#4 – Does Solar Power Really Cost This Much?

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What We Covered

A realistic view of how much an off grid solar power system really costs. Plus, the top 3 ways to save money when setting up an off grid solar system.

In this episode:

3 sample off grid solar systems
Descriptions of what you can do with each sample system
Estimated range of cost of materials for each system
Top 3 ways to save money with an off grid solar system

Chapters

00:00 – Intro
06:28 – Sample System
07:13 – A Very Small System
10:35 – A Small to Medium System
15:29 – A Medium to Large System
17:48 – What Was Not Included
19:43 – Putting This Into Perspective
20:43 – Top 3 Ways To Save Money With Off Grid Solar Power
20:59 – #1 – Becoming Energy Efficient
24:14 – #2 – Federal Solar Tax Credit
27:19 – #3 – Proper System Design
30:57 – Bonus: Buy In Volume (especially solar panels)
32:17 – Question of the Week: Claim solar tax credit if no tax liability?

Important Links

Episode 3 – For a good foundation on off grid solar power
Solar Power Basics video set
Free Class: “What You Can Do Now To Start Going Off The Grid.” Register here:

Transcript

Hi there, and welcome to The Ready Life podcast.

Well, today we wanted to talk to you a little bit about something that we started last week in the podcast. And as you recall, if you didn’t get a chance to listen to last week’s podcast, please go back and take a gander at that because we were talking a lot about off-grid solar power systems. And this is something that there’s been a lot of interest about and we feel that it’s a really important topic and we laid out the reasons why in that podcast. So please, if you haven’t listened to it, go there.

But one thing that we brought up in the question of the week, someone was asking about the cost of an off-grid solar power system. And we touched on it a little bit, but we wanted to get into more detail because it really is a loaded question. And so last week, all we did was we shared with you a rough estimate of what our system cost years ago. And we wanted to share with you a little bit more than that.

Intro

Well, I remember at one point we took a class. In the class, everybody was going around the room making introductions, and we, you know, one of the things was, you know, what do you do? And so we shared what we did. And it just kind of seemed dead, like nobody was interested in off-grid. Anyway, so then the next day, I think it was the instructor that made some comment about how, you know, I think she referred to how expensive or… the high cost of solar systems. And so I think you piped up and said something to her about, well, you know, our solar system, I think you said how much ours cost. And everyone’s jaw dropped in the room like, what? Yeah, you could hear gasps all over the place. Like who in the world could have a whole operational solar system for that much money? A lot of folks became suddenly very interested and they wanted to know more about it. Like, hey, you know, I could actually do that for that kind of a cost.

And, you know, another conversation that comes to my mind is I was talking to a guy. I don’t even remember what we were talking about, but he once again asked what I do. And I told him we help folks go off the grid for a reasonable price. And he said, oh, that’s really interesting. What does it cost to go off the grid? And so once again, I shared with him the cost of our system and he kind of went silent. I got a little funny on you. Yeah, and I was like, boy, did I say something that offended him? I didn’t know what to make of it. A few minutes later, it came out what the deal was. He told me that his brother had just spent $120,000 on a solar system. If you could imagine. My jaw absolutely hit the floor. And it was a grid tie system that you could not go off the grid with as it was configured. It was only operational if the grid was operational. So all it was doing was offsetting his power bill. So power grid goes down and he goes down with it. Even with all that money spent, that’s unreal.

You know, we hear that a lot actually. People, friends or whatever, they’re just like, so expensive and it’s like, well, you know, what do you mean? And they’re like, I have a friend and it was 80 grand or this or that. And it’s just like, no, actually we, no. It could be. It could be, yeah. Obviously somebody paid $120,000 man alive. What we could build with that. Yeah, right. So, but the point is that it could be, but it doesn’t have to be. And that’s really what we’re all about.

I’m sure you’ve heard all the horror stories, much like the ones we’ve mentioned already. So we hope that this would give you a more realistic view of what it actually would cost. Now it is going to cost you. It’s not gonna be something that you can just run down to Walmart and pick something up and be like, oh, I’ve got a solar system. You know, it’s gonna cost, but especially if you wanna do one that’s, you know, built quality and that’s built to meet your lifestyle needs instead of becoming Amish or like… you know, living without the power. If you’ve got tons of money to throw at it though, and you’re not interested in strategies that are going to enable you to save thousands of dollars, then this episode isn’t for you. It does take a little effort to save money, you know, it’s time versus money kind of thing. And so if that’s not you, then just be aware that this is for anyone who wants energy independence and also wants to be as economical as feasible. And you might just be on a shoestring budget like we were when we set up our power system. So that’s who this episode is actually for. Right.

