Electric feel

People are weird about money.

Some people will whip out a credit card to buy new shoes, appliances, even entire weddings. They’ll get secured loans for homes or cars or boats. It’s easy to make judgments about other people’s characters by knowing what they spend money on. The process is our culture’s primary fuel. It’s the engine of consumption.

But those items I just mentioned, with the possible exception of the house, are losing propositions. The first time you use any one of them, it’s worth less, and it’s worth less with every day that passes. Criminals can take them. Shoot, much of the time, the government is a party to the theft.

But there are some things that appreciate in value and that have the feature that they can’t be stolen from you. Education, for example. A college master’s degree is worth $1.3 million more in lifetime earnings than a high school diploma, according to the U.S. Census Bureau. It’s a report called the Big Payoff, if you want to read it for yourself.

And yet, people bitch about kids who get student loans. Spend $40,000 to make $1.3 million? Who wouldn’t take that return on investment? But again, it’s the fact that it gains value and can’t be stolen that I’m interested in. People buy $40,000 cars without blinking an eye, but in six years, those cars may lose $25,000 in value.

I want to spend my money on things with true value. I’m not talking about “investing.” The fact that I had my retirement and my home’s equity stolen by the illegal actions of the finance industry informs this thinking, but it’s not just about that.

That’s where my plan to put solar modules on my house comes in.

People keep asking me, “So when will those things be paid for?” Like those kids with college loans, people question my wisdom, as though solar modules are frivolous because they won’t produce value until they produce savings on my power bill after being fully paid for. Well, it’s not just about the money.

Some people get it. If we’re going to move past the petroleum economy that’s destroying our planet, we have to help create the green economy. We have to move it forward by buying into it, even though the short-term costs are higher than buying oil. But then I’ve never heard of someone getting killed or tortured in the Middle East because we wanted their country’s sunlight.

So how am I going to put my money where my mouth is? I have a three-part plan: I’m going to lease an electric car. I’m going to figure out financing. I’m going to power my house and car with the sun. OK, maybe not in that order.

And you know what? While I do it, I’m going to try to convince skeptics that it makes financial sense—even for those people who want immediate return on investment.

Empire of the Sun

Let me tell you one thing straight up. You know those people you meet at Earth Day? They’re so nice, so loving. They’re probably not the people you’re going to meet when you’re moving into the personal power utility. People in the “green” banking business are just as cutthroat as your most traditional banker. The people who sell electric cars are still car salesmen.

Upon making the decision to really go green, I contacted an expert, Bob Tregilus, president of the Electric Auto Association of Northern Nevada, so I wouldn’t have to waste a lot of time on car shopping. For cars available in Reno, he’s a fan of the Nissan Leaf. He also steered me toward Nissan of Reno. Nissan is running a national deal on a 36-month lease, $2,000 plus taxes, plus $199 a month (plus sales tax) plus $300 at the end. Insurance will be about $840. Call it $4,186 a year.

My experience with Nissan of Reno turned out to be a comedy of errors, all the things you hear about buying cars. Eventually, we’d sign a contract, which they would promptly break, although not through their own actions.

(And when I got irritated, one of the managers pointed out that it’s written into Nevada law that the dealers have 20 days to back out of car sales contracts. “Usually, it’s because we found something wrong with your credit, but it could be for any reason,” he told me when I used the words “breach of contract.”)

Eventually, they made good on their promises, and they threw some extras in to make good on the broken deal, although plainly I’ll have to pay for these “extras” at the end of the lease if I choose to buy the car.

Let me do the car math for you. I have been driving a 1998 Jeep Grand Cherokee with 170,000 miles on it. I spend an average of $240 a month on gasoline. I get the oil changed twice a year to the tune of about $100. The last couple of years, I’ve conservatively averaged about $2,000 a year in repairs. Insurance is about $50 a month. That’s annual cost of $5,140.

