Time to read: 6 minutes
If you’ve been keeping up with our posts in the past, then you know that we’re big fans of financial incentives that make solar more affordable. Today, we’re going to be exploring one of the more unique things that a Solar Powered System can offer you and your family: solar buyback. We’re joined by two experts from IES Texas Solar: Solar Consultant Kristin Killgore and PV Design Engineer Kevin Marceski. Kristin and Kevin have helped us explore other topics in the past, but today they’re here to show us how solar buyback works and what it can do for your home or business.
So what is solar buyback?
Put simply, solar buyback is the ability to sell the excess electricity generated by your Solar Powered System back to your utility company. As Kristin explains, the amount that you are credited varies depending on your utility company.
KK: “Solar buyback is the value at which an electric company credits a customer’s excess solar kilowatt hour production. It’s important to know that it can vary on that value. I think that’s something that can really become very confusing to a lot of customers. Each utility really varies on that and so it really affects the offset of what your solar systems should be based on that value.”
How does it work and how are you credited?
KK: “Whenever you see your bill at the end of the month, you have the cost per kilowatt hour that you buy it. And then for solar, any excess credit that you produce, you’ll also have a kilowatt hour that they sell it to you. um, that you’re giving to them. Normally it’s like a one-for-one ideally. It’s a one-for-one in the Solar World, that’s obviously the best value for the customer. But sometimes it’s either a one-for-one or a wholesale is what I normally see in Texas, and wholesale is usually about half of the value, half of the credit of what you’re actually buying it from them at.”
Does it vary between utility companies?
KK: “It can really vary between utilities. In Texas we still see both one-for-one and wholesale value, which is about half the credit. But there’s different ways you can combat it and it really doesn’t matter. Like you know, whether you offset your electricity to 60% or you offset it to 100% you’re essentially going to be owning that part of your system. So, if you offset your system 60% it still means that you are going to own 60% of your electricity and that has a great value in it because that’s locking you into future inflation.”
This seems like a big win for customers. Even if different utility companies provide different rates for solar buyback, it’s still a wonderful deal for owners of a Solar Powered System.
KM: “Yeah, I think it inspires different incentives with people. Like you were saying Kristen, the one-for-one buyback is kind of like the golden standard for solar. But some utilities kind of want to incentivize people to have a correctly sized system, so they’ll only give you that wholesale rate back and I think that kind of incentivizes people to be using power as the solar is being generated instead of having to worry about a buyback in any kind of way. You’re optimizing your energy use while the sun is shining while it’s the light producing electricity to keep your power all within the house as it’s being generated. I think that’s a really cool part about it, even when there isn’t a full buyback. It is incentivizing smarter electricity use.”
KK: Normally, you’ll see in a home that if you have like 100% offset of solar, you’re using about 50% to 60% of that offset during the day. So basically, when the sun is shining and your system is producing electricity, it goes down to your main service panel, and from there it is instantaneously being used in your house. Anything extra from that will go back to the meter as the credit. So from that percentage about 50% to 60% That no matter how the utility buys that back, that’s yours to use. So it’s an incentive to be able to use as much as you can during the day because that’s your own power, and anything else that goes back to the grid is a credit and that will be a wholesale or retail. So usually retail or wholesale is usually seen in Texas, and depending on that is usually a conversation that I will have with a customer depending on like do you want to have the best value or do you want to have 100% offset? Because if it is wholesale, then even if you have 100% production, you’re still not going to be able to get back that sort of utility winning in that position. Because even though you’re actually giving them just as much they’re not giving you the value for it.”
KK: “So if it’s 80%, depending on what your graph would look like, depending on what your consumption is, like in January versus July versus February, you could look at all that and you look at what the solar buyback is from the utility and you look at the customers graph, and you ask what where’s that sweet spot? So if it’s 100% then but if it’s at your retail, then it would be 100% consumption or annual basis. But if it’s like for wholesale, then you want to look at that graph and kind of see where that sweet spot would be to where you’re going to get more value for your solar and not let them win in getting more out of it.”
Stacking benefits and incentives
Solar buyback pairs very well with all of the other financial incentives that come with switching to solar, especially the newly increased federal tax credits.
KK: “Besides being able to own your electricity and owning your own power, they’re buying it and having the inflation rise up every single year. You also get the tax credit that just raised up to 30%, which is a huge incentive. And you know, if you had a completely off grid system, you would have to have a battery to be able to use your light you have to have a battery to be able to run your house at night, but because we’re tied to the grid and we have those credits that can go back, you’re basically pulling those instead of having a battery and that really decreases costs too.”
If you are considering switching to solar for your home or business, reach out to us by going to our website, iestxsolar.com, or by giving us a call at (855) 447-6527.