Be your own power company (© Stuart Pearce)Click to enlarge picture

© Stuart Pearce/agefotostock

Energy independence isn't just for nations anymore. It's for households like yours and mine.

As fuel prices rise and the necessary equipment inches toward affordability, small solar and wind generators are entering the mainstream. By 2005, at least 21,146 utility customers (most of them in California) around the country were selling electricity they had produced back to their utilities, according to government figures. The bulk of this was wind and solar-generated, but a handful of people have set up small hydroelectric generators. (This last option is severely limited, particularly due to environmental regulations for construction in a streambed.)

But generating your own power still isn't cheap. Installing solar power — easier and cheaper than wind turbines for most homes — isn't likely to pay back your investment in one or even two decades. In the meantime, you can reduce your electric bills and think of the money you spend on the initial set-up as a low-return, long-term loan to the environment.

The charge of being your own power producer
The average 2,000-square-foot house without electric heat or an electric water heater uses at least 8,000 kilowatt-hours a year. To supply that, you'd need a system with about 6.5 kilowatts of capacity — the amount of energy that can be produced at any one time — which costs about $52,000. Figure on paying about $8 a watt. 

Sending electric power back to your utility's transmission lines is called net metering. Geologist Tom Gignoux, a net-metering pioneer, installed a tiny 900-watt solar-panel system on his 1,200-square-foot Missoula, Mont., home eight years ago. Being an early adopter had its benefits: He got in on his utility's pilot project, which paid half the cost of his $9,000 system.

Even with the subsidy, though, it'll be a long time before Gignoux's investment is eclipsed by his electricity sales. His panels produced 1,261 kilowatt-hours of electricity last year, which saved him — after the utility's standard $4.60 monthly charge for reading the meter is factored in — about $117 on his electric bills.

What's your home worth?

Because utilities often cap how much power they'll purchase, Gignoux will never get rich operating a home-based utility. The best a homeowner can usually hope for is to end up spending zero on monthly electric bills. NorthWestern Energy, Gignoux's utility, has about 320 customers who sell power to the grid, and only one produces enough to see a zero balance on his bills, says the utility's net-metering project coordinator, John Campbell. 

Gignoux figures he's earning about 1.5% on his money, an investment he likens to "a bad bank account." But the higher electric rates go, the faster his investment will be recouped.

"The personal pleasure I take certainly makes it worth it," he says, "and this is $117 I didn't have to earn and pay taxes on. As an investment, it's going to be paying (back) for 30 or 40 years."

Solar: What it takes
If you are thinking of producing your own power from the sun, here's a rundown of the basic equipment required, according to Campbell:

  • Photovoltaic panels. The panels, which soak up solar radiation and convert it into electricity, are made of silicon and coated in tempered glass. They aren't difficult to install, but for safety's sake, it's best to use a licensed electrician. Panels can be mounted on a roof or on a free-standing pole and can be installed in a fixed position or made to follow the sun. A less obtrusive option, Sunslates, are roofing tiles with photovoltaic panels built in, but these about double the cost of a typical solar project, says Rip Hamilton of Solar Plexus, a Missoula equipment supplier.
  • An inverter. This regulates the power and changes it to the alternating current that household appliances require. Inverters for a 6.5-kilowatt system run $3,000 to $4,000.
  • A meter that can run backward to show not just how much power you take from the utility but also how much you're sending back.

Adding batteries, which can be done initially or later on, makes you self-sufficient in case of a disaster. But they cost a lot — about $23,000 for that 6.5-kilowatt system — and last only eight to 10 years.

If your home is linked to a utility's distribution lines, any excess power you produce flows back to those lines, sort of like water spilling out of a full bathtub. The question is, will your utility credit you for the power you're sending it? The answer depends in part on your state's energy policies and rules, and whether your local utility works with net-metering customers. Consult "Freeing the Grid" (this is a .pdf file), a report by the nonprofit Network for New Energy Choices, which explains and ranks each state's policies and programs. New Jersey gets a perfect score; the other top-ranked states are Montana, California, Oregon, Nevada, Minnesota, New Hampshire and Wisconsin.