Solar Power & Electric Cars--the numbers are better than ever

I admit that I'm biased--I really want solar power and electric cars to work.  This is not because I stand to make any money from either of these technologies.  Much more important than that, I believe that the future survival of humanity requires it.  Check out the current record forest fires in Colorado for the latest warning shout from global warming.

But I also try to be as accurate as possible with the facts.  I know that electric cars and solar power are expensive.  The question is whether they are cost effective.  If people can save money by buying solar panels and electric cars, then they will buy them.  The key issue here is that both of these purchases require big up-front investments.  Since most of us don't have enough cash on hand, that means that we need to borrow it.  The good news is that interest rates keep going down, making these investments better than ever.

Solar is now cheaper than PG&E

For solar, the ideal is a 30 year mortgage.  The current rate for that is around 3.5%.  According to a June 19, 2012 report from Greentech Media the current cost for solar installed in the U.S. is $4.44 (compared to only $2.24 per watt in Germany!).  Using the U.S. figure for our modest 3.24 kilowatt system, the cost would be $14,386.  At 3.5% for 30 years, the Capital Recovery Factor is .054.  Therefore, the cost would be .054 x $14,386 = $777 per year.  Since our system generated 4,371 kilowatt hours (kwh) in its first year, that would come to $777/4,371 = 17.8 cents per kwh, which is slightly less than PG&E's average.

That's the unsubsidized cost.  In fact there is a 30% federal tax credit which reduces the cost to $l0,070.  The annual cost then becomes .054 x $10,070 = $544 per year, dropping the cost to 12.4 cents per kwh, lower than the lowest PG&E rate for standard households of 12.8 cents/kwh.  With these costs any homeowner in Northern California can save money with solar.  It used to be that only heavy electricity users would save money, but that is no longer the case--now everyone can save!

But that's not all!  Because of net metering, solar is reimbursed at the peak rates, while most of our electricity is in the off-peak charging our car.  Therefore, our 4,371 kwh of solar power paid for 6,460 kwh of power.  See Everything is going according to plan for more details on these numbers. Adding $54 in PG&E minimum charges to the $544 payment for the solar means that the actual cost per kwh would be $598/6,460 = 9.2 cents per kwh.

What about electric cars?

The low interest rates also make the additional investment in an electric car more attractive.  For a car that you plan to keep for its life, a 15 year loan would be ideal.  The current rate on 15 year home refinancing loans is around 3%.   A Chevy Volt costs around $33,000 after rebates.  Assuming that is about $15,000 more than what a conventional car costs, what is the better deal--borrow $15,000 or buy a gasoline car? 

If the gasoline car gets 25 miles per gallon of gas, and gas costs $3.75 per gallon, that means it costs 15 cents per mile to drive.  Electricity to charge a car at night is now priced at about 6 cents per kwh (PG&E wants to raise this to 10 cents--see pg&e proposed rate change), so the Volt costs about 2 cents per mile to drive (3 miles per kwh).  This means you save 13 cents per mile compared to the gasoline car.  At 10,000 miles per year that is $1300.  The Capital Recovery Factor for 15 years at 3% is .084, which means that it would cost you .084 x 15,000 = $1,260 to pay off the loan.  In other words the $1,300 you save is greater than the $1,260 it costs to pay the loan. 

So a Volt is a better buy than a gasoline car that gets 25 miles per gallon.  By similar math, a Leaf, costing $26,000 after rebates is cheaper than a gasoline car costing $18,000 and getting 40 miles per gallon.

So  make your next car electric, and you'll be saving money.

"Everything is going according to plan"

One year of solar power & the Volt—how did we do?

Short answer:  “Everything is going according to plan,” to quote Emperor Palpatine.  The solar production exceeded our expectation; the Volt cost 2 cents per mile to drive; and we cut our CO₂ by over 70%.  Still we have a ways to go to be truly sustainable.

The Analysis:

What was our plan?

 Our goal was to provide enough power with our solar panels to zero out our electric bill.  Note that this does not mean that the solar panels would provide all the electricity to cover the car and the house.  Because we charge the car in the off-peak at roughly 5 cents per kilowatt hour (kwh) and because the summer peak hour rate that our utility, Pacific Gas & Electric (PG&E), pays us for electricity that we generate is about 29 cents per kwh, the solar panels do not have to generate all the house/car’s electricity to zero out the bill.  Because PG&E will not pay for any extra electricity that we generate—i.e. there is no feed-in-tariff-- it would not pay to produce more electricity than PG& E will reimburse. 

Comparing the numbers to the estimate

Our estimate was that the panels would generate 4200 kwh , the house would consume 3600 kwh, and the car would use 3000 kwh for a total of 6,600 kwh for the year.  So what are the final numbers?

