost per kWh. Again, going back to our empty lot example, there is no usage from the empty lot, so all of the electricity that the solar system would produce could only be sold to the utility at the nominal percentage, meaning little to no income for you.
Commercial solar installations will reduce overhead costs and help your bottom line.
What About Net Metering
Net metering is another way to generate money for your solar array. However, its tied to your local utility company and how much solar electricity your commercial building uses versus how much it generates. With net metering, your utility company puts a meter on your solar installation. When the meter spins forward, youre using the utility companys electricity. When it spins backwards, youre powering your company with the electricity your solar array generates.
If you use more electricity than you generate, you pay the difference between those two amounts. That difference appears on your utility bill for that month. If you generate more electricity than you use, the utility company puts a net metering credit on your monthly bill. That credit will appear as a dollar amount.
Before you look into this option, you should make sure your state has a net metering program. Connecticut, for example, is currently phasing out their net metering program. New York, Massachusetts, and Rhode Island, on the other hand, all have net metering programs in which businesses can participate. If you participate in a net metering program, its a great way to offset the cost of installing solar panels.
You Need To Know How Much You Pay On Your Electric Bill
This estimate assumes you will get all of your power from solar. While some homes will be able to get 100% of their electricity from solar, or even sell some surplus energy back to the grid, others will still have an electric bill to supplement usage. This will vary widely from home to home, depending on how many solar panels are installed, normal energy consumption and more. Get more tools to calculate your home’s potential savings here.
Now you have a sense of how much energy you’ll save, login to your electric utility company account and calculate an average of your last several electricity bills. Go back at least six months, if possible, to account for seasonal temperature changes and other fluctuations in cost. Let’s assume you get 100% of your usage from the panels and currently pay an average of $125 per month in electricity bills, or $1,500 per year. Now you have the information you need to estimate the payback period for solar panels.
Read Also: Is There A Government Scheme For Free Solar Panels
See About Tax Benefits
Many states offer tax incentives to homeowners who take steps to make their homes more sustainable and energy-efficient. Thinking of installing solar panels? You can claim the federal solar tax credit and, depending on where you live, a state-level tax credit or rebate, too.
Find out now: Do I need life insurance?
Investing In Solar: Seven Ways To Make Money From Solar Farms
Considering Investing in Solar?
While our quest for a clean and green energy source is getting some positive vibes, the renewable energy industry is also open for investment. Just like any other investment, the renewable energy sector requires you to consider the investment horizon and risk tolerance. In fact, you should start with the least risky investments that offer a maximum time horizon.
The economic growth of renewable energy has been outstanding. As time is passing, more and more individuals are investing in this field to get their share. For instance, investing in the solar power sector is a great idea to multiply your money without any serious risk.
Moreover, companies involved in the production of green energy are getting relief from governments such as solar tax credit in the U.S. Also, the prices of solar panels have continually been decreasing and making solar a much more viable option compared to alternatives.
However, there is a significant issue that precludes investors from making their move. This relates to the fact that investors dont have an idea of where to start. There are mixed opinions about how to invest in solar. Some prefer to invest in solar companies, while others want to invest in solar funds.
Apart from these, you can think about some other ways to invest in solar.
Also Check: Should I Set Up A Sole Proprietorship Or Llc
Estimate How Long It Will Take To Pay Off Your Solar Panels
First, multiply your solar panel cost by 0.26, which is the tax credit you receive for installing your system. If you spend $20,000 on it initially, your tax credit is $5,200. That takes your initial investment down to $14,800.
Now, let’s factor in energy savings. Divide your initial investment by the $1,500 you typically pay the electric company per year that’s how long it’ll take for your savings to equal the amount you spend. Using the example above, you’d divide your initial investment of $14,800 by $1,500: The result is a payback period of just under 10 years.
That might seem like a long time on the surface, but solar panels can easily last 25 years.
You can further expedite your payback period by selling renewable energy certificates, or RECs. These are measured in megawatt hours of electricity that come from a renewable source. Electric companies must purchase some electricity from renewable sources, meaning you could save more by selling energy generated by your solar panels.
Bring your home up to speed with the latest on automation, security, utilities, networking and more.
Selling Your Home With A Solar Lease Vs Owning Your Solar Energy System
Potential homebuyers will pay more for your property if you own your solar energy system than if you lease.
