The last time you bought a sandwich, how much did you pay?

If it was between $3 and $8, you probably didn’t think twice about the greenbacks you pulled out of your wallet. But what if that sandwich had cost $20 or $25? You’d probably wonder where each dollar was going and why on earth the restaurant was charging so much.

When we buy things, we don’t usually break down the cost to see where the dollars are going, but we also don’t buy things that are tens of thousands of dollars every day (thank goodness).

People often grumble about the price of solar electric systems. And yes, $30,000-$60,000 to buy a solar electric system – instead of using a solar service or a lease – is a LOT of money. It’s only reasonable to want to know where your money is going, so here’s the story:

• Solar panels account for about 60% of the cost – they’re mostly made up of pure silicon, which is expensive and takes a long time to make.
• The inverter makes up about 10% of the cost
• All the other parts, like wires and racking, is about 15% of the cost
• And labor is also about 15% of the cost (but don’t starting your own DIY Solar Project just yet!)

Before you get too hung up on calculating 15% of $30,000, though, chew on this:

When you buy a solar electric system, what you’re doing is paying in advance for electricity you’ll get in the future. Basically, you’re paying for 25 or 30 years of power all at once (which may or may not make sense, but that’s another discussion). If you divide it up, what you’re paying every month for solar power for the next 25 years will be less than what you’d pay the utility company in that same time.

So the real trouble is not so much breaking DOWN the cost of solar but breaking UP the cost of solar! And that’s of course what we’re here to help with.

False: I need a battery back-up for my solar system

Let’s play a quick word association game. Ready? Go.

“Solar power.”

What comes to mind? A lovely, remote home – perhaps the place you’ll retire – whose inhabitants are striving to be self-sufficient and independent from most modern conveniences?

Now, try this one:

“Utility company.”

How’s your anger reflex? Did the dial on your Rage-O-Meter just max out?

If you answered “yes” and are considering solar power, you may have thought about a battery back-up for your system as well.

Am I right?

Many people I chat with about solar power are fed up with the utility; they rant about the “outrageous rip-off” and how the utility “practically steals money.” The next line in the conversation is usually an emphatic: “I can’t wait to go solar and disconnect from the grid completely!”

Others love the thought of the autonomy itself – what bliss it would be to install solar and get off the grid! Ah, energy independence and self-reliance.

But, a battery back-up is – in almost all cases – not recommended. Yes, it’s “cool” that with solar you can be off the grid. From a practical perspective, though, you’ll reap the same benefits of solar being hooked to the grid. And you won’t incur the additional cost and maintenance headaches that come with batteries.

Batteries are extremely expensive, reduce the efficiency of your solar system, and require ongoing maintenance. Plus, they only last 5-8 years, even when properly maintained, which means you’ll have to pay for a battery pack many times over throughout the life of your system.

The batteries used for solar systems are like car batteries – they require very careful handling, storage, and maintenance. The fluid in these batteries is highly corrosive and its level has to be checked, for example. And the batteries need ventilation and protection from cold weather.

Given their cost – both monetary and otherwise, battery back-ups just don’t make sense for homeowners with access to the power grid.

The better alternative is to use the grid itself as a battery. When your solar system produces more energy than your home needs, the extra power flows back out onto the grid so you can use it at a later time.

For more about how this works, stay tuned until next week when we talk about net metering…

Imagine someone asking you to pre-pay all of your cell phone minutes for the next 18 years by purchasing a cell phone tower and installing it at home.

You may be saying, “It sounds expensive and complicated to me.”

It also might also make you wonder how many minutes you’re  actually going to get and how much you’d actually have to spend keeping the tower working.”

Deciding to go solar isn’t much different if you’re thinking about purchasing solar panels and other hardware.

However, you can buy solar electricity only as you need it from a solar electricity system at your home without taking on the large expense and responsibility for generating years’ worth of electricity.

When SunRun provides its customers solar electricity they know how much they’ll get every year, how much it will cost and how much they’ll save versus buying from the grid.  All of that, plus SunRun maintains and insures the hardware.

Our interests are aligned with yours.  If we don’t build and maintain the best systems that produce the power our customers need at a good price, then we don’t make money.  We’re all working to get electricity from cleaner sources.  However, SunRun makes at least an 18-year commitment to produce green electricity.  In that way our incentives are in line with a community’s need for more green electricity too.

Communities throughout California recognize that at the end of the day, the most important thing is to make green electricity easier to get and less expensive than the grid – not necessarily encourage everyone to get into the power business themselves.

Do you know why people prefer getting mail from the IRS more than from their utility company?  At least there’s a chance you’ll get a refund from the IRS.  Today, mail from the utility company will more than likely announce another price increase than ever before.

Across the country, residential electricity is getting more expensive every year.  If you live in a populated area, it’s likely your bills are going to go up too.  In California utilities are asking for double-digit increases.  My parents in Maryland saw their bills increase 50% last year alone.

Residential electricity prices will continue to rise in most places because they’ve been kept artificially low by local regulators.  As these rate caps are removed, like they will be in Pennsylvania in 2010, prices will jump.

For decades we’ve invested in natural gas power plants assuming the price for gas would be affordable.  However, that price has quintupled over the last decade.  It’s going up because we’re importing it from overseas and using it in record quantities.

Keith Johnson in the Wall Street Journal last week would have you believe that renewable energy—say from solar—is more expensive than traditional sources.  That may be true for utility companies burning coal, but it isn’t true for you.

Homeowners are cutting their electricity bills dramatically by going solar.  Let’s say you’re an average consumer of electricity in California, living in Fresno, paying $240 per month to Pacific Gas & Electric.  You can purchase solar electricity from SunRun for $120 per month, saving 50%.

Unlike your utility that increases your bill every year because they create electricity using scarce natural resources, solar electricity companies can fix your bill for years to come.  Imagine you could have had locked your price for gasoline in 1990 at half-off when everyone else was paying a $1.35 per gallon.  You can save with solar too.

It’s no surprise to anyone who’s been paying attention to the news that the time for renewable sources of energy is now. Sadly too many people still think that alternate energy is a dream.

Imagine getting the electricity you need from a clean, renewable source right at home. Now imagine paying only a fraction of the cost to get that electricity. Feeling warm and fuzzy inside?

Sweet Solar Home has been designed to help you understand the technology, news and advances of the solar power movement. We’re here to clear the misconceptions behind alternative energy and explain how everyone can tap into this vast resource to save money and the environment.

We invite you to take this journey with us and we welcome your comments and thoughts on solar energy.

We think that everyone should be able to harvest the clean, free-flowing energy the sun gives us every day and enjoy total peace of mind. In the weeks and months to come we’ll explore the lives of people who have already made the solar choice and share with you how you can do it too. Welcome to Sweet Solar Home.

- Nat Kreamer
President & COO
SunRun

Do you have a question about solar energy? Ask us! We’ll feature your questions on our blog.