The solar panels worked like a champ:  4,371 kwh!

Total electricity consumed:                           6,460 kwh

Car electricity consumed:                             2,400 kwh

House electricity consumed:                       4,060 kwh

Final Electrical Bill:                            Summer peak:  -371 kwh x $0.28 =       $103.88 (credit)

                                                                Partial peak:  36 kwh x $0.09 =         $   3.24

                                                                Off peak:  2423 kwh x $0.04 =          $  96.92

                                                Final Total Cost for the year:                           $     3.72 (credit) 

So the numbers came out pretty close to what we expected.  Note that there is an $11 minimum charge per month in addition to this total.  Therefore, the total electricity cost is $11 x 12 months  =  $121.  Also, this is not a final exact amount.  I’ll let you know if the final numbers have any big surprises from PG&E.

Did the Solar Panels save us money?

Yes!  For the 6,460 kwh that we used we paid $121 fixed cost for the electricity.  The solar panels cost $12,000 after the 30% solar tax credit.  Spread over 30 years that comes to $689 per year.   So the cost per kwh was ($121 + 0 + 689) ÷ 6,420 kwh = 12.6 cents per kwh.  This is less than PG&E’s low Tier 2 rate for most residential users, which is 13.9 cents per kwh.  Our rates would have been above Tier 2 if we did not have solar.  The solar panels run the meter  backwards, so we never get out of the low tier Tier 1 rates.

In our case, we also spent about $3,500 upgrading our 1927 house’s electrical circuits up to current standards for the solar panels and electric car.  This brings our cost up to about 15.7 cents per kwh, which is still less than PG&E’s average rate for residential use, which is 18.6 cents/kwh.  Using that average rate, we saved $183 with our solar panels (our electricity cost was $1,011, counting the electrical upgrade, while the average rate cost would have been $1,194).

Also, the cost of solar panel installation has now dropped to under $5 per watt, a 5% savings compared to one year ago, so the cost today would be about 12.1 cents per kwh, virtually the same as PG&E’s Tier 1--i.e. lowest regular residential rate of 12.2 cents per kwh.  Also, solar rates are not subject to inflation, so the savings should get better with time.

The only puzzle to me is why anyone who uses more than the baseline of 300 kwh or so per month would not install solar panels—i.e. most people in California, especially if their house is already up to current electrical standards, and they can qualify to refinance.

If you live in the San Francisco’s East Bay, I suggest you give the guys at Super Solar,  who installed our panels, a call.  Actually now is a perfect time to refinance since interest rates are at record lows. 

Did the Volt save us money? 

The car on the day we bought it a year ago with new electrical conduits and panels installed (we've since painted them white to match the house).

So what did it really cost to drive the Volt?  As reported in the previous post on this blog, we drove 7,900 miles on electricity and 4,800 miles on gas.  On gas, the car gets 37 miles per gallon so that’s about 10 cents a mile, or $480 for the year.  On electricity the car gets about 3.3 miles per kwh, so it used about 2,400 kwh.  This is less than the 3,000 kwh we estimated.  Since most of that charging was at night, the cost for driving the car was 2,400 kwh x .04 = $98.00.  Note that I’m assuming that the household electricity use during the off-peak is about zero since the solar panels produce electricity on the weekend during off-peak times.   If we add the fixed cost of $11 per month and spread it over the average of 535 kwh per month, that adds 2 cents per kwh, so the off peak cost becomes 6 cents per kwh, and the total cost for the car becomes 2,400 kwh x .06 = $144.  This gives a cost of $144 ÷ 7,900 = $0.018 cents per mile, say 2 cents per mile.

Our previous car was a 1991 Honda Civic that got 25 mpg.  Assuming an average of about $3.75 per gallon for the year (as you know gas prices have been going up and down), the Honda would have cost us $0.15 per mile for gas for a total of $1,905 for gas for the year.   The Volt cost $480 for the gas miles and $144 for the electric miles for a total of $624.  So we saved $1,281 this year.

Now that’s not enough to cover the cost of the Volt, especially since the Honda had been paid off long ago.  However, it is enough to borrow $15,000 for 15 years at the current interest rate of 3.25%.  Since the Volt costs $40,000 minus a $7,500 tax credit it has a total cost of $33,500.  Since the savings in gas are worth $15,000, the cost of the car is equivalent to $18,500 for a car that gets 25 mpg, i.e. about the same as an average new car today.

My secret plan

OK, so the car “only” breaks even compared to a new car that gets 25 mpg.  But wait, I’m a very conservative person.  I never plan to buy another car again.  We financed the car for 30 years at 4 per cent interest.    Now I do assume that I will need to buy new batteries in about 10 years, but I think they’ll be modestly priced, no more than regular auto maintenance would have cost.  So how do the Volt numbers look with my 30 year plan?

