Clean energy systems (solar) all have an up front capital cost (around $15,000 for a 3 kW system). The whole system must be paid for before the first kWh of energy is produced. You essentially own your energy production and become your own “utility.”
Our normal “brown” energy is sold by the kWh (kilowatt- hour) for around 10 cents here in the areas that TVA (our friendly local energy monopoly) serves. The “average” house uses around 1000 kwh’s per month for a monthly bill of $100.
Traditionally we Americans have gotten used to paying each month for the power that we use. Our electric bill unfortunately seems to keep going up. Our local energy monopoly has had 3 price increases in the past year! The latest increase was blamed on a “mild winter” with customers using less energy than previously expected— so, TVA decided to raise the rates. We are not even talking about the extra money that TVA has put on all of our electrical bills ($.69 per bill) for the next 13 years to pay for the Kingston fly ash spill clean up costs.
Basically we are forced to pay whatever the energy monopoly prints on the bill and sends our way. We can try to reduce our usage to minimize our expense, but we are stuck with the bill!
I am not sure if the protected energy monopolies have our best interest in mind. They quickly raise OUR rates when THEY make mistakes (in estimating seasonal usage or by inadvertently dumping fly ash into our rivers).
What will happen when the cost of raw coal increases?…. Easy- The monopolies will raise our rates.
What will happen when the cost of transporting coal increases (because of sky high fuel costs)?…. Easy- they will raise our rates.
What will happen when coal costs more to mine because they can no longer endanger miners lives by ignoring safety regulations? Easy…. they will raise our rates.
What will happen when the utilities must clean up their emissions? Easy…. they will raise our rates.
What will happen when their proposed nuclear reactors cost more to build than they initially claimed? Easy…. they will raise our rates!
What will happen when nuclear fuel becomes scarce or highly regulated? Easy…. they will raise our rates!
And what can we do about it? Keep quite and pay your bill!
The energy monopolies can basically charge us whatever they want (in collusion with their “regulators”- the ones who grant their “monopoly” status). The only folks who are left out of the discussion are us lowly “ratepayers.”
These rates have been escalating at around 5% per year. We can conservatively estimate that rates will continue to escalate at the same rate. TVA itself assumes prices will escalate on this trajectory. So, get ready for some higher electrical prices.
The monopolies are protected landlords… they basically rent you their electrical power production. If you owned your own power production you wouldn’t need to rent any power production from them. For instance, if you owned your own solar system and generated enough electricity to run your whole house you could feasibly unplug from the “grid” and be your own power source. You would be an “energy system owner.” That is comparable to a “home owner.”
The same questions are legitimate for home ownership as are for energy system ownership. Is owning better than renting? Which is less expensive? Which makes more sense?
It depends….. home ownership was seen as an American right for so long and people assumed that home prices were always going to escalate. Home ownership seemed like the ONLY wise choice for many years.
With the bursting of the housing bubble many folks have re-visited the “ownership” question and many have decided that renting can also be a wise move (at times). It depends on so many factors….. some of these include…
- how long you are planning on staying in the house?,
- what kind of a downpayment can you afford?,
- what is happening with the neighborhood?,
- what is happening with your employment?,
- what do resale values in the area look like?,
and many other factors.
With energy production it is a little different. The prices will definitely continue to rise. Nobody at the power monopoly will bat an eye when you estimate that prices will increase at 5% per year. They know it will happen, as it has been happening like that for years!
Producing some of your own power can be a tremendous investment. A solar system that produces electricity each month will automatically be getting at least 5% MORE valuable each and every year (as the cost of electricity rises). This is like locking in a house that you know will increase in value each and every year. Guaranteed appreciation. This is one of the reasons that energy “ownership” can be much better than simply “renting.”
On top of the guaranteed appreciation that energy production ownership affords, you can also know that you will never have ANY fuel costs. ALL of the fuel costs for the next 25 years (warrantied lifespan) of the solar system have already been paid up front. No matter what happens to the cost of coal, gas, propane, natural gas, etc. you have already protected yourself with an “energy hedge”. Your prices will not increase.
So you can lock in your price of electricity for the next 25 years. (Actually, the useful lifespan of these solar systems is more like 40 years). If you spread out the cost of the system per kWh produced over it’s whole lifespan you find that for 40 years you will have paid an average of under $.06 per kWh. Under $.06 per kWh for 40 years!
The current rate for electricity today is $.10 per kWh. So, assuming that the cost of electricity NEVER went up in the next 40 years, you would still be only paying 6/10ths as much for the solar generated electricity.
At a 5% rate of increase- 25 years from now we will be paying over $.32 per kWh to our friendly local energy monopoly. The solar system will still be generating electricity for $.06 per kWh. You’ll be laughing all the way to bank. More likely your neighbors will be crying all the way to the “quick loan” store to cover their energy bills… Notice that smile on her face as she gets ready to pay her electrical bill!
If prices increase faster than the estimated 5%…. that is only better for solar energy AND for you.
You are guaranteed to save money in the long term owning your own solar energy production. The main issue that currently makes us hesitate is that we need to come up with such a large up front capital investment. We have to buy the power plant before we can realize the savings.
At SimpleEnergyWorks we are working with financiers who are interested in providing loans for these clean energy systems. (They realize what a stable and lucrative investment clean energy is!). They will loan up to $25k to those with a good credit history for a solar system. These loans are available for homeowners, even if you don’t have any equity in the house. In other words, when you install a $25k solar system on your house, the lender knows that your house is now worth $25k more than before- that is where your equity (and their security) comes from!
The loans for businesses to install a solar system are even better!
The up front cost of a solar system should no longer keep anyone from “energy independence” and “energy production ownership.” Energy Producers are the new Home Owners… it’s time to leave your landlord behind!