And this is about off-grid. Just a quick reminder, off-grid is our thing. We are not into grid tie. If you’re interested in grid tie systems, then feel free. There’s a little… a lot of information out there about grid tie. Off grid, there’s not as much. And we made the case for off grid in the last episode. If you’re not familiar with those two or the difference between them, take a look at episode three and we jump into that there.

Sample Systems

So in this episode, we decided to put together kind of some example systems. Which goes against my grain. You know, I rail on all these retailers, solar retailers that have package systems because it’s like, that doesn’t work that way. Just looking at a package system doesn’t mean that it’s gonna work for you or in your location because everybody’s needs are different, everybody’s weather and location is different and even something as simple as shade in your area can dramatically change things. So I don’t like it, but I get it. You just need an idea. So here we go into packages.

A Very Small System

So, shall we jump into the very small system? Not recommended for actually living. This is more of like a hunting cabin or a small place that you vacation in, like a vacation place or something like that. Right.

If your power usage is in the neighborhood of one kilowatt hour per day. Now, if you know anything about power usage, that’s a very, very small amount of power. How much does the average American use just so we have something to compare this to? 30 kilowatt hours per day. So this is one kilowatt, it’s a very small, did we emphasize it’s a very small system? This is not livable for hardly anybody and I hesitate to even bring this one up because of that reason, but I wanted to because you may have a small, like Lisa said, vacation cabin or a little shack up in the mountains somewhere that you want to set up. And this would be potentially good for that type of situation.

So let me just paint a picture for you of what, like if we were to walk through a home that was powered off of a very small system. Here are some of the appliances you might see as you wander through the house. You might see a blender, an internet modem, maybe a cell phone charger or two. If you’re careful, a laptop computer, maybe a hairdryer. You’d want to have obviously a really energy efficient water pump in the well. Lights, you’re gonna have several lights in the house. I say several, being more like a few lights in the house. Maybe a smaller washing machine where you’re not doing loads of laundry, like lots of loads of laundry every week, but just having a washing machine or a small dryer or something there to use. And then maybe like a small RV size or super efficient refrigerator. So that’s what you might find in our very small power system house.

And if you want to see the details on the video version, we’ll have a link to the show notes if you’re listening to this podcast, if you’re not watching the video. But on the video version, there’s more details of how exactly we came up with these figures. But we’ll spare you the details of talking through all of this. But anyhow, what are we looking at for the cost? Somewhere in the neighborhood of five to 10,000. And you know, once again, the reason there’s a range there is because you could live in a climate like ours, where you’ve got to build a much bigger system, or you could be in a climate that’s a lot more sunny, where you don’t need as large of a system. Also, you could save money by choosing less expensive components. I like quality, and I like to go with quality, because, you know, what is the saying? Buy once, cry once, something like that. You know, that’s kind of my theory, but you could certainly save some money on components here and there. But that gives you a rough idea of range there really, really rough, depending on a lot of different factors.

A Small to Medium System

Okay, so let’s look at one that’s a little bit more, well, actually I think the next one is our system, isn’t it? It is, it is. Okay. And that is the, what I call the small to medium system. So we live on give or take two and a half kilowatt hours a day. Well, you should probably put that in the past tense. We used to live on about two and a half kilowatt hours a day. Okay, so our family has grown since then. As in not more of us, but just a little six month old that crawls around on the floor isn’t gonna use a whole lot of power. When you have a nine year old that’s plugging in all kinds of appliances and turning lights on everywhere he goes, you’re gonna use more power. And while I’d like to blame the kids entirely. I just stepped into our bedroom before we started this and realized we also have a sauna. This is true, infrared sauna, and all sorts of other things. You know how life goes, you acquire more and use more power and all that sort of thing. So all that to say we do use more than two and a half, but we still have the same size of system, so we should probably at some point in time. upsize our system a bit. It’s working just fine for us even now.

So what could we do with this kind of a system? What could people expect to do? So if you come to our home, you would find of course kitchen appliances like a blender and a modem, so an internet modem. We have multiple cell phone chargers and tablet chargers. We have a hairdryer. which used to be just times one, but now we’ve got times two, as you saw, the beginning. Laptops, plural. We’ve got a desktop computer. We have a water pump that runs pretty regularly. Quite regularly. Yeah, with two kids, a lot regularly. Yes. Let’s see, lights. We’ve got a number of lights. light fixtures in the house that sometimes are on more than they should be, but washer and dryer, of course. We have a super efficient refrigerator, which really helps with the power. Having said that, it is a full-size refrigerator. It’s a full-size, yeah, and a freezer on top. It’s just one that we paid a little bit extra. to get one that was really efficient, a DC powered one. Yes, it’s a very nice fridge and freezer. And on top of that, we have a regular conventional chest freezer. Yes. And et cetera, et cetera. Et cetera. Yeah, more et cetera’s than we care to admit. We probably should right now. Yeah, probably.