A gas savings of $1,281 per year is enough to borrow $22,151 at 4% for 30 years.  This means that the cost of the Volt is comparable to paying $33,500 – 22,151 = $11,349 for the car.  And this does not assume any increase in the price of gas!  Anyone want to bet that gas won’t go over $5.00 in the next ten years?

Thus my slogan for buying electric cars—“Save money, Save the planet”

What was the carbon footprint?

The big advantage of a Volt is that it produces a lot less CO₂ and other pollutants, especially when combined with solar panels.  Our Honda would have used 508 gallons of gas to drive the 12,700 miles that we drove last year.  At 27.5 pounds of CO₂ per gallon (see:  How Clean are Electric Cars?)that would total 7 U.S. tons of CO₂. 

Our Volt used 129 gallons of gas for a total of 1.77 tons of CO₂.  The electricity for our house was 68% solar/32% from PG&E.  PG&E estimates 0.524 pounds (238 grams) of CO₂ per kwh (see the same post referenced above), so I calculate 2400 kwh for the Volt  x 0.524 lbs/kwh x 32% PG&E electricity = 402 pounds CO₂ = 0.2 tons. 

Therefore, the total CO2 from the Volt was 1.97 tons, a 71% reduction compared to the Honda.  Note that these numbers are for our car.  I read that the average Chevy Volts is getting 111 mpg, so we are guilty of using more gas than the average Volt owner.  We’ll try to behave better this year.

Is our Volt/household use sustainable?

Unfortunately, not really.  I’ve argued that the earth can only absorb 7 billion tonnes (7.7 billion U.S. tons) of CO₂ per year, so we really only get one tonne each.   Our Volt produced a little less than 2 tonnes.   Since we use about 3 tonnes just on natural gas for our stove, hot water, and household heat, and that doesn’t even count the CO₂ produced at workplaces, we really need to eliminate CO₂ from our transportation system if we are to have any hope of getting down to a sustainable level. 

Fortunately for the Volt, this is not unreachable.  If the gas we used were a low CO₂ biofuel, that would put our gas driving down to the same range as our electric driving, say 0.2 tonnes total.  And if batteries in the future can deliver two or three hundred miles on electricity, we would use much less gasoline on our trips.

What’s next?

So we aren’t there yet, but the Volt is a big step in the right direction, unlike mining the Canadian tar sands, which is a big step in the wrong direction.  Let’s hope that the will for self preservation wins out over the oil companies will for profit this year.  (Thank you President Obama for saying NO to the Tar Sands once again!—see:  http://www.washingtonpost.com/national/health-science/obama-administration-to-reject-keystone-pipeline/2012/01/18/gIQAPuPF8P_story.html  )

Another step in the wrong direction is that PG&E is proposing to raise the rates for electric vehicles from 4 cents per kwh to 11 cents in the off-peak.  While this is still cheaper than gas, it reduces the cost savings for driving electric.  Since electric vehicles are still new, I am encouraging PG&E to retain their rates at least for another two years, when all the rates will be reexamined.

Other steps that we should try to take this year include:

·         Establishing a royalty/severance tax on oil in California.  I just read in Greg Palast’s book, Vulture’s Picnic, that BP bribed the corrupt dictator of Azerbaijan so they would only have to pay a 10% royalty on the oil they extract.  But in California we collect ZERO, nada, zip—we’re giving it away for free!  How outrageous is that.   Even Texas collects 25%.

·         End oil subsidies, such as the modest steps that Obama has suggested, and more

·         Stop the Keystone XL pipeline, no matter what route it takes

·         Add warnings on gas pumps that burning gasoline increases the risk of catastrophic climate change, and encourages people to conserve fuel, to walk, and to use public transit, bicycles, and electric vehicles

·         Support a constitutional amendment that declares that corporations are not people, and dollars are not free speech.  (See http://movetoamend.org/)

And on the home front:  The numbers show that our house used about 4,000 kwh instead of our estimated 3,600.  It could be that the motion sensor floodlights we added in the driveway and around the house account for the extra, or it may be that we just need to turn off the lights more!  I’m sure we can conserve if we work a bit harder.  Also, household-electricity is more expensive than car-charging-electricity since it is more likely to occur during the peak and partial-peak daytime hours.  Fortunately, our solar productivity was also above the estimate so the PG&E bill did zero out.  I would also love to figure out an economical way to add solar water heating.  It just doesn’t seem to pencil out like the solar panels do, especially with an electric vehicle.

Much to do, but it’s been a great year!