Reasons to Generate Your Own Clean Electricity
We are often asked why it makes sense to generate clean electricity, using technology such as solar, wind and micro/mini hydro, to cover one’s own household and transportation needs. Here are some things to consider:
Have you already reduced your energy use through energy efficiency retrofits? If not, do this first, because it will normally pay back sooner then generating your own energy. Also, you can reduce the amount of energy you need to generate, minimizing the cost of your clean energy generation system.
The cost of generating your own electricity can be less than the long term average cost of the electricity supplied by BC Hydro, especially if you offset only the more expensive “Step 2” electricity you previously consumed. To calculate how much Step 2 electricity you consume on average in a year, the easiest thing to do for BC Hydro customers is to open an online MyHydro account to determine your average annual consumption (in kilowatt hours) and then subtract the Step 1 use amount of 675 kilowatt hours per month. The amount of this Step 2 consumption you can offset depends on when you use the electricity compared to when you generate it. If you generate it during the same time you consume it, you can offset a lot of Step 2 consumption. If you generate it at a different time from when you consume it, then you will offset less Step 2 consumption. The actual calculation can be performed using a spreadsheet. See below for an example.
To get an idea how BC Hydro’s residential rates may change over the long term going forward, please refer to our Projected BC Hydro Residential Step 2 Rates. Note that while governments have placed artificial controls on BC Hydro rates in past history, as they have recently done in BC, long term records suggest that eventually reality sinks in (rising costs of system maintenance and operations as well as replacement of aging power infrastructure to serve a growing population) and the rates spike to make up for low increase years. This usually happens after a change in government, and is usually accompanied by finger pointing at the previous government(!) Accordingly, we have not yet factored in the latest announced rate controls, but are monitoring the situation and will update our forecast over the next few years when we have solid data.
For an example of the potential long term cost advantage of meeting your Step 2 residential electricity needs with solar PV generated electricity, see the figure below:
The 25 year levelized cost of electricity (LCOE) for the grid-tie solar PV example in the figure above assumes a 6 kW south facing Nanaimo area system tilted at a typical 34 degree roof angle with minimal shading. As well as $2.50/watt for system supply/install, allowances are included in overall solar PV system costs for a structural engineering check ($1,500) as well as long term maintenance ($20/kW/year). It isn’t unusual for solar PV systems to last for 30 years or more and supply/install costs can be below $2.50/watt, so the actual LCOE can be less than shown above.
PST is not applicable to either clean energy generation equipment or BC Hydro residential electricity. See BC Bulletin PST 203 for clarifications. If you are a BC Hydro business customer you will pay PST on your BC Hydro supplied electricity until January 2019, when PST will no longer apply. Note that businesses can take advantage of the CRCE accelerated capital cost allowance if you purchase a solar PV system to offset your business electricity use. Also, BC Hydro’s RS1300 small general service business electricity rate, while not quite as high as the residential Step 2 rate, is also high enough to make solar PV cost effective.
Planning on selling your home or business and concerned you won’t recoup your investment before you sell? Don’t be. The solar PV investment you make in your home or business actually increases the value of your property because of the electricity savings it offers future owners. In other words, you get back your investment when you sell or the increased property value is added to your estate. See the results of a few studies collected by Enphase here.
A major advantage of local electricity generation technologies such as solar PV is that they generate electricity where it is needed. This is called “distributed generation”. The advantage of this is that it reduces demand on the existing BC electricity grid and the requirement for new transmission lines. This not only reduces capital and maintenance costs for transmission infrastructure but also reduces the land requirement and associated environmental impacts (environmental footprint) for the grid because new transmission lines can be avoided.
Also, while BC Hydro’s greenhouse gas (GHG) emissions are claimed to be very low, due to the old age of their reservoirs, the lifetime GHG emissions of wind and solar PV energy are also very low and less than new large hydropower operations. Please refer to our Environmental Impacts of Solar PV Power to see how solar stacks up in general against other energy sources and refer to Hydropower’s Biogenic Carbon Footprint for a recent discussion about the emissions of large hydropower operations.
Distributed generation can provide energy security in a number of ways.
Since BC Hydro only generates about 25% of the Vancouver Island electricity demand right here on the Island, that means we rely on submarine cables from the BC mainland to provide most of our electricity. Should any of those cables be damaged during a natural disaster (such as a massive subduction zone earthquake), we Islanders could face complete or rolling blackouts for an extended period of time. Installing more distributed generation systems, such as grid-tied solar PV, will help by increasing our on-Island electricity generation.
For homeowners who want more control over the cost of their electricity, installing a grid-tie solar PV system is a great way to insulate themselves from future increases in BC Hydro Step 2 electricity rates (as shown above).
Finally, for homeowners who want to be completely independent and fully protect themselves against the rising cost of electricity or those who want to be prepared for natural disasters, going “off-grid” is an obvious choice. However, the necessary batteries (or other energy storage means) can add about 50% to the cost of your electricity generation system depending on the type of storage technology chosen. One alternative is to start with a grid-tied (no batteries) electricity generation system and then retrofit the system later when you purchase an electric vehicle. In this way, you can power your electric vehicle with inexpensive solar PV electricity and use your car’s batteries as a future electricity storage system for your home system.