Selling a house with owned solar panels is more straightforward than selling a home with leased panels. There is no leasing contract to transfer, the solar installation just comes as an asset to the home.
If youâve leased your solar installation and your buyer doesn’t mind taking on the lease, they’ll have to pass a credit check and fill out some paperwork – it’s relatively painless when compared to the house sale paperwork.
Also Check: Do I Need A Separate Bank Account For Sole Proprietorship
Check With Your State And Utility Company
Over 40 states allow for some kind of net metering. Translation: households that generate electricity through residential solar projects can receive checks from the power companies for excess energy sent to the grid.
Heres how it works: while youre off at work during the day, the solar panels on your home generate electricity that gets stored on the grid as credits. You draw down those credits when you come home and turn on the lights, but if over time you generate more credits than you use, you can sell the credits to the power company.
The rules and rates for selling electricity to the grid vary from state to state, as well as by utility company. Some make it easier than others, and there are caps on how much each household can sell via net metering, to prevent people from fleecing the utility companies.
Recently, theres even been a push to make it harder for folks who generate renewable energy to sell it back to the grid. Opponents of net metering argue that people who generate their own electricity should pay the utility company for the privilege of using the grid. Its another reason to take advantage of the money-earning possibilities of net metering while you can.
Facility Is Available In These States
Solar Energy is available for sale in Punjab, Madhya Pradesh, Rajasthan and Chhattisgarh. Under this, you can sell the surplus power produced from the solar power plant to the state government by connecting it to the power grid. In return, the government gives you a good amount. The state government of Uttar Pradesh is also running an incentive scheme to use solar power.
Read Also: Does Pine Sol Get Rid Of Mice
How Did The Old System Differ
It was called the feed-in tariff and there were two payments a generation tariff and an export tariff. The scheme was launched in April 2010 and closed for new customers at the end of March this year. Those with existing contracts are not affected and continue to be paid.
The generation tariff paid for all the electricity that households generated. Rates were set by the government and depended on when you signed up to the scheme and the size of your solar PV system.
Rates were much higher in the early years some paid more than 50p per kilowatt hour, but were cut over the years and fell to around 4p for new customers by March this year. Once you had secured a rate it was fixed for the life of your contract, typically 20 or 25 years.
The export tariff paid homeowners for the surplus energy they exported to the grid. Rates were fixed by government for the entire contract term and were around the market rate for electricity. It was 3.82p/kWh until August 2012 and then 5.38p until the FiT scheme ended. For all households under the FiT this rate is paid on 50% of all the energy generated by the solar panels. The actual amount exported to the grid is not measured, so everyone gets this regardless of how much electricity they actually export.
What We Know About The Export Payment So Far
The export payment was scheduled to start in July 2021. However, it has been delayed until H2 2021. As of October 2021, the Commission for Regulation of Utilities is running a consultation on the details of the scheme. A final decision is expected in November, following legislation from the government.
Homeowners, businesses, farmers, and non-profits will all be able to participate. The plan is for the scheme to have two parts:
Read Also: How Many Solar Panels For 30 Amps
Selling To The Utility
When a solar-generating company “sells” electricity back to the grid, it is in essence receiving credits, rather than cash. These credits are different from SRECs. Solar technology company Solar World cites a savings of over $223,000 in utility bills over 25 years for a 77.8 kilowatt commercial system in North Carolina. Selling power is particularly advantageous for time-of-use payment structures where utility rates are highest during the day.
Because PV systems produce the most power during the day, producers are able to sell high at that time, extracting additional gains. When the solar installation produces less, at night, it is buying power from the grid at lower rates.
References
Solar Energy Rollovers And Reimbursements
Its not enough to know if your state or utility company allows net metering. You also need some understanding of the fine print, since not all net metering programs are created equal.
First, find out if net metering credit be rolled over from month to month. Similarly, what happens to unused credits at the end of the year? Do they expire? Are they paid out at a lower rate than monthly surpluses?
Its also important to determine whether your utility company charge a monthly connection fee. More importantly, find out exactly how much utility will pay for the excess power you produce through net metering.
The majority of states pay retail rates for surplus electricity so the utility pays you the same rate it charges when it sells its electricity to you. About 10 states, however, pay consumers avoid costs rates, which are basically what it cost the power company to produce its electricityand these are lower than the retail rate.
Find Local Pros
Recommended Reading: How To Make A Simple Solar Panel
Could I Make Money By Selling My Feed
Some companies claim you could earn up to £20,000. You continue to use the free electricity generated by your solar panels.