But I almost feel bad detailing all of these things because it sounds like we are just misers about our power. And I’m trying to convey to you that We really do live normally. We just try and be strategic when we’re buying our appliances. And yes, we try and not be wasteful. So I do try and get the rest of my family to turn the light off when they leave a room. I’m not successful most of the time, but. It’s a good habit to have. You know, if you’re going back in a few minutes, then it’s not a big deal, but I don’t like leaving lights on all day long in rooms that are unoccupied. You know, things like this we try and be a little careful about, but we’re pretty normal.

So what would you expect to pay for a system like this these days? So we actually mentioned in the last episode that we spent about $15,000 for our power system. Granted, we did go for more higher-end equipment, and this was how many years ago now? A number. Quite a number of years ago. So prices have gone up a little bit since we purchased our equipment. But depending on where you’re located, on your shade, on your lifestyle, give or take, and the equipment too that you purchase, we estimate that it’s going to be somewhere between $10,000 and $20,000. Now, if we picked up our home and our power system, and we moved it a few hours away, a couple hours away from where we’re at, it would be very interesting to see how our power system would operate in another location because we’d probably have to do a lot less with our power system. I would think that we’d have to add more panels because we wouldn’t be in a climate with as much sun.

A Medium to Large System

Moving on to, we’re just gonna do one more of these. We could do these till the cows come home, but let’s just do one more.

And this is going to double the amount of power usage up to five kilowatt hours per day. And with that, that’s quite a bit more than we use in the wintertime. And that’s what I like to do is design a system for the wintertime because that’s your most difficult time from a solar perspective. And that’s when it’s best to design for. And so, yes, in the summertime, we use quite a bit of power because it’s there. And why not use it? We’ll run the window air conditioner and all sorts of other things that we would not do in the wintertime. So, yeah, maybe we do use five kilowatt hours a day in the summer, I don’t even know. But in the winter, not even close.

So with this. You could expect to do blender, juicer, toaster, internet modem, cell phone and tablet chargers, cordless phone, TV, DVD, if you even have that thing, that type of thing anymore. Yeah, that’s good. It’s becoming ancient for DVD players. Stereo, hairdryer, laptop, desktop computer, water pump, running for longer, running for more because we’re designing for more people with this kind of a system. and garage door opener, fan on a wood stove, mini lights all over the house, and washer dryer, more of that, and a more conventional refrigerator freezer, one that you could buy at an appliance store, just shopping for the most efficient model you could, but it’s still a conventional one, and a reasonably efficient chest freezer, all of that. you know, basically just more of the same and for… Or more individuals in the home perhaps.

Right, right. If you’re not as careful or more people in the house, that type of thing. So what could you expect to pay for that? Well, something like that’s gonna cost you roughly 20 or 30 grand. Right, depending once again on a lot of factors, we won’t go through all of those again, you get the general idea.

What Was Not Included

But… That gives you an idea of a few sample systems. There are a few caveats that I need to include here that were not included in these prices. For instance, one thing that was not included was a backup fuel-powered generator. This is because a lot of folks already have a fuel-powered generator, and so I didn’t want to throw in something that you already have. And another item that I didn’t include was local materials that you would source locally. For instance, when you’re building your system, you’re always gonna be running to Home Depot or somewhere like that to pick up some small parts or some electrical conduit and things like this, short pieces of wire for different things. And the one big thing I can think of that you would source locally would be the… large steel pipe for the solar array that we designed into this system. Now you might put your solar panels on the roof, and if so, you just eliminated that expense. But we like ground-mounted arrays on a steel pipe, and so we included everything but the steel pipe in there.

And then the other big factor that was not included was labor, and that’s because it can vary greatly. I mean, very greatly. It can vary very greatly. And the other thing is that you could do your own installation. I know many a number of folks that have done their own installation, and so they didn’t pay anything for labor, just their own time. So just be aware that these factors were not included in those prices. It’s materials only. But I hope that gives you an idea. You know, you might look at this and think, well, you know, that does sound like a chunk of change. Maybe it’s not as much as you were expecting. Certainly not anything like 60, 80, or even 120,000. But it still is a chunk of change, and I’ll give you that, it is.

