Posted on 05/03/2022 12:29:54 PM PDT by Mariner
Already frustrated and angry about high gasoline prices, many Americans are being hit by rapidly rising electricity bills, compounding inflation’s financial toll on people and businesses.
The national average residential electricity rate was up 8 percent in January from a year earlier, the biggest annual increase in more than a decade. The latest figures, from February, show an almost 4 percent annual rise, reaching the highest level for that month and approaching summer rates, which are generally the most expensive.
In Florida, Hawaii, Illinois and New York, rates are up about 15 percent, according to the Energy Department’s latest figures. Combined with a seasonal increase in the use of electricity as people turn on air-conditioners, the higher rates will leave many people paying a lot more for power this summer than they did last year.
The immediate reason for the jump in electric rates is that the war in Ukraine has driven up the already high cost of natural gas, which is burned to produce about 40 percent of America’s electricity. And supply chain chaos has made routine grid maintenance and upgrades more expensive.
...snip...
Natural gas prices have surged in recent months as U.S. producers have sent more fuel to Europe, which wants to use less Russian gas.
(Excerpt) Read more at daily.energybulletin.org ...
Obama’s war on America more like.
“Electricity rates would necessarily skyrocket”.
Never let a crisis go to waste.
Wonder what’s next up their sleeves?
3% inflation rate in both power rates and natural gas rates (right after I put on solar I replaced my natural gas appliances with high efficiency electric ones, meaning I save money as either power rates go up or natural gas rates go up or both). Basically, once you realize that energy rates keep going up you realize that your savings 2 years from now will be better than your savings 1 year from now, which is better than this year's savings, etc.
Gradual reduction in solar panel throughput so that on the last year of their 25-year warranty they're still producing at 70% (as per the warranty).
Similar reduction in battery storage throughput (19-year/50% warranty).
It also includes paying the interest on the HELOC I took out to pay for almost all of this project. (I've paid little out of pocket by putting it on the loan. Each month I pay a HELOC payment and small power bill, where before I was paying a larger power bill and a natural gas bill.) If I wasn't in the middle of doing an upgrade with my solar system (that's how much I liked the first year's output), about a year from now my HELOC payment plus power bill would average $300/month (because my HELOC payment goes down as my HELOC balance is paid down). Since I was averaging $313/month on power + natural gas in 2019 (before covid and before Brandon), I count that as a win already.
If I wasn't upgrading I'd actually be paid off in the 9th year, but that's related to how I invest money. Basically every month my HELOC + power bill is over $300 I pull the excess from the HELOC so that my budget feels like I'm paying $300/month. On the months my HELOC + power bill is less than $300, instead of paying extra on the HELOC to pay it off earlier I put that excess into an investment account (why pay extra on a 3.8% interest loan when I can do way better than that in simple mutual fund investing?).
To understand how paying down the HELOC works while energy rates go up, think of it like this. The HELOC is my cost for the savings in my power bill (and natural gas bill). As energy rates go up, I save more each year. And as the HELOC balance is paid down, my HELOC payment goes down with it (kind of like a minimum credit card payment goes down as the credit card balance is paid down). Thus, each year it costs me less per month (HELOC payment) to save more per month (avoiding ever increasing energy rates). About the end of the 2nd year of owning the system (next April or May) my HELOC will be paid down enough so that my HELOC payment + power bill will on average be a hair under $300/month. Meaning from then on the home energy portion of my budget will be less than what I was paying for power + gas in 2019 (without me having to pull from the HELOC to assist my budget). It'll be as though the past 3 years of crazy inflation didn't happen (at least as far as home energy costs goes). I wish I could do that with all of my budget.