The actual amount offered is calculated using factors including the feed-in tariff rate you receive, the number of years you have left to receive it, the size of your solar panel array, and your current generation-meter reading.
These schemes promise a large upfront payment. Otherwise you would receive your feed-in tariff gradually, over 20 years, as your panels generate electricity.
Calculate how much you expect to receive from your feed-in tariff payments in total, and compare this with the upfront sum offered by the solar buyback company.
Although youll have to wait longer to receive the total amount, its likely youll be better off this way in the long run. It would not make sense for the companies otherwise.
£14,250
amount one Which? member expects to earn from their feed-in tariff. A buyback company offered them £4,987
One Which? member told us a company offered them £4,987 for 19 years worth of feed-in tariff payments. But over the same period of time, the member expects to earn £14,250.
Sell Your Electricity Back To The Grid
Sure, we know that electricity is technically a quantifiable resource. But it’s a bit hard to conceptualize processes like buying and selling it because, well, we just can’t see it. Renewable energy certificates, or RECs, help to bridge that gap. RECs are certificates issued by the government establishing ownership of renewable energy. One REC is issued for every 1,000 kilowatt-hours of energy funneled back into the grid.
PURPA requires that utilities purchase a certain amount of their electricity from renewable sources. RECs essentially serve as proof that they’ve fulfilled this obligation. So although RECs won’t charge your laptop or keep the lights on in your apartment, they allow renewable electricity producers to profit while giving traditional producers an easy way to go green — vicariously.
So how much money can you make selling electricity back to the grid? Since rates vary with the market value of electricity, there’s no set dollar figure that you can expect to take home. However, many home producers make around $3,000 per year from a combination of REC sales and governmental clean energy incentives.
Sounds great, right? But before you commit to an investment in renewable energy, make sure you have the full story. Here are a few things you should ask your electric company before getting started:
Still can’t get enough? Check out lots more links about electricity resale below.
Recommended Reading: Is Leasing Solar Better Than Buying
Through Starting The Business Have You Learned Anything Particularly Helpful Or Advantageous
The number one thing Ive learned while starting and running multiple businesses is that you have to be ready to adapt. Sometimes your marketing just stops working, or the economy changes. Better to be lean and mean, and ready to pivot, when and if things change.
Early on, our direct mail campaign was killing it. However, soon our production started to slow down because we didnt have the ability to do appointments beyond a certain driving radius. The eventual solution was to develop solar phone sales and to open our own call center. We adapted by making a pivot and were able to move forward.
Describe The Process Of Launching The Business
After testing out our marketing campaign and locking up a finance partner, we were ready to launch,
In the beginning, we didnt have a team of solar sales reps, it was just me setting appointments and then sending out one of my former loan officers to pitch the program. We set appointments, answered the phones, sold systems, and processed paperwork with just two people.
Targeting Orange County, the direct mail campaign and sales script worked so well that we were immediately setting 3-5 sales appointments per day, and we had to bring in a couple of seasoned veteran solar sales reps to handle the volume. With closing ratios averaging between 24-40%, our production started to grow very quickly.
Since we started on a shoestring budget, we waited until we actually had production, before starting to hire staff. As we grew, we quickly had to scramble and hire more appointment setters, permit runners, operations personnel, and installation crews. We havent taken any venture capital or investment money, everything has been self-funded.
Recommended Reading: How To Get The Best Solar Deal
How We Design Solar Arrays
When we design a solar system for your business, farm or home, we design a system that will meet about 100% of your total yearly electricity usage. Some years you may use less electricity, and some years you may use more, so this percentage will possibly change from year to year. However, we try to design a system that will yield the greatest benefit to you and help you save the most amount of money because we know you have better uses for your money than electricity.
Estimated Profit Margin For Solar Panel Businesses
As more people, cities, and states turn to renewable energy sources, the solar panel industry is enjoying a healthy growth of 15 percent annually, according to reliable statistics. Coupled with ongoing technological improvements and reducing costs of materials, solar power is becoming more affordable and appealing to both residential and commercial clients.
However, even if a solar panel business leases solar panels, their profit will depend entirely on the number of panels they have installed. A typical profit margin in this business is about 6 percent per year, but this requires a long-term investment strategy and a total consideration of the factors mentioned above.
Recommended Reading: How To Save Solar Energy
