Today, I received a nice offer in my mailbox from utility company ENMAX. These offers often make me angry because I find that they prey on people’s lack of information regarding electricity units and pricing. Today was no exception.
It seems that, “more and more Albertans are tapping into easy home solar power,” and ENMAX will look after everything for me and, “make it affordable thanks to three pricing options.” The three pricing options (on 15 year terms) are:
- $0 down, $59.99/mth;
- $1500 down, 39.99/mth; or
- $3500 down, 16.99/mth
But, that’s not all. In the fine print, I am also informed that this does not include other charges with may apply such as permits, wiring, conduit, a new electrical panel, etc. Otherwise, if I have a standard roof, ENMAX will take care of the rest, and at the end of the term, they’ll charge me $950 to take the panels away, or $350 to buy them.
What ENMAX did not see as important to provide in this offer was information such as, say, the capacity of the solar panels, or what I might expect the capacity factor to be – in other words, they are offering me the chance to buy a solar power system for easy monthly payments without giving me the least bit of information on how much power that system will generate.
So, after checking in on the ENMAX site, I found out a few more relevant details:
How much energy will a 1.3kW solar photovoltaic system produce annually?
In Alberta, a 1.3kW solar photovoltaic system will typically produce between 1000 and 1400 kWh per year.
Wow, 1000-1400 kWh per year! That might sound like a lot, but it actually isn’t. A quick check over to my ENMAX bill shows that I use, on average, 700kWh per month of electricity, so my new solar system would typically offset between 12 and 16% of my monthly electricity usage.
ENMAX tells me that I might want to do this to reduce greenhouse gases, to lead the way into the future, to get a portion of the energy I use from the sun, or just because it feels good. Well, let’s run some numbers on these and see how much I’ll be paying to lead the way into the future, shall we…
On my electricity bill, I pay for a lot of things other than the energy itself, and some of those charges would also be reduced by my solar system. On average, I paid just over 13c/kWh for delivered power (including energy, distribution, and transmission) over the last year. Based on these values, I should expect my system to save me, on average, about $15.17 per month in electricity bills.
Let’s assume that I can get the system permitted and install all the ancillary components for $1000, and that I choose the lowest implied interest rate (option 3) on my panels, and that I generate 1400 kWh per year (I’m picking the top of the range to make this look good). With $3500 down, and $16.99 per month, the net present value of the cost of my solar power system is $6304.33 assuming a 10% annual discount rate. If I assume that the price of electricity increases at 5% per year, then the net present value of my electricity savings are $1970.59 over the same time period. The net present value loss from my solar system would be $4333.74.*
But, that’s not the only benefit, as I also get the GHG offset value. Based on Alberta average grid emissions from Environment Canada, I can offset 880 grams of CO2e GHG emissions for every kWh of solar power I generate. Again assuming generation of 1400 kWh/year, I would offset 19.71 tonnes of CO2e over the life of my contract with ENMAX. Now, there are plenty of other ways that I could offset GHG emissions, including buying top-tier certified offsets. Let’s use a benchmark of $30/t for the value of GHG offset, which leaves me a net present value of $301.11, reducing the net cost of my solar system to $4032.63. You might say that I’d have to value GHG emissions at an average of $235/t to make the system pay off on GHGs alone, but you’d be wrong – even if that were the case, you could take your $235 and buy and retire about 20t of EU ETS permits right now and get a much bigger bang for your buck.
So, if you happen to value leading the way into the future and feeling good at about 18c/kWh, I’d say you should give ENMAX a call. Otherwise, make sure you know what you’re buying for as little as $0 down and 180 easy payments of 59.99/mth.
* The nominal values, with no discounting, are costs of $8458 and savings of 4305, for a net loss of $4153.
NOTE: A reply to this blog post from ENMAX is available here: http://andrewleach.ca/climate-change/enmax-has-a-different-definition-of-affordable-than-i-do/#comment-3081