Remember the good old days of the mid-’90s when a gallon of milk only cost you $2.50 at the store? Now your average cost is $4.40. So, what will this household essential cost you in another decade?
No crystal ball can predict this. While you can’t count on keeping all your household or business expenses low as the years go on, solar is one tool to essentially set your price ahead of time for electricity.
What if you could hedge against inflation by controlling this key recurrent expense – for keeping the lights on and heating and cooling your home or business space? When planning to potentially add solar, you can check your current utility rate against what that would be long-term with photovoltaics. The best way to understand this long-term is by calculating your levelized cost of energy.
First, be sure solar works at your specific site. The latest advancements in technology help accurately predict the performance of a solar system. Industry software tools determine how solar might work for you. The software replicates the performance of sunlight converting to electricity specifically on your roof. It enlists 10 years of weather data in a specific geographic location, taking into account the azimuth and panel tilt. If you want to try this for yourself, the National Renewable Energy Laboratory (NREL) has a simplified version of modeling software at this site called PV Watts.
Levelized cost of energy (LCE) takes into account the up-front cost of installing a solar array, plus the cost to maintain the system over time, to determine your cost per kilowatt-hour. kWh is the way utility companies bill you for your energy usage. If you receive a federal energy grant or tax incentive, this can further lower your cost, leading to a faster payback of your solar installation and a lower cost per kWh. The NREL site has this free Levelized Cost of Energy Calculator. You can also enlist a solar professional to help calculate LCOE.
Could supplying some of your own electricity through solar cut your costs long-term? Perhaps. For instance, if you currently pay your local utility 12 cents per kilowatt-hour, and a solar installation’s LCE is 6 cents per kilowatt-hour, then you could potentially cut your cost for electricity in half over the long-term. If you create even half of the electricity you need through solar, maybe you would still curb costs significantly. You’ll want to look at the numbers.
Here is a look at KUB’s Business Electric Rates and Residential Rates per kilowatt-hour. Your costs, options and the way you work with your utility when adding solar could vary depending on whether you are in a residential or business setting. You would want to check with your utility as well as ask for help with planning from a reputable solar designer and installer.
What can that lower, set cost of electricity mean for you in the long run? It means risk mitigation and a competitive edge. It means one less thing to worry about when running a business or a household.