To your point, you're right that solar tech improves each year while also getting cheaper (except this year in which equipment costs rose a little like everything else in life). At least cheaper per kW or per kWh if talking about battery storage (just like a new laptop might cost 20% or so more than your last one, you count it as cheaper if it processes 10 times faster and holds 10 times as much info). So you bring up a good point on it might be best to try to time a good point to buy into solar. To which I argue these 2 points:
1. When is a good time? Will there every be a time solar equipment quits improving? I doubt it. In many ways solar equipment is like computers. My experience has been that right after I buy a desktop or laptop I could have bought a better one for cheaper within a year, but if I had waited for that to quit being the case I wouldn't have had the benefit of computers for the past few decades because I'd still be waiting for computers to quit getting cheaper per khz (showing my age, my first computer's processing speed was measured in khz instead of mhz or ghz LOL).
2. What's the alternative? The longer one waits to go solar the longer you have to keep buying power and possibly natural gas --- which we KNOW is doing nothing but go up. See, not only is solar saving me money in the long run, it's also made my financial planning easier by replacing some of my variable future costs (future power bills and natural gas bills charging only God knows what rates) with a future fixed cost (HELOC payment with a fixed interest rate) that I know won't go up. That allows me to transition into retirement soon (my wife's already retired) and keep my investment portfolio a little more aggressive in retirement than I normally would have because some of my monthly expenses (energy costs) won't fluctuate as much.
There is another alternative, and that's make your home more energy efficient. I did some of that too, but that goes only so far. So when I replaced my gas water heater with an electric one, my new electric water heater is a somewhat expensive hybrid water heater that very efficiently uses electricity to run a built-in heat pump to heat the water form the nearby air. And with that I ducted air in from the attic (read: usually pretty hot air from an Alabama attic) so it has plenty of free heat to transfer to the water in the tank. Thus my water heater takes less time (less power) to heat the water tank after I take a shower. I'd bore you if I told you all the other things I did like that to lower the energy usage in my house (part of the costs in the HELOC).
I'm in the process of upgrading my solar system and getting an EV. For that plus my already existing cost, I expect a break even point of about 12 years (really 9-10 years again with how I invest money coming in instead of paying extra on the HELOC). That assumes a 3% inflation rate on gas prices from $3.50/gallon. (Currently it's $3.84 here. I expect Brandon to grace us by letting it go down to about $3.50/gal and hoping we all are grateful after paying over $4/gal recently. So I calculate based on $3.50/gal with a 3% inflation rate form that each year.) That also assumes a 3% inflation rate on oil changes, not having to buy a used car every 7 years for around $10K (like my wife and I have done for decades), paying $90 extra per month on car insurance until the $55K-ish EV is paid off (as opposed to cheap liability only insurance like we have on the old used car the EV will replace), 1.9% interest on the car loan, not setting aside $400/month to a car savings account while making car payments (what we've done for years to have money to repair or buy a used car when an old one gives up the ghost, thus this $400/month will help make the $917-ish car payment), having to replace the EV battery for $10K in 10 years, all while averaging ~200 miles driving the EV per week (which translates into the amount of gas cost saved, not counting how much I still drive an old ICE truck on times we either need a truck or need two cars), and assuming around 90% of the power for the house and charging the EV will be "free" from solar. And instead of operating on $300/month for home energy costs, I'll operate on $450/month for home energy plus EV costs (pulling extra from the HELOC for the 5 years to help make car payments, then when the EV car payments are done, for every month my HELOC plus power bill is less than $450 I'll put the excess into the investment account). If I get an EV in early 2023 like I hope to, I expect that about the end of 2030 or early 2031 my investment account balance will equal the HELOC debt (assuming a 10% ROI on the investment account).
