My topic for today’s post might appear to be at odds with the main subject of our blog, which is how we can use bikes of various shapes and electrical enhancements to address practical transportation needs. However, if you’re patient enough to read (or skip directly) to the punch line, you’ll see how this relates.
We bought our electric car (a Nissan Leaf, which I described here) exactly one year ago, and we bought a fairly large solar panel array two years ago, so I now have enough data on each to draw some conclusions about their costs and benefits. As I look at the data, there are no huge surprises, but having this data in hand helps me understand how these might fit into our nation’s energy future. I hope my observations will be helpful to you too!
The solar panels
Our solar panel array consists of 33 SunPower solar panels, with a combined maximum power rating of 7.4 kilowatts. In practice, we produce only about 80% of the max (just under 6 kilowatts at noon at the peak of summer) because the panels are not optimally oriented towards the sun. For optimal performance, we would have needed to stand the panels up on our roof rather than mounting them flat, which wouldn’t have looked nice for the neighbors. That less-aerodynamic orientation would have increased the risk of damage during the infamous wind storms that often howl through Seattle in November, so we decided to be conservative.
Since we installed them in May, 2010, the panels have produced about 6.3 megawatt-hours of energy each year. That’s enough to completely power the electric car, and still have about 40% of the output left to offset the electricity we use to run the house. In addition to reducing our electric bills significantly (we actually pay nothing for electricity during the summer), our local utility pays us 15 cents for every kilowatt-hour we produce during the year. Once a year, they send us a check for almost $1000.
Sounds like a no-brainer, right? Well, the sticky part of the equation is the initial investment. The price of solar panels has since dropped due to heavy competition from China, but at the time we bought them, the whole installation cost $50,000. Fortunately, there were a few incentives that reduced the cost. Our local sales tax was waived (a savings of almost $5,000), and we qualified for a federal tax credit that brought the final price tag to $35,000.
Even with the tax incentives and the higher-than-retail compensation we get from our utility for the energy we produce, we won’t recoup the cost of the solar panels for about 20 years, close to the length of the warranty on the panels. From a purely economic standpoint, justifying solar panels in Seattle isn’t easy: we are too far north, we have too many cloudy days, and an abundance of cheap hydro power makes it difficult for solar power to compete. There are places where solar power is a better fit. For example, my brother installed a solar array for his home in California. The stronger sun, more sunny days, and more expensive electric rates will make his system pay for itself at least 2 times faster than mine.
Many of the important factors in this cost-benefit analysis are changing fairly rapidly. For example, the cost of solar panels has dropped by about 10% since we bought them. More crucially, Washington state is supporting its own in-state manufacturers by offering a credit of 54 cents per kilowatt-hour of energy produced by locally-manufactured equipment, more than three times the credit I get. This could reduce the payback time to 10 years rather than 20.
Another interesting development is volume discounts for groups of neighbors that install systems at the same time. These discounts can reduce costs by around 20%. Perhaps solar in Seattle will become a no-brainer after all (at least until the 30% federal tax credit expires in 2016 – I can see a big rush coming as we get close to that date!)
Although our system was expensive, do I regret our decision to go solar? Not at all. I feel that this is one way my family can take practical steps towards reducing our carbon emissions and our impact on the planet. I do many things to minimize the time I spend driving, for example, but when I have to do it, I use electrons harvested from our own roof. It’s comforting to know I am driving in the least impactful way I can.
We have driven the Leaf a little over 1,000 miles per month since we bought it. When I analyzed our utility bills, I was surprised to find it was adding less than I expected to our electricity consumption. Our average increase from the prior year was about 300 kilowatt-hours per month. Assuming we bought that power from our utility, it would cost about $27 per month (about 9 cents per kilowatt-hour with the surcharges we pay to use only sustainable energy sources). That’s less than 3 cents per mile, almost 8 times cheaper than driving our mini-van.
Every time I admire the Leaf’s smooth, quiet yet quick acceleration, I wonder why these cars aren’t more popular (although I see quite a lot of them in the Seattle area). There are two difficult problems: battery range and price. The 100-mile range drops to only about 80 miles in the winter. The batteries don’t produce as much power in cold weather, and there are places that are much colder than Seattle. Although the car is great for trips around town, it’s really out of the question for the 3-hour trip to Portland or Vancouver, BC.
With a list price of more than $32,000, the Leaf costs at least $15,000 more than comparable small passenger cars. But a new Leaf still qualifies for a federal a tax credit of $7,500, so the final cost difference is reduced by half. Compared to a $17,000 gasoline-powered car getting 30 miles per gallon, we save about $900 a year in fuel costs (assuming our cost for electricity and our relatively high cost for gasoline). At that rate, it would still take over 8 years to recover the extra cost of the car. To tell the truth, I don’t expect to be driving this car 8 years from now. I am confident that battery technology will improve enough that there will be more attractive options available in half that time.
There are a few mitigating factors, however. First, the cost of maintaining the Leaf is very low. There are no oil changes, no spark plugs, carburator, distributor, transmission, or radiator – almost none of the complex parts that you have to service and repair in a normal car. Even the brakes see little wear since you’re using regenerative braking and charging the battery if you brake smoothly. My first annual maintenance visit to the dealer cost $300 (they checked the battery, rotated the tires, changed the brake fluid, and detailed the interior of the car).
And maybe it’s not fair to expect the Leaf to save money compared to gasoline-powered cars. If you were to buy a new Toyota Prius, it would cost at least $24,000. Compared to the same car I used to benchmark the Leaf, the Prius will save $640 per year (assuming gas costs $4 per gallon), for a payback interval of 11 years. Given the costs of electricity and gasoline in Seattle, the Leaf beats the Prius!
Like the solar panels, the Leaf is a long-term investment that delights us and has environmental benefits. But we must face the facts. For a variety of reasons, this isn’t something that everyone can do.
What can we do?
Until now, I would say that the Leaf is a better fit for the Seattle climate than solar panels. Given the number of Leafs I see on the road compared to solar panels I’ve seen on rooftops (two other houses that I know), I think others in our neighborhood have reached similar conclusions. Perhaps that will start to change.
If you don’t have the money or the inclination to invest in solar panels or an electric car, is there anything else you can do? I bet you already know the answer to that. A bike with or without an electric motor is at least an order of magnitude more efficient than the Leaf, and has other fitness and societal advantages as well. Many of these are described in previous articles in this blog.
If you’re contemplating even small steps that you can take to improve the environment, I applaud you. These steps aren’t easy at the moment, but I see signs that make me hopeful. In the meantime, our individual actions can collectively initiate change that has eluded our world leaders and politicians. It would be tremendously empowering for future generations to look back on the challenges of this time and realize that positive results were achieved through the informed decisions of citizens, rather than grand treaties and government decrees.