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Can I oversize my solar system so that I make a profit?

asked 2015-01-16 12:41:05 -0500

Trev N gravatar image

updated 2015-01-24 11:04:07 -0500

I'll be purchasing solar panels this year to take advantage of the federal tax credit/rebate before it expires.

I'm wondering if I can get an extra large system and sell all of my surplus electricity to the grid to earn some extra money. Is there any reason I can't or shouldn't do this?

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answered 2015-01-16 14:20:56 -0500

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updated 2015-01-16 14:20:56 -0500

energysage gravatar image

Hi Trev,

First of all, it's important for you to understand how a solar system saves you money. There are 3 ways it does this:

1) By generating your own power, you avoid having to purchase electricity from your utility, which means a smaller bill.

2) Any excess solar power will earn you 'net metering' credits on your power bill. The net metering credit rate is usually the same as what you pay for electricity. So if you pay 10¢ per kilowatt-hour (kWh) for electricity from the grid, your surplus power will earn you 10¢ per kWh as well. Read more about net metering.

3) If you live in a state that has an SREC market (read more about SRECS here), then you can also earn money from SCRECs - this is usually a deposit in your bank account, and does constitute spendable cash, unlike 1) and 2).

Now to answer your question:

The short answer is 'no' - you generally cannot install a solar panel system with the primary aim of making money on it. Utilities will usually not let you install a system that produces significantly more power than you need for your home. When solar installers design your system they will usually keep this fact in mind, and will select a size that is most appropriate to your needs. In some rare cases, they may oversize your system, but they would only usually do this if you've told them that you expect your power usage to increase in the near future - for example, because you are going to get an electric vehicle or a pool.

And even if utilities did allow you to deliberately oversize your system, this would most likely not benefit you in any substantial way. This is because any surplus net metering credits that you accrue on your utility bill will not translate into extra cash for you. And even if you can get SRECs in your state, they will not generally earn you much money. While you may roll them over from one month's bill to the next, in the worst case scenario they may expire - and therefore be worth nothing - at the end of your annual contract. Even in the case that your utility will 'buy out' your surplus net metering credits, the rate they pay is generally substantially lower than what you would receive as an electricity bill credit, so you'd be making a loss.

Hope this helps.

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Asked: 2015-01-16 12:41:05 -0500

Seen: 1,681 times

Last updated: Jan 24 '15