How do you calculate the utility rate to compare for solar?
A customer’s ROI calculation can vary significantly based on two key items: the local incentives and the local utility rates. Take the same size roof in Tennessee and New Jersey and you will have an ROI that can vary by 7+ years. Why is that?
The simple answer is local incentives. New Jersey offers TRECs and Tennessee only has the federal ITC and deprecation bonus. The states initiatives driven by energy policy to drive more local and renewable energy generation can be anything from an upfront rebate to a quarterly check based on the production. Often, there are local incentives such as tax abatement and REAP grants available based on zip code.
Next to incentives, the utility rate to compare for solar can be one of the largest drivers in an ROI calculation. A utility bill has many components the make up the final calculation on an average bill. Within one utility, rates can vary based on: zone, rate class, how much they consume, time of day they consume the most electricity, and more. When understanding the rate to compare specifically for solar, various net metering laws drive that calculation – which furthers the confusion from a customer’s perspective.
While there are many variations of billing components there are three key factors to look at: customer fees, per kilowatt (kW), and per kilowatt hour (kWh). Customer fees often indicate the administrative cost to serve a customer. kW fees generally indicate demand charges. And kWh fees are generally generated by actual energy consumed. When we calculate a customer’s cost to compare the general calculation is Total Bill – Customer Fees – (x% of Demand) divided by the kWh consumed that month. The Demand percentage varies by the way the utility calculates this number and the way the customer operates their business.
Genie Solar is unique because we were born out of the energy business. We understand our clients bills unlike any other solar installer. In fact, we have a team of experts (the Price Desk) that spends their day looking at ways to reduce on bill charges. Find out how we can help you reduce your energy bills by speaking with our Solar Energy expert Sarah Schwandt today!