Cha-ching, right? $954 a year in my pocket. And that doesn’t even include the $7,500 incentive the federal government took off the price of the car if I choose to buy it. Your results may vary, and the only reason it works out so well for me is that I was driving an old gas guzzler that needed a lot of repairs the last few years.

I’m not the only one who feels this way. In fact, according to Autoblog.com, the Nissan Leaf hit a U.S. sales record, last month, 2,420 of them sold for a 253.3 percent increase over last year. Chevy sold 3,351 Volts in August. “In the US, the Volt had an 18.4 percent increase over August 2012 numbers, and easily beating the Volt’s previous best sales month from October 2012, when 2,961 were sold. For the year, the Volt has so far sold 14,994 units, 11.1 percent more than the same time in 2012,” the blog reported.

After calling to promise a callback, Nissan of Reno did not choose to do an interview.

Home is where the sun is

Next for the solar modules on the house. Modules are the correct name for those black photo-voltaic squares that you see on people’s roofs and arrayed frames. Most people call them solar panels. I want to run my house and charge the car off them. Turns out it’s going to have to happen in two stages, and I’ll explain why in a bit.

With me, business is all about relationships. If I have a good relationship with the people involved with a business, I’ll stick with them. I first started working with Russ Cartwright at Independent Power Corporation in 2001 or 2002, when I had the company repair some old domestic hot water solar panels on my house. It cost us around $2,800 at the time, money we really didn’t have, but just powering an electric hot water heater costs in the neighborhood of $60 a month. That’s $720 a year or $7,920 savings by having the solar panels working on the house. Obviously, four months of the year, the hot water solar modules don’t do as much, so let’s cut off 15 percent, which leaves a savings of $6,732 minus $2,800: $3,932 in the black.

Cartwright has moved on, but having had a purely positive relationship with them since those days, when Bob Tregilus suggested I talk to Jeb Bateman, their current solar efficiency specialist, I didn’t balk, and I didn’t call any of the other solar installers for comparative prices. There are other contractors in the area, like Briggs in Carson City and Bombard in Las Vegas. Again, your results may vary, so I suggest you do comparative shopping. I’m happy with my decision.

I’m not the only one making the decision, Grace Caldwell told me. “There’s sort of two aspects,” she said. “The solar thermal heating—water heating, pool heating—that’s been pretty stable. … In the PV world, with the prices coming down so dramatically, many homeowners can afford something now that they couldn’t afford two or three years ago.”

And that means more people are doing these types of improvements now, although it still hasn’t reached the fevered pitch of the housing and credit bubble 2006-7. But unlike those halcyon days, this period may be based on real values.

“I think [the green economy] really is coming on now,” she said. “With the lower prices and the housing industry coming back and the economy coming back, it’s going to keep building. That’s my feeling on it.”

The downside to all this? With the cost of technology dropping, companies like Caldwell’s have to do more work (gross sales) to make the same profit.

The reason I have to do my solar module installation in two phases is because NV Energy gets to decide how much energy I can generate on my roof. Basically, I can put enough solar modules on my roof to pay for the equivalent of last year’s electric use because the power company doesn’t want to have to buy energy from me. I didn’t have an electric car last year, so that will be a large increase on my power use this year. To make a long story short, after a year with the modules on my house, I’ll be able to add modules to power the car. But to do this, I have to start with a system big enough to handle the add-ons in a year.

Please understand, this story is going to give you just about enough information to be dangerous. I’m just a reporter, not an engineer, not a financial whiz.

At any rate, the big difference between doing it all at once and doing it in two phases is that I’m putting a 6 kilowatt system on the house that will initially run a 3.4 kilowatt system. That’s 14 modules, a 6 kilowatt inverter, and since I’m going to remain tied to NV Energy, no battery backup. It’s going to cost me $18,497.

Eighteen thousand five hundred effing dollars?

