How to Save Money » Frugal Living

How To Screw The Power Company

As an admittedly cheap bastard frugal guy, I cringe at opening my bills each month. Sure, I like having things like running water and heat, I just don’t like paying for them. Even though utilities are incredibly cheap, I still don’t like paying. Imagine all the money I’d have if I didn’t have to pay utilities. I could spend it on all sorts of other extravagances- like potato chips. Have I ever mentioned how awesome chips are? Oh, only every minute? Never mind then.

We’ve established my hatred of paying for utilities. How can you avoid paying for them? Well, beyond illegally squatting in your neighbour’s basement, there’s no way to get free utilities. But what about minimizing them?

Enter Solar Power

One of the ways that’s become popular is buying a solar power system for your home. Especially if you live in a warm climate with a lot of sunlight. Before you go down to the local Canadian Tire and start buying solar panels, is the idea even feasible? Just how much will it cost? This blog post will attempt to answer some of those questions, and will probably fail. Don’t say I didn’t warn you. Keep in mind that I have zero practical experience in this arena, nor do I even know anyone who is doing this. With that out of the way…
A solar power system has two components, the panels themselves and the battery system. In simplistic terms, the panels convert the sunlight to energy, where the battery stores it, since your house will use energy even when the sun isn’t shining. The panels are installed on the roof commonly, meaning you might have to replace your roof before even embarking on the project. Let’s assume your roof is relatively new, so onto the next step. How much does it cost to install?

Cost of Solar Power

Well, this is where it gets murky. Canadian Tire has a 85 Watt panel currently on sale for $600. An 85 watt panel will produce 85 watts per second, which is just enough to… power a 60 watt light bulb with a little room to spare. Doh. You’re obviously going to need more than one.
According to this article (easily the most useful one I found on the topic) having 720 watts worth of capacity will mostly power a normal house. 9 Canadian Tire panels would give you 765 watts, at a cost of $5400. As is the nature of our economic system, I checked around, and the cheapest I could find after my exhaustive search (read: 3 minutes on eBay) was about half that much from a wholesaler out of Montreal.
That’s just the cost of the solar panels. If you’re a relatively handy guy, you’ll probably be able to install them yourself. If not, you’re looking at maybe $500-$1000 for installation. Once they’re installed, you can either install a battery system to draw on when it’s dark, or simply draw from the existing power grid system at night. You’d sell your excess power back to the grid during the day (often at attractive government mandated prices) and then draw off the grid at night, meaning the cost would approximately be a wash.
There are also tax incentives available for home owners who take the initiative to install a solar power system. In Ontario, the provincial government is willing to let a homeowner write off the HST paid for the system, a 15% savings. Many other provinces have similar incentives for solar power. The federal government is willing to kick in $500 assuming the components of the system are on their approved list. We’re not talking huge amounts of money here, but a few hundred bucks here and there help make the system more economical, which is the real reason we care.

Should You Bother?

Understandably, you’re probably a little nervous about this. Solar power has come a long way since you were first amazed by a solar powered calculator, but is it feasible for your energy needs? I’m not going to pretend this piece is the penultimate authority on the subject. However, the cost seems downright reasonable. Just how much money can you save?
Assuming the system costs $7500 to install (a generous estimate, to be safe) and you pay $100 in power like I do, your investment in solar power pays for itself in a little over 6 years. Considering the solar panels have an expected life of 25 years, you could have next to free power for 19 years. As demand for energy continues to go up, the price of said energy will surely increase as well, meaning the return becomes even more attractive in the future.
What’s most exciting about this concept is that solar energy isn’t very far away from being a mainstream source of energy, even in a cold place like Canada. A key part of thinking like a wealthy person is not being dependent on others. I don’t know about you, but I’d enjoy the freedom of no longer having a power bill. As long as the numbers make sense.

Comments

  1. Sustainable PF

    I think the ROI might be a little under-estimated here.

    In Ontario, the microFIT program lets you sell power back to the grid at around to 10x the rate you buy it at. From what i’ve read, you need close to a $40,000 investment to make it worth it. So if you include interest on the loan to buy and install a professional grade system (the Crappy tire panels won’t last 25 yrs – I have screwdrivers from Crappy tire that are done in a year and there are no chips or electronics in those!) you would get your money back in about a decade. From there on out, profit. But don’t forget these things likely need maintenance.

    There is an interesting ROI calculator (and articles) here: http://switchkingston.ca/wiki/doku.php?id=microfit:calculator

  2. SavingMentor

    Interesting concept for sure, but sounds like a lot of work. I do know some people who want to go the windmill route though, which may be a bit simpler and cheaper to do?

  3. Paul N

    The explanation of the installation of a grid on you home in your blog sounds really easy.
    It is not that simple. The panels will supply 24Volts DC most likely, that will have to be converted to 110 V AC. Plus you need to wire it to your panel and to the grid. This requires a lot more then an array of panels and a few batteries. (Unless you wish to burn down your home in the process. When your batteries are fully charged you don’t want to keep pumping 850 Watts into them.

    So the typical cost for a system practical and safe for an average home in Canada is $20 K.

  4. Jon C

    A friend of mine managed to install $5k worth of solar panels to his house and is directly connected to heat his swimming pool.

  5. David Leonhardt

    Our plan was to just move off the grid, but here in Ontario the Grid pays very well for solar power and charges the public almost nothing for it. So it just did not make sense to replace the hugely discounted power we were buying. In about a week’s time, our solar power generating equipment will start feeding the grid itself, and we’ll be paid what it’s actually worth.

  6. Krantcents

    I would love to be off the electrical grid. I live in Southern California where the sunshines 300 days a year. Unfortunately, solar power is not practical or cheap enough yet. I keep my utitlity bills very low.

  7. Richard

    If you get really simplistic with a sollar power system and like earthy toys, you could hook up the solar power to heat the pool late spring to early fall and then have some toasters (electric elements) in a forced air system to directly heat the return air.
    Requiements: Pool and forced air heating/cooling system.
    Especially useful if Hydro uses peak load rates.

  8. Finance Talk

    Hi there,

    Nice article and fairly descriptive. I’m sourcing my bus electricity needs here in New Zealand with 2 x 190 Watt Mono Crystall solar panels. Awesome! So I’d recommend anybody to use those. My investment in was close to $1,000.00 for the panels only plus some for batteries and connectivity.

    Cheers!

  9. youngandthrifty

    Would this still work in Vancouver where it rains 90% of the time and is overcast? 😉

  10. Theresa

    Solar power, a great idea but I just can’t have it fit it in my budget. Moreover I am very much careful in its usage and keep’s my wastage to a minimum and assist me to keep my bills low and save me around 15%-17%. Also, let me be candid in admitting that my power company is doing their job well by a proper supply at a minimal cost per unit. So screwing my power company looks like a distant dream as of now.

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