If you have gone solar, or are thinking about going solar, you are familiar with the many variables involved. These include energy costs, financial incentives, roof design, shading, electricity usage, panel efficiency, and renewable energy credits. To address these complexities, Pepco has developed a “solar calculator” tool, WattPlan, designed to help potential solar customers understand the interplay between these variables. The calculator allows you to input your home’s specific information and receive a projection of solar costs and savings. Unfortunately, WattPlan grossly underestimates the savings going solar offers and provides misleading and inaccurate information.
MD SUN conducted detailed research into the information provided by the calculator. We found its cost estimates and projected savings do not reflect current solar reality in Pepco’s Maryland service territory. WattPlan fails because it provides unrealistic dollar-per-watt cost estimates and does not factor SREC values or state incentives into its savings calculations.
Dollar-per-Watt cost estimates
When calculating a user’s cost of going solar, Pepco’s configuration of the WattPlan software uses a default of $4.00/watt installation cost. This assumes that the average solar installer in Pepco’s Maryland service area will charge customers $4.00 for every watt of solar they install. Unfortunately for WattPlan users, this assumption is too high. The average dollar-per-watt installation cost in the mid-Atlantic region is $3.50/watt. This fifty cents makes a big difference. Residential solar installations can run from 3 kW (3000 watts) to 10 kW (7000 watts) in size. So a $0.50 cost discrepancy means Pepco’s calculator is off by thousands of dollars.
MD SUN ran the WattPlan calculator for a typical suburban mid-size Maryland house. WattPlan estimated a system size of 6.25 kW, which is reasonable for a rooftop solar array in Maryland. On average, the typical residential Maryland system runs between 6 and 7 kW. WattPlan then assumed a baseline dollar-per-watt cost of $4.00/watt, which is used to calculate the total installation cost. As discussed above, this default setting overestimates actual install costs. While this default is misleading for users, there is some good news: users can manually change certain settings within WattPlan. Accordingly, we ran the WattPlan calculator again, this time manually reducing the dollar-per-watt installation cost to $3.50/watt. Whereas WattPlan’s original default calculation yielded a total cost estimate of $25,000, this second (more accurate) calculation returned an estimate of $21,875. The result of WattPlan’s flawed default assumptions is significant: a cost differential of $3,125.
Pepco’s configuration of the WattPlan calculator with an exaggerated dollar-per-watt default affects more than just its estimate of installation cost. It also alters calculations of estimated lifetime cost savings. WattPlan defines these as “what you can expect to save with solar compared to what you would spend over the next 20 years if you did nothing”. For the same suburban mid-sized house, MD SUN found that WattPlan’s default calculations (using $4.00/watt) estimated 14% lifetime savings for a system paid upfront. When MD SUN manually reduced the dollar-per-watt cost to $3.50/watt, lifetime cost savings improved. This time, WattPlan estimated 20% lifetime savings, much better than the default savings calculation.
Similarly, when MD SUN used WattPlan to calculate the lifetime cost savings for a leased solar PV system, the default settings yielded an estimate 10% lifetime savings. When MD SUN manually reduced dollar-per-watt cost to $3.50/watt, the estimated lifetime savings increased to 18%. Here, our slight change to the default cost setting resulted in a nearly-doubled lifetime savings estimate. For both solar ownership scenarios (upfront payment and lease), the flawed default cost setting of $4.00/watt significantly reduces the quantity of lifetime savings predicted by WattPlan.
Finally, the default cost setting of $4.00/watt yields a payback period calculation that is much longer than what it would be in the real world. When MD SUN decreased the default dollar-per-watt cost to $3.50/watt, WattPlan’s estimated payback period was reduced. Our manual dollar-per-watt cost reduction saw WattPlan’s estimated payback period improve from 17 years to 15 years. (This is without the inclusion of other incentives, which we will discuss below.) For many homeowners, payback period is a principal concern when considering solar. For Pepco’s calculator to overestimate payback periods because of an inaccurate cost assumption is particularly worrisome.
So, for Pepco’s WattPlan calculator to be fully accurate, the default regional price should be set at $3.50/watt. It should be noted that even lower installation costs are possible through installer promotions and solar bulk purchase programs.
Solar Renewable Energy Credit (SREC) values
WattPlan also misleads customers by not including the value of Solar Renewable Energy Credits (SRECs). These credits represent the “green value” of energy produced by a solar PV system. They carry a monetary value and can be traded on an open market, generating a potential revenue stream for the SREC owner. This revenue is an important tool for financing solar systems. Yet, WattPlan displays no information about SREC values on its website, and appears to exclude these values from its calculations.
In Maryland, SREC prices have recently fallen to the $30 range, but have historically traded around $175 a piece. While the SREC market is dynamic and prices are subject to change, the financial value of these credits is undeniable. In many cases, factoring in SREC value into total cost estimates reduces a system’s payback period.
Solar PV system owners have multiple options for monetizing their credits. They can sell their SRECs on the spot market, sell them annually, or sell their system’s lifetime production of SRECs for an upfront payment. In the example Maryland mid-size house from above, WattPlan estimated a default system size of 6.25 kW. If that homeowner were to sell 15 years’ worth of their SREC production for an upfront payment today, they would receive $937. This amount of money was not factored into WattPlan’s calculation.
SREC’s absence from the calculator is a serious flaw because it weakens users’ understanding of solar economics. To address this shortcoming, WattPlan should be configured to include a conservative estimate of SREC value over the system’s lifetime, or at a minimum include a chart of SREC sale options that reflect present SREC pricing.
State and Local Incentives
Finally, Pepco’s WattPlan solar calculator is not configured to account for local renewable energy incentives. This is particularly misleading for residents of Maryland, a state with clean energy capital available for solar installations. Of particular importance is the Residential Clean Energy Grant Program (administered by the Maryland Energy Administration). This program offers a $1,000 grant to any resident installing a solar PV system under 20 kW. This grant program can reduce upfront installation costs, but is not considered by WattPlan calculations.
To illustrate the misleading effects of WattPlan’s calculations, MD SUN offers our own cost estimate for the same 6.25 kW system from above. We estimate the dollar-per-watt installation cost to be $3.50/watt, and we include the 30% Federal Tax Credit, the upfront sale of SRECs, and the Maryland Residential Clean Energy Grant. As you can see, factoring in SREC values, the Federal Tax Credit, and state incentives significantly reduces upfront costs.
By forgoing critical financing considerations and creating unrealistic price default settings, the Pepco calculator tool produces flawed calculations. It paints a misleading picture of the current costs and savings of going solar. Tools like this can be helpful, but only if they provide accurate information. Hopefully future iterations of WattPlan will do so.