Putting This Into Perspective

But something that I think about is how many people spend more than this on a single car. That’s true. I mean, our dream car. Right? Exactly. And that car is not going to save you money. That car is only going to spend money. You’re going to pour gas in that thing, oil in that thing, repairs in that thing, all of that. Whereas with this system, it’s going to dramatically reduce, if not eliminate, your expense for energy, for power, which is huge. And you also get energy independence out of the deal, which is great. Really awesome. Which means you don’t lose that freezer full of food when the power goes out. That’s right, that’s right, big deal. Yep.

3 Top Ways To Save Money

So one other thing that we wanted to mention while we’re on this topic of cost is how can you save money? What are, we mentioned one way on the last episode, the number one way, what’s the number one way?

#1 – Become Energy Efficient

Number one way to cut the cost of your power system is to really think carefully about your power usage. And we mentioned that earlier about the appliances. If you just walk into an appliance store and you see an oven range or a stove top that really catches your eye and you’re like, oh, I really like this, it’s got all these features and whatnot, and you buy that appliance and take it home, it probably or it may use a massive amount of power. Whereas, If you did just a little bit of research and shopping around online, you could find pretty much the same thing with all the same trinkets and gadgets that you love, but on a model that’s energy efficient and uses very little power. Uses gas instead of power, for instance. Or if you wanna get more primitive, more independent, a wood cook stove or something, or a solar oven or any number of options like that. So there’s… We bring up the really convenient ones being gas, because it’s so easy to just replace electric with gas for a lot of these items. Yes, exactly.

And so your power usage, like cutting your power usage, there are so many tips and tricks and ways that you can cut the amount of power you use, even right now while you’re on the grid, if you need to replace an appliance in your home, or if you. you want to learn more about energy independence, then this is the one way that you can start learning about that in your own home, where you are at right now. Just start thinking about all of the appliances that you have plugged in around the house, walk around and take a tally. One way that I love is to use power strips. And in the kitchen, I have a power strip. I plug a lot of my appliances in, you’d be surprised how many of those appliances when they are off are still drawing power constantly. And so put them on a power strip and then just turn the power strip off when I’m done. And that saves a lot of power that’s being wasted every single day. You’re not even using it for anything. It’s called phantom power. So that’s just one way.

But the appliances, like you mentioned the big four. becoming really strategic about the type of appliance that you put in your home, how you heat your home, your clothes dryer, etc. Those are the things where you can save a massive amount of power very quickly. The big four, once again, being electric water heater, electric clothes dryer, electric oven or range, and an electric forced air heating system.

Yes. So for those, we already mentioned those in the previous episode. But. Gas is a good option for three of those for heating your home. We really like wood heat and it is possible to use air conditioner off the grid. If you’re careful, there are some good options such as mini split systems and things like that. We’ll talk about that. I’m sure in the future. Yes, I’m sure. So that’s probably the single biggest way that you can cut the cost of your power system.

#2 – Federal Solar Tax Credit

So number two is the federal tax credit of 30%. Now, if you’re not familiar with this, a tax credit is way better than a deduction. A deduction just reduces your net taxable amount, but a credit comes off of the bottom line. So if at the end of the day you owed $10,000 in taxes and you had a $3,000 credit, That means that you now owe 7,000 instead of 10,000 in taxes. Wow. Yeah, so it’s a big deal. It really is. And so you are basically getting dollar for dollar. You are cutting the cost of your solar system by roughly a third. So if you spent, like let’s just say that you put 20,000 into one of these systems, that 30% tax credit is going to reduce your cost. to 14,000, gonna reduce it by $6,000. Wow. Yeah. Now what if I only owed $3,000 in taxes that year? Then you can actually, you could utilize that $3,000 to get your tax bill down to zero and then you can carry forward the remainder to a future year. Now obviously I’m not a tax preparer, talk to your CPA about this. Yes. I’m not giving you tax advice, but that’s… very plainly written into the language on the tax credit that it does carry forward.

The nice thing about the federal tax credit, though, is it also includes labor with your solar system. Yes, which is a big thing. Yes. So you’re just cutting your labor cost by roughly a third as well, as long as you have a tax liability. And yeah. But I don’t think it includes the generator, right? This is true. It’s for renewable energy. is everything to do with the IRS. There’s a lot of gray here. But it is pretty clear. I feel pretty confident saying, based upon what I’ve looked into, it obviously covers the solar panels, but it also covers inverter, batteries. I’ve read a, oh, what do they call those things? Tax ruling or some kind of a paper where the IRS did a ruling where they said that battery storage would also be included. So all those kinds of things, the main thing that I’m aware of that would not be included would be a fuel-powered generator and stuff associated with that. But it’s anything that’s to do with the solar and that is needed in order to utilize the solar in your home. So that’s a great way to save a good chunk of change. And of course, from year to year, everybody, they’re changing. everything all the time. So you’ll want to just double check with your CPA, of course. But as of now, they’ve extended the tax credit where it’s good through, I don’t know, a number of years into the future. That’s awesome. Yeah. That’s really awesome.