Now hold on. That’s the upfront cost. Let me let you in on the real math. Again, your results may vary. Take $500 bucks off the top because Independent Power threw in the installation of a 240 volt charging station for my new car. Then take off the 30 percent federal tax credit at $5,399.

Next, add in $595 per year from electricity savings. Then add in the annual PEC credit payouts from NV Energy. We’ve got it at $840 a year, but with the hot water solar, which we are installing the technology to measure, that’s likely conservative. With an annual monetary value of the system of $1,436 during the first year, that’s an 11.4 percent return on investment the first year. Over the life of the system, about 25 years, and before I add in the less expensive half of the system, that’s $24,635 in power savings, $21,000 in PEC credits: $45,635.

That doesn’t include the increased value of my home. That doesn’t include increasing energy prices. That doesn’t include the fuel costs I’ll save from not paying for price increases in petroleum. It doesn’t include the fact that the Nevada Legislature could decrease the payout for PEC credits with a stroke of a pen. It also doesn’t include the fact that big companies like Barrick Gold may start competitively buying green PEC credits, and some of the numbers I’ve heard bandied around are 5-10 times what NV Energy is paying.

Unfortunately, it also doesn’t include the interest on the loan I got to pay for all this.

Sunny money

The weird thing about alternative energy contractor types like Jeb Bateman or Grace Caldwell of Independent Power Corporation: They know little about financing. If I were to presume to tell them how to do their job, I’d suggest they go to each of the banks in town and any bank on the internet with a green-focused loan, and I’d collect a one-sheet from each that describes their program. To that, I would add a one sheet that shows every possible tax rebate or utility credit, because nobody knows all the ins and outs of these deals. And every program that adds to the buyers’ personal bottom line is a reason to invest.

Since the whole mortgage crisis killed almost everyone’s home equity, mine included, a regular second is often impossible. Still, I’ve got about a 770 credit rating, so I’m going to get any loan I apply for. I was able to find and compare three banks that had special green financing programs.

In Reno, Nevada State Bank has a loan called a “Green Chip Energy Efficiency Loan,” and as I understand it, that’s an unsecured loan that’s .20 percent over the Green Chips rate, which would put it at around 2.20 percent interest this week. NSB will loan up to $7,500 for up to 60 months. They’ll be looking for a debt-to-income ratio of 45 percent or lower. The money that funds this loan is from a 501(c)3 called Green Chips. Read more at http://www.greenchips.org/pages/presskit.pdf.

Umpqua Bank has several special green loans, but the only one I qualified for was called “Green Street.” This is also an unsecured loan for up to $15,000 with up to 60 months to pay. It’s got a 5.25 percent interest rate with no loan fees, no annual fees and no origination fees. It’s a pretty good deal, but it’s going to have a steep payback right from the get-go.

I eventually went with Admirals Bank out of Rhode Island,
www.admiralsbank.com, because of the terms of the loan. While it seems more expensive at first glance, it’s the one that would work best for me. It’s a 7.95 percent loan with a 20-year payback. If I was just to pay back the loan as scheduled, I’d be paying $24,492 in interest, which would devastate my $45,635 profit. (That’s the sad truth about interest, kids. Use credit responsibly.)

But built into this loan was a free refinance. That’s key to me because it gives me leverage. When I get my federal incentives back, I can either pay down the principal by $5,399 and cut the length of payback, which will decrease the interest rate (possibly down to 4.95 percent for a 60-month payback). This loan has no penalties for early payoff. The other thing I can do is use the federal tax money to pay for the second phase of solar panels, which will generate another 30 percent federal tax credit as long as I do the project before 2015. That will complete the cycle between the sun, my roof, and my car.

I’m going to leave it up to you to decide whether I’m being weird about money. In the absolute worse case scenario, I’ve spent $12,600 plus interest to feel better about my impact on global warming. On the other hand, the cost to Reno taxpayers of our blood-for-oil war in Iraq is $677 million; that’s $2,969 each for the 228,000 of us.

I’ll let you calculate what that says about our characters.