I start with total power bill, subtract $15.86 (for my $14.50 flat rate plus 75 cent natural disaster rider plus 4% tax) to get what I call the overall usage fee. Divide that from the kWh purchased to get the real kWh rate (regardless of how much of that is the stated 10.6 per kWh plus various riders charged per kWh like the energy rider my utility pays for coal and natural gas to power their plants plus a 4% tax). That was 13.4 cents per kWh in April, as opposed to 10.3 cents in April 2021. I then determine the # of kWh my inverter says I consumed that month (1041.8 kW for the dates of my April bill), subtract that from what the power bill says I bought from them (285 kW) to see how many kW I saved (756.8 kW). Multiply that by the true rate I calculated above and I get total dollars saved that month ($101.44). Then estimate how much my natural gas bill would be if I still had one ($133.42), and I do a little fudging with that number because I didn't save 100% of that --- some of that savings is transfer to power because by replacing my old natural gas appliances with high efficiency electric ones, I in effect raised my power consumption some, but not as much as I saved in natural gas. By my estimate I saved overall $228.82 in April. All of this was a head scratcher the first few months. But now it's calculated quickly in both Excel and with SQL Server queries after keying in a few data fields from my power bill each month.
That makes me glad I had to buy only 27.4% of my power from the grid in April.
That doesn't include any money sent my way from the utility buying power from me. I don't do that because my utility doesn't do net metering. I'd have to pay a yuge monthly fee to participate in it only for the utility to pay me little per kWh I sell to them. No thank you. Plus, for that reason whenever the grid power goes down the power in my house doesn't shut off automatically. (Which admittedly doesn't happen often because I don't live in 3rd world areas like California.) If I was to put power onto the grid I'd by regulations be a "power generating" customer and the regulation would require my house power to shut off automatically when the grid power goes down. Because I always put exactly zero power back onto the grid I'm not a power generating customer, therefore I'm not a danger to linemen working on downed power lines.
Filled the gas tank today, $5.09 per gallon. Then got a robo call from the power company— the rates are going up due to inflation.
Phenomenal post. Well done. I appreciate the details having an eng and investment background so run the same thing for myself on a massive spreadsheet typically.
Tech will always get cheaper and better but I always like to wait till the initial expensive part of the cost curve starts flattening out. I figure that point is about 2 more years for solar. That would be ideal for me because I have 8.2cents/kwh locked in till then so converting now wouldn’t save much.
I live in FL and considered solar. No thanks.
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Interesting. My state requires net metering, and I needed a “Permission to Operate” slip. As you say, this means that if the grid goes down, not only am I disconnected, I cannot produce any power for my home. The only way around this is to buy a Tesla Wall or some similar battery back up. That’s another 15K I hesitate to spend at the moment, even though I see it happening sooner than later.
In Hillsborough County, FL even if you install solar and commit to a $30-60K price tag or loan, you are still beholden to TECO. You are NOT off the grid. TECO monitors what you generate and your usage and bills you accordingly. You are never free of them.
Learn how to EDIT. Your posts eat up valuable FR bandwidth yet they are not worth having to plow through for any real benefit other than the realization that you are a legend in your own mind.
What is that some sort of law?🤔
Well Gay Sirrod Sirrod.😏
I’ve been using solar for decades.
Drying clothes on the line, f’rinstance.
I have six Gyll LifePower4 lithium batteries 48V/60A each holding a hair over 5kWh (total 30 kWh). All of them together and the cabinet they fit it cost $10K, have a 19-year warranty (guaranteeing to still operate at 50% near the end of the warranty).
But some FReepers ask tons of details because they're interested, so I give it to them.
And I every now and then get replies like this: https://freerepublic.com/focus/news/4060059/posts?page=25#25
Am I reading you correctly that you have a 19yr warranty on the batteries? What type of battery lasts that long and what are their cost and storage capacity?
I'm 100% for decentralized solar (done at the individual level on your own home/business) though I'm against it being forced onto us or attempted at the utility level (one-size-fits-all leads to fitting nobody). But even if you do solar on your own I strongly suggest you do tons of analysis on the past 2 years' worth of power bills (particularly usage each month in winter, in summer, etc.), peak solar hours in your zip code per month, actual power rates (probably more than your stated rate after riders and tax are added in), whether your state does net metering, etc. This is not the kind of project to go into flippantly.
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