#3 – Proper System Design

All right. So then the last way that we can think of that you could cut the cost of your power system is to make sure that you design your system for your personal lifestyle. as opposed to the sample systems that we were just mentioning to you. So many times we see people will call up a solar dealer and say, I want to buy a solar system. And so they go pull their power bill out, which we already told you don’t do. And then the person on the other line then says, oh, you should buy this package. So they buy that package, they bring it home and they install it. And then what happens? Well, any number of things could happen. For instance, they could install it in a location where there’s a bunch of shade and they don’t get nearly the power production that it was planned on. Or they could have it installed in a nice sunny location and they end up producing way more power than they could ever use because the parameters that they started out with were incorrect. It was not tailored for them. It could… be undersized, you know, where they actually are not making as much power as they need. And either way, it’s gonna cost you money unnecessarily, because if it’s oversized, then you’re spending money that you don’t need to. And if it’s undersized, and I’ve seen this happen, it costs money too, because then you end up having to rebuild parts of your system, and then you’ve got other equipment that you might have to sell. And it’s a big mess.

How many people we’ve run into that were so frustrated, because they called us up, or they’d email us and say, I don’t know what’s wrong, or why my system’s not working for me, but I’m running the generator all the time. And I thought I was setting myself up for independence, but this is turning out to be more of a headache than it should ever be, and lots and lots of extra stress, when it should be relieving stress. It doesn’t have to be that way. Yes. When, you know, our experience and the experience of many others is that if it’s set up properly, your system requires not much input from you. You know, initially you’re learning it, getting used to it, that sort of thing. But after that early stage is over, like we told you in the last episode, I check on our system literally once every month or two. I mean, sure, we’re glancing maybe at the little meter as we walk past it through the day just for a split second, but as far as actually getting in and doing maintenance or doing stuff to it, very little involved. So it’s- And how rewarding it is to walk past that little meter and see it charging up the batteries and powering our house with ease and efficiency. So that can be your experience, but in order to have that, you really need to make sure that you design a system that’s tailored for you, for your lifestyle, and for your location. And we’re actually going to talk about that in a future episode. We’ve gotten a question about that we wanted to use for a future episode. And so we’re going to be doing that. So just hang tight on system design. Tuck that one away. We’re going to dig into it and give you a good idea of what goes into a scientific system design rather than one of these packages.

Bonus – Buy In Volume (especially solar panels)

I will say, though, one more way that you could save money was something that we did with our power system. I think we almost, we paid little to nothing for our solar panels because what we did was we bought, like, in bulk. And then we just sent out an email. put up an ad on Craigslist or I don’t remember in the penny pincher or something. And then we got so many people that wanted to buy solar panels from us that were wanting the solar panels that we had ordered. I think we ended up ordering a second bulk. We got several pallets. Several pallets of solar panels. Because we had found them for a good deal. You can get solar panels for incredible prices by the pallet. And. It’s a great way to save money on solar panels. For the other equipment, I’m not aware of volume discounts on other pieces of equipment. But for solar panels, yes, excellent opportunity there to save some money. And if you have time, you can just watch and shop around for sales or discounted prices or things like that. So those are ways that you can cut the cost of your power system.

Question Of The Week: Claim solar tax credit if no tax liability?

So the question of the week. Oh, yes, we got a really good question. And then actually kind of ties into what we’ve been talking about today from someone named Maureen. She said:

“Where on earth did those not filing taxes, like on a fixed income such as Social Security, obtain the 30 percent tax credit on new power systems?”

For that one, I’m sorry to say I don’t have better news for you, but the 30% federal tax credit is not a refundable credit. So it can reduce your tax bill to zero, you can roll it forward to future years, but it will not give you money back. So you’re not going to get a refund as a result of that. So if you have no taxable income, then you may not get a, you may not have a way to recoup. from that credit, but you can keep rolling it forward, is my understanding. And if there was a year in the future where you had tax liability, then you could potentially use it at that point in time. And one other thing I should mention is state tax credits. They usually are not nearly as good as the federal one, but check in your particular state. And there are occasionally. state or state tax credits or utility tax credits for installations of solar and things like that. Yes.

Anyhow, well that brings us to the end of this episode. Appreciate you joining us for this topic that’s very dear to our hearts. We hope you found it helpful and we’ll see you next time.