Solar not actually a good investment?

[BEVeedom]

A "Life Cycle Costing Analysis" is a great decision making tool, but how often does the consumer live by that rule? If you compared a nice used Toyota Echo to a new Nissan Leaf, one must choose the Echo based on the LCCA results. Is that what you need or what you want? Economics is still not a real science because it must deal with irrational human behavior. The LCCA doesn't take into account the environmental cost, but that is in keeping with our current "no carbon-tax" reality.

I believe solar PV is a good investment in many situations right now. Do it If you have a new roof with an unobstructed view to the south, you plan to live or live in your house for 20 years, can get an installed price of $5/watt DC, your utility rates and costs are on the high side, and you can afford it. It will give you a lot more return than a granite counter top, an in-ground swimming pool, a Corvette, or a motorhome over the same 20 years. And it sure beats the boredom of safe money in the bank making relatively nothing in the current economic environment.

Does anyone think that electric utility prices are coming down in the near future? PV is also a hedge against inflation and price creep. Also, remember too that In the early 70's the cost of installed PV was $90/watt. How low can it really go now with a claim of a $5/watt installed price.

Don't forget to put the inverter replacement in year 15 of your analysis, or the costs of micro-inverter (one for each PV panel) replacements over the years. The balance of system should be good for 30 years with a trailing off of PV performance in the last third of the life cycle.

 

[Cheezmo]

I, like you, made a big fancy spreadsheet to try to project everything out when considering a 6kW system for my house. I ended up doing a prepaid 20 year lease for $9000. Worked out to something like 6-7 cents/kWh over the 20 years. Of course my local electric rates then dropped down to 5 cents/kWh ruining all my projections, but we'll see how that holds out long term. I think that prepaid lease deal is similar to what Solar City does, it may be worth looking into. Mine was through NRG Solar Leasing here in Texas.

I didn't get in to this expecting a huge return or anything. I figured if it was anywhere near break even it would be worthwhile.

The only surprise for me in the whole set up was that Texas doesn't have net metering and very few REP (electricity providers) buy back outflows. The ones that do charge outrageous rates so it isn't worth switching. About 16% of my generation is going back into the grid for free right now. That should not be an issue once air conditioning kicks in.

 

[Burr]

You left out future increases in your electric bill by the utility companys. In Los Angeles (SCE), charging my leaf would put me in the $.33/kW tier. SOLUTION: build your own solar array. Check out U-Tube and shop on Craig's List. A little effort, study,and your own power drill could save you thousands. It feels good driving my Leaf and knowing that I have only used sun light..........Good Luck.

 

[Computerizer]

I realized I should probably update this post, as after all this I ended up making the decision to get solar at home.

What really made it worth it is a loan from a local credit union -- they offer up to $35,000 at 4.49% for 15 years, and they let you re-amortize after you get your federal tax credit.

I don't want to repeat myself too much, so if you're interested in the details you can read my blog post: http://green.binarypeople.net/were-going-solar/

Tyrel

 

[smkettner]

Roof space is limited to a 6kW system, which at best is only 30-40% of our energy usage
- $40K price
- Tall trees on south side of property

You may not need to cover all your needs to make solar worth while. IMO 1 watt per square foot of home is fairly good sized when you are on a TOU rate. Depending on your rate and tiers the biggest return is usually supplying just the first 25% to 50% of usage.

Smaller system, lower price, better return.

Smaller system might avoid most of the shade issues.

 

[Burr]

Let me say it again. Solar panel installation is not rocket science. Study U-Tube, shop on Craig'e List, install yourself, and hire an electrician to check your work and hook it up to the GRID. There are a lot of CONS out there trying to separate you from your money. $40 k would set me up and each house beside me. None of us would have to pay for electricity again. One other little detail in many of the long term calculations I see missing: the rates are going up every year. SCE just resently got approval for three rate increases over the next two years( someone has to pay for San Onofre Nuclear Power plant closure). At the very least know what you're paying for. There is no big deal in panels at 14% efficiency vs. 16%. No one can make the panels cheaper than China. The whole industry knows it. Warranties after about 2 years are almost worthless. SOLAR INSTALLATION IS NOT MAGIC, LEARN HOW TO DO IT.......Good Luck.

