Thinking of Going Solar?  As Groucho said, "Outside of the improvement, you'll never notice the difference!"

It would be great to save the whales and clean up our Earth.  Earth could survive a little longer if we reduced our carbon footprint.  Noble intentions are great but there also are some real money reasons to purchase a PV (photovoltaic) solar system for your home:

1)  There is a 30% federal tax credit on the total amount of your installation.  The 2015 PATH Act extended this credit through 2020, decreasing it to 26% in 2020 and 22% in 2021.  The credit is claimed when the installation is in service, so hurry, it's sooner than you think.  If you have to finance the installation or do roof repairs, those costs can be counted when calculating the 30% credit, too.  Tax credits are not tax deductions; they are dollar -for-dollar reductions of your tax bill.  Every $100 of tax credit reduces your taxes $100.

2)  Your monthly electric bill will decline significantly and forever.  Depending on the size of your system, it could be 75-95% lower each year.  Any excess electric you produce during the day gets sold back to Pepco at retail rates.

3)  Future electric rate increases will only apply to the small amount of power you are buying.  But they will continue.  Pepco filed for a 5.25% rate increase for DC residents, a 10% rate increase for MD residents, in June 2016.

4)  Your home value increases because new buyers won't have to pay high electric bills like your neighbors do.  It also increases in value because the asset on the roof increases the value of the home and is a part of the selling price.

5)  Similarly, you can collect higher rent if you are providing electricity to tenants since their utility cost is negligible or zero.

6) A typical 5kW townhouse-sized roof system should run about $16,500, etc.  An average 8 kW system runs about $26,400.   It depends on your roof space, orientation, and shading, among other things.  Out in the 'burbs or in the country, you can consider using a ground-based installation which can be larger and less expensive to install.

7)  Solar systems are almost entirely maintenance free.  Baring the unexpected meteor, slime mold infestation, or volcanic ash blackout, there is almost no maintenance. 

8)   MD offers a real estate tax installation credit, but don't let some installer tell you they're “a sure thing.”  You won’t get it if you live in a Historic District.  But they are only minor, anyway.

9)  Now for the juicy part a lot of people don't know about.  Your system will generate SRECs, Solar Renewable Energy Credits.   The number of credits generated annually is about 1.2 times the size of your system per year.  Power companies in some states are required by law to buy SRECs from home owners as a stimulus to solar installations.  You can sell these credits on the SREC market just like a share of stock.

SREC credit values vary by state.  In MD, for example, the current SREC market is about $20/credit. Install an 8kW system and get $200 of SREC cash per year. In NJ it's $260/credit, bringing $2,600/yr for the same size installation.  But keep in mind it's in NJ.

In DC, the current SREC market is an astonishing $490/credit.  There are restrictions on who can sell SRECs in DC.  Systems must be "in DC," but some MD systems in older suburbs (like mine) are part of the DC power distribution network and qualify as "DC-based systems".  I have the map, ask me for it!  That 8kW system could bring $4,900/yr, speeding the payback significantly. 

DC City Council passed legislation, B21-0412  June 28, 2016, extending SRECs at the current $500/maximum rate through 2023, then tapering down to : 2024-28:  $400;  2029-32:  $300;  2033 – thereafter: $50.  It's a huge amount of payback, averaging $413/ SREC/ Year for the next 15 years. 

In our two examples above, the 5 kWh system that cost $16,500 already got a $4,950 Federal tax credit the first year and should generate about 90 SRECs worth $37,200 through 2032.  Did I mention you won’t be buying (much) power from Pepco? 

In our 8 kWh example that cost $26,400, you already got a $7,920 Federal tax credit the first year, and you should generate about 160 SRECs worth $59,520, and only pay tiny Pepco bills.

A quick rule of thumb:  if you are a DC system, the Federal tax credit gives you a 30% refund the first time you file taxes,  SREC’s alone will pay you 250% of your investment, and you won’t be buying much power from Pepco.  After 2032, you’ll still be producing a lot of free power. 

What’s the best deal? Some large commercial installers make large profits.  Non-profit ad hoc solar buying cooperatives are proliferating, so check out DCsun.org or MDsun.org.  Join their mailing list and see when a group is forming near you.  I saved 10% on my installation compared with the 6 commercial bids I'd received earlier.

Should I Buy or Should I Lease?  Most of the commercial companies offer you a "little or no cash down" deal where you lease them your roof, they install their system, and they sell power back to you.  There are no tax benefits for you if you "lease" the system or if someone else owns it.  No tax credit, no SRECs, no nothing.  And under most agreements,  you will pay almost as much for the power you use as you paid before. That means if a system is installed on your roof but some company owns it, you'll pay them a slightly reduced amount monthly for electricity and you get none of the credits listed above.  The system owner (in that case, the company), gets all those credits.  Don't be fooled: "nothing down"  means “nothing gained,” and you'll still be buying electricity from a big company.  Your electricity costs will increase steadily, the savings will be marginal at best; they usually guarantee it in the lease!

O.K., How About Some Specifics?  Great question, thanks for asking!  We turned on our 8.7kW system 2/27/15.  The roof is in MD but qualifies as a DC system.   In the first 21 months we produced 13,200 kWh (or 13.2mWh) of power, and bought only 704 kWh from Pepco. The total of all bills in the first 21 months was $448.29.  Most months we made more than we used but paid mostly transmission and connection charges that keep their system operational.  We still need Pepco at night so I don’t mind supporting the infrastructure.  August and Sept 2016 were so hot we used air conditioning more than normal.

In the 21 month period before solar we purchased 22,350 kWh (or 23.35mWh) from Pepco for $3,301.  Before solar our average monthly purchase was +1,064kWh.  Now, we’re buying only 39kWh per month from Pepco. 


Initial solar investment                 $29,300

Installation tax credit                    - $8,790

Not paid to Pepco                         - $2,620,

Sale of of SRECs                          - $8,945  

We’ve recovered 69.5% of the investment ($20,355) in 21 months.  The remaining $7,705 should be recovered from SRECs and savings in 13 months, around January, 2018. 

After that, it’s essentially nearly free power plus another $62,000 of income from sale of SRECs through 2032 and not paying $22,500 or so to Pepco.  That’s about $84,500 in income and savings after we break even.

We’ve paid Pepco and average $22.83/month (a total of $448) for 21 months, saving $2,620. How much was your electric bill?  Average electric rates have increased 44% (>3% per year)  in the past 13 years.  Pepco filed for a 5.25% rate increase for DC residents,  a 10% rate increase for MD residents, in June 2016. How much do you think your bill will be in 2026?  2036?