Going Solar in Huntsville is different from Birmingham

Going Solar in Huntsville vs. Birmingham

Thinking about going solar in Huntsville or Birmingham?

One of the many factors in your decision probably has to do with how long it’ll take for your solar power system to pay for itself. Of course, since Huntsville and Birmingham are only about 100 miles apart, you might assume that the timelines are roughly the same.

Nope. Not so much.

If you live in Huntsville—or Madison, Decatur, Athens, Florence, or any other part of north Alabama under the jurisdiction of the Tennessee Valley Authority (TVA)—you can reasonably expect a payback on your solar investment within 10 to 12 years. But if you live in Birmingham—or most anywhere else in Alabama—the payback time on your solar project will be much longer. In fact, it might never happen. Well if you want to connect to the grid.

Why the difference? It has everything to do with policy.


An investment in your future

Let’s look at a couple of examples based on real solar projects right here in Alabama. The first is a 6,000-watt solar setup at a residence in Huntsville. The up-front cost was $18,000, for an average expense of $3 per watt. Subtract $5,400 right away for the 30% federal tax credit that all new solar projects currently earn. That leaves $12,600 to pay off. In this example, 71% of the residence’s energy needs would be offset by solar, which means that household would only need 29% of its energy from the grid—and would thus pay only about 29% of its usual utility bill. Imagine the savings.

Thanks to TVA incentives, going solar in Huntsville has certain advantages.

In addition to that, the TVA pays solar customers the current retail rate for any electricity they generate. (According to the Huntsville Utilities website, the current rate is $0.08856 per kilowatt-hour for the first 1400 kWh.) This fair purchase price reduces the payback time considerably. For our example project, the estimated payback time is 10-12 years.

Think about that for a moment. Sure, 10 or 12 years might sound like a long time up front. But for residential solar generators, that timeline makes plenty of sense. After a dozen years or so, your solar system would produce pure savings. So if you’re in a house for 20 or 30 years, the incentive is strong. And if you build your solar array at the time of purchase and roll the cost into your mortgage, your earnings from selling electricity could be greater than the increased cost to your mortgage.

Either way, all of the savings come from simply running your system as you normally would any other time. So it’s not like you have to change any behavior drastically. Even better, you’re investing in yourself and your home.

Why incentives matter

The incentives for going solar in TVA territory are less enticing than they used to be. But then again, solar prices have dropped dramatically. That said, TVA’s stance on renewables is the best in Alabama. To understand why, let’s look at another example project, this one in Birmingham. 

Instead of reaping the benefits of incentives, many potential solar homeowners in Alabama are penalized by being charged a grid access fee. That means solar generators incur an extra tax of $5 per kilowatt of capacity to connect their system to the grid. This fee, which is one of the highest of its kind in the country, can reduce your monthly solar revenue by as much as 50%. Non-solar customers do not pay the fee.

Furthermore, most solar producers in the rest of Alabama are only paid what is known as the avoided cost. As of this writing, that’s approximately $0.025/kWh. This “avoided cost” represents a buyback of less than one-fourth of TVA’s and seriously dampens your return on investment.  This makes it virtually impossible for our example system in Birmingham, or any grid-tied residential solar array in the bottom two-thirds of Alabama, to pay itself off, regardless of how long it’s in service.

Of course, commercial solar is different. More on that next time!

Microgrids: What are they anyway?

What are Microgrids?

The first thing you need to know about microgrids is that they’re not so micro at all.

Or at least they don’t have to be.

As microgrids have become more widespread in the United States and around the world in recent years, you might have started to think about what they mean to you. But if you’ve ever tried to take a deep dive into the topic, you might have discovered that a single definition of the term is difficult to find.

To wit, there’s this, from CIGRÉ (h/t Microgrids at Berkeley Lab):

Microgrids are electricity distribution systems containing loads and distributed energy resources, (such as distributed generators, storage devices, or controllable loads) that can be operated in a controlled, coordinated way either while connected to the main power network or while islanded.

And this, from the U.S. Dept. of Energy’s Microgrid Exchange Group:

A microgrid is a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected or island-mode.

And, much more succinctly, this from Energy.gov: “A microgrid is a local energy grid with control capability, which means it can disconnect from the traditional grid and operate autonomously.”

Renewables such as wind power can be one of the sources for microgrids.

If you’re new to the topic and were reading all of that closely, there’s a decent chance you got bogged down in all the technical talk about distribution systems and interconnected loads. Don’t worry about it—that’s aimed more at specialists.

On the other hand, what you probably understood better were the island metaphors. And that’s critical, because while the term microgrid lead you to believe it’s all about size, the key here is actually autonomy. The Microgrid Institute, which begins its definition by calling a microgrid “a small energy system,” follows that up with this: “Microgrids are defined by their function, not their size.”

So what is that function? Essentially, a microgrid serves as an independent backup to the main grid, or macrogrid, by using the various resources (and they’re sometimes widely varying) at its disposal. That’s all it is. To put it another way, a microgrid generally works within the larger grid, but it can also disconnect and work autonomously as a locally controlled alternative.

Whether it’s because of an emergency, or because of its remote location, a community might need autonomy with its energy supply at certain times. And a microgrid, which is by definition locally controlled, provides that independence.

Microgrids are defined by what they do, not by their size.

Consider, for example, the potential benefits a microgrid can provide for a place like Alabama, which experiences severe weather regularly. In 2011, after a historic round of powerful tornadoes, some parts of the state went without electricity for a week or more. In a situation like that, a microgrid can break off from the main grid and provide an invaluable service to a community. Not only would Alabamians have electricity, but so would emergency-response workers.

“The key to understanding the importance of microgrids was driven home for us here in Alabama after the April 2011 tornadoes” says Daniel Tait, CEO of Energy Alabama. “Modern life is built on energy. Without its uninterrupted supply, especially for long periods of time, things begin to break down. Flexibility and resiliency is the name of the game.”

But that’s not all microgrids can do for a community. According to Berkeley Lab, microgrids can improve efficiency, relieve grid congestion, and provide a more reliable supply of energy, all at reduced cost to consumers. And according to Energy.gov, they can also cut costs, build energy independence and offer more flexibility. Those first two are ideas that everyone can get excited about, and more flexibility means potentially using renewable sources like solar and wind, in addition to whatever powers the macrogrid.

The remote Isle of Eigg derives most of its electricity from a microgrid.

So what does a microgrid-powered community look like? The answer, it turns out, is as varied as all those definitions from before. There’s Mesa Del Sol, a mixed commercial-residential development in New Mexico that harnesses solar power from a photovoltaic system mounted to a parking-lot canopy. Then there’s the Fort Collins Zero Energy District (AKA FortZED) in Colorado, a project aimed at creating as much energy locally as the area uses.

And there’s the remote Isle of Eigg in Scotland’s Inner Hebrides, which demonstrates the concept of islanding in literal fashion. Previously dependent on diesel generators, the 90 residents of the Isle constructed a microgrid that blends various renewables into a community-wide system. Completed in 2008, the microgrid uses hydro, wind, and photovoltaics to produce a reliable electrical supply 24 hours a day.

All of those projects are localized, and the Isle of Eigg is obviously smaller than the others. But the idea here is big, and with all the benefits microgrids can bring to a community, you might see one in your area sooner than you think.