 

[sparky]

Let me say it again. Solar panel installation is not rocket science. Study U-Tube, shop on Craig'e List, install yourself, and hire an electrician to check your work and hook it up to the GRID. There are a lot of CONS out there trying to separate you from your money. $40 k would set me up and each house beside me. None of us would have to pay for electricity again. One other little detail in many of the long term calculations I see missing: the rates are going up every year. SCE just resently got approval for three rate increases over the next two years( someone has to pay for San Onofre Nuclear Power plant closure). At the very least know what you're paying for. There is no big deal in panels at 14% efficiency vs. 16%. No one can make the panels cheaper than China. The whole industry knows it. Warranties after about 2 years are almost worthless. SOLAR INSTALLATION IS NOT MAGIC, LEARN HOW TO DO IT.......Good Luck.

I'm a little hesitant to give such advice even though I did a self-install and am very happy I did. I don't think the electricity part of PV install is any big deal and watching youtube and getting advice from a qualified electrician can instill a lot of confidence. The most dangerous part of a PV install is walking around on your roof and pushing 30+lb unwieldy panels up a ladder. And if you have a 2-story install or steep pitch or tile you really have to decide how much those risks are worth the price difference when you need to rope-in and / or do scaffolding. So I would say evaluate doing a self-install based on your comfort level with the kind of physical agility involved, less so the mental agility. My $0.02.

 

[Computerizer]

And some people just don't have the time to do it themselves.

 

[Burr]

You're right SPARKY. I don't think I would have tried installation on those roofs either. But two nights on U-Tube studying ; one night shopping on Craig's List; one Saturday picking up equipment; one Saturday for installation; and one morning with the electrician (and building inspector) saved me about $2000 per kW. Working around SCE and all those salesmen with their SOLAR Schemes really did it for me. I have been waiting seven years for the right electric car to use on my existing solar array. The LEAF is frosting on the cake for me. Good Luck and hope all goes well with your LEAF.

 

[Volusiano]

One way to look at solar investment is to think of it as a diversified investment. If you already have enough money in the stock market in various forms and your 401K contribution is also maxed out and you don't want to put more money in the stock market or real estate, then instead of putting extra money in the bank to earn a lousy 1 or 2%, the savings from your solar will be better than that for sure.

 

[donald]

You are looking for a warm and glowy feeling to go ahead with an installation ...

Well, just consider this - how much in subsidies are you sucking up? Do you feel good about drawing down on the tax-payer's pot?

OK, so the Gov has decided to shell out that money, and it'd be a heck of a lot of money to decide not to turn down.

Do you feel good taking Gov handouts, will that off-set any warm feelings you might have?

I'm not arguing that point, though. I'd have little hesitation myself in accepting Gov incentive to start-prime a new technology market. Just that it is not a universally agreed point.

But, then, ask yourself WHY the Gov is doing that?

Simply, they are trying to incentivise you to use your money to invest in solar and are 'making up the difference' compared with the benefits if you decided to invest the money in financial markets. If they get their sums right, it should be just the right amount to incentivise you to go ahead.

So on balance, you can likely expect the reality is that it's not a financial argument. Instead, consider if the security of having your own energy supply is, itself, worthwhile (which is often why solar folks go for it, irrespective of financial arguments), and also bear in mind that you are helping to reduce the burdens and loads on the network which, again, is not only adding to your energy security but is helping the sustainability of the electrical network delivering to the wider community.

You might also want to contemplate if it actually adds up to a socially responsible thing to do, to install solar panels if you have the opportunity. Others might want to, to reduce emissions and reduce reliance on fossil fuels, but cannot because it is not practical at their properties while they look at your large property annoyed and wondering why you are selfish enough to take no action to help energy security and reduce fossil fuel use.

Without subsidies, it looks to me that, pretty much wherever you are in the world, the pay-back cost is 20 years on solar panels before the value of the energy generated exceeds the cost of the equipment. The Gov is helping you get that down to just a few years, though in practice there is probably no pay back for the tax-payer for that 20 year payback period either. Maybe 15 years now, with lower prices, but still a decade+.

