You have heard that solar can reduce or eliminate your power bill. The power company will purchase any excess power and you can even make money. If you covered a few acres with solar panels, you might even have a nice retirement income.

All of the above is true in states where the utility offers NET metering. Net metering exchanges kWh at the retail rate. The utility pays you the same amount for a kWh as you pay them. No utility in Alabama offers net metering and it exists mostly (maybe ONLY) in places where it is mandated by the state. Net metering is bad for utilities and their customers. Every solar system results in lost revenue to the utility and forces rate payers to subsidize the lost revenue. I think net metering will eventually go the way of the dinosaur.

The intent of a grid-tie system is to offset kWh you would otherwise purchase. This it does. Here is how it works in Alabama. Every kWh you generate and consume saves you the cost of the kWh and the associated taxes, including the state and federal income tax. A solar kWh consumed by the owner saves around 16 cents. That is a good deal. Most Alabama utilities will purchase any excess kWh you generate at the “offset”, or wholesale rate, of around 4 cents. That is a reasonable and fair deal.

Technically, you can offset every kWh your house consumes, making ownership of a grid-tie system very green. However, reducing your power bill is another matter. A grid-tie solar system sized to maximize the return-on-investment will be sized to minimize the generation sold to the utility at the reduced rate. In other words, you want to minimize the kWh you generate and sell for 4 cents. This is the current situation with most all electric coops in Alabama, including TVA.

Alabama Power is a little more jealous of their revenue. They got the PSC to approve a Capacity Reservation Charge, or CRC for short. It is currently about $5.50 per system kWh rating per month. Their take is something like this. The capacity they have installed to serve your house is idle when the sun is shining. But they must maintain the capacity because they have to meet your electrical demand when the sun is not shining. So, they charge you a fee for holding that capacity in reserve. This makes perfect business sense to a utility and I suspect many other utilities will follow this model and small roof-top grid-tie solar will disappear.

Alabama Power likes solar. They own a lot of it. And they seem very friendly to their customers owning solar. But the CRC protects their revenue by essentially putting the generation of your solar system into their pocket. If your goal is to be green, this program works for you. If you are interested in reducing your power bill, not so much.

By the way, grid-tie systems must be connected to the utility to function. They go down with the grid. Many people are disappointed that their grid-tie solar system does not produce power during a grid outage.

But solar is not going away. In fact, it is now a force to be reckoned with and will play a significant role in the future of residential power. Easily 90% of our systems involve energy storage – batteries. These systems reduce or eliminate your dependency on purchased power. They are fully capable of interacting with the grid, but because of the complexity of utility interconnection agreements, most owners choose not to connect their solar system to the grid. These systems power select loads much like an uninterruptible power supply and can push power into your grid panel, reducing your purchased power. No grid interconnection agreement and no permission slip required from the utility. The technology is amazing.

A solar water heater is an excellent way to use solar energy to reduce your dependency on fossil fuels and will save a boat load of money if you replace an electric water heater. Solar water heaters cost less than a modest grid-tie system, break even in around 7 years, and will return around $20,000 over its expected 30+ year lifetime. No permission slip or contract with the electric utility required. This is a better solar option for many people.

Thanks for your interest in solar and I appreciate your reading this blog. We would love to help you tap into the abundant solar resource – the natural and renewable source of energy.

The TVA administers the solar program. Click this link for details. https://www.tva.com/energy/valley-renewable-energy/dispersed-power-production-program The process starts by making application with your electric utility and Co-Ops are not required to participate. Make application, get the information and study it well to understand how this works. You can’t connect a solar system to the utility without a signed agreement (usually lasting 5 years) between your utility and the TVA. Your solar installer must also be qualified and be approved by the TVA.

Let’s start with a few facts about grid-tie solar. First, a grid-tie solar system is grid-dependent. It will not work if the grid is down.

Second, solar is fully capable of offsetting every kWh your house consumes. However, eliminating or reducing your power bill is another matter. There was a time when net metering was popular in parts of the US. Net metering provides for an even exchange of kWh through the meter. In other words, the utility pays you the same thing you pay them. Consider that a TVA utility purchases a kWh at one rate and sells it to you at a higher rate that allows them to remain in business and make a reasonable profit, as regulated by the Public Service Commission. If they pay you the “retail” rate for a kWh, they will lose money when they sell it to your neighbor because of the losses involved in moving energy. This loss is actually paid by the rate payer. Net metering is not a good deal for the utility nor the non-solar owning rate payer. I’m not aware of a single utility in Alabama that uses net metering. Legislated net metering made solar grid-tie systems very popular, but I think they will eventually go the way of the dinosaur.

The TVA does offer options that accommodate those that just want to be green and those that want to lower their power bill via solar. Let’s talk about the latter.

Grid-tie solar systems generate kWh, the exact thing you purchase from the utility. Every kWh your system produces goes to one of two places. If you consume it, it offsets a kWh that you would have otherwise purchased. If you don’t consume it, the TVA purchases it for the offset rate. If you consume a kWh your solar system produces, you save something close to 15 cents. If you don’t, TVA purchases it for around 4.5 cents. This huge disparity tends to keep the grid-tie systems connected to a TVA Co-Op relatively small. A larger system will produce a lot of 4.5 cent kWh, making a large system less profitable than one designed around your average summer and winter consumption.

Solar water heating offers another way to reduce your power bill. A solar water heater costs less than a small grid-tie solar system and breaks even in about half the time. Solar water heaters do not require a contract or a permission slip with the utility or TVA. If lowering your power bill via solar is your goal, I suggest you start by considering a solar water heater. Watch the video on the water heating page for more details.

The prospect said he was interested in having solar panels installed on his roof. When I asked why, there was a long silence.

This is not a hypothetical situation. It happens often. The prospect may be thinking the answer is obvious and pondering why I asked the question, because in most cases, the person wants solar to reduce or eliminate their power bill. They have never thought it can do anything else. So, let’s start with power bill reduction.

By the way, the gravy is at the end. Stay with me…

There is not an electric utility in Alabama that will allow you significantly reduce your power bill via solar. Electric utilities generate revenue by selling kilowatt hours. Anything you save reduces their revenue. They already have the pole, wire, and transformer in place, and they will still restore power during a stormy night if needed. If everyone cut their bill in half via solar, how are they going to stay in business? Yet many Alabamians think that solar will negate their power bill and maybe put some spending cash in their pocket. Sorry, but that is not the case.

Generally speaking, utility companies are not interested in their customers cutting their bill while increasing the utility’s administrative costs. (Somebody has to keep up with what you buy, what you use, and what you sell.) Alabama Power, for example, has removed all financial incentive for owning solar specifically to discourage their customers reducing their electric bills via solar. In the absence of state incentives, every utility in the US will eventually do the same. These kinds of solar systems are going the way of the dinosaur.

But solar has some highly desirable capabilities. It can provide power. It can pump water. It can heat water. It can do all of these things completely independent of the grid. If you are interested in staying your house through a prolonged power outage with some level of comfort and security, solar is the answer.

That said, solar can still help you reduce your power bill. The least expensive solar option is water heating. It also has the strongest return. Watch the video on solar water heating on this web site. And non-Alabama Power customers can reduce their power bill a little by owning a solar grid-tie system. Just be advised that heating water with solar breaks even in about half the time as a solar grid-tie system.

Can we install solar panels on your roof? Of course, we can. But what do you want them to do for you?