Personally, I'd say that it is in everybody's interests to be as efficient with energy as possible, irrespective of financial or energy security arguments. I think your question is a no-brainer with those sorts of subsidies on offer [which, I presume, are only available for a professionally approved installation, so DIY might be out of the question]. I only wish I had a suitable property, and could draw on those sorts of incentives. You would be promoting a technology and an industry to get on with making such installations more and more cost effective and energy-beneficial. Just do it. It's a 'real' piece of economic activity, than punting bits of paper around thinking that in some way financial markets 'generate' wealth.

 

[ERG4ALL]

Regarding investment returns, anything that pays for itself in 20 years is basically a 5% return with a lot less risk than the stock or bond markets.

Regrading staying in your house long enough to make PV worthwhile, after a year or two you will be able to see what savings you have. After that if you decide to sell, take the forecasted income stream and use a Net Present Value analysis to see the savings over the life of the system. Then raise the selling price of the home over non-renewable energy homes by a portion of that savings. You get to get more of your investment back and the new owner gets a lower monthly energy bill.

Regarding tax incentives robbing other citizens, I look upon any subsidies as getting MY TAX DOLLARS back and would encourage anyone else to get some of their tax dollars returned to them as well. This country has a propensity to spend money on a defense budget that is as much as the next 13 largest defense budgets in the world, but we somehow say we can't afford anything that helps our own citizenry. I calculated that if the money that has been spent ($400 Billion) on the F35 non-fully-operational-next-fighter-jet (http://www.latimes.com/business/la-fi-0612-fighter-jet-testing-20130612-dto,0,4701367.htmlstory) were spent on quick chargers at $20,000 apiece on the entire U.S. Interstate system, we could have a charger installed every 12.5 feet. My conscience is clear getting some of my tax dollars returned to me.

 

[donald]

if the money that has been spent ($400 Billion) on the F35 non-fully-operational-next-fighter-jet were spent on quick chargers at $20,000 apiece on the entire U.S. Interstate system, we could have a charger installed every 12.5 feet.

:lol:

And if there is 10% penetration of EVs in the market place, you'll probably need that many!

 

[surfingslovak]

And if there is 10% penetration of EVs in the market place, you'll probably need that many!

Disagree, and vehemently. I realize you meant this as a joke, but I'm starting to wonder what exactly your agenda was here.

 

[QueenBee]

Regarding investment returns, anything that pays for itself in 20 years is basically a 5% return with a lot less risk than the stock or bond markets.

Not sure I follow your math. If it pays for itself in 20 years that means after 20 years I have a 0% return but a 100% return of investment which means after 20 years I have the same amount of money that I started with. That means I've lost money both because of lost opportunity cost and the real impact of inflation.

[which, I presume, are only available for a professionally approved installation, so DIY might be out of the question].

Nope, AFAIK there aren't any incentives that only apply to professional installations.

 

[RegGuheert]

Well, just consider this - how much in subsidies are you sucking up? Do you feel good about drawing down on the tax-payer's pot?

I'M the taxpayer and I have absolutely NO qualms about KEEPING as much of my money as I can.

Simply, they are trying to incentivise you to use your money to invest in solar and are 'making up the difference' compared with the benefits if you decided to invest the money in financial markets. If they get their sums right, it should be just the right amount to incentivise you to go ahead.

I can almost buy your argument if you consider the average installation, but this is WAY off base if you are talking to an individual about PV. If you ignore government meddling, you will find that the costs and payback time of installing PV solar vary tremendously between different installations, even within the same geographic area. So many variables need to be taken into consideration that I reject any blanket statements about PV payback when applied to an individual circumstance. Some installations pay back very quickly, some never pay back and there is everything in between.

 

[ERG4ALL]

Donald got me thinking. What would the cost be if there was 10% penetration of EV? I got some figures from this website and then started noodling with the numbers.

http://www.usa.org/cars/

Registered Passenger Vehicles in U.S. 2004 243,023,485
Cars 136,430,651
SUVs & Pick Up Trucks 91,845,327
Assume 2/3rds are SUVs 61,230,524
Total Long Trip Vehicles 197,661,175

10% Penetration by EVs 19,766,118
Avg. Weeks of Vacation 2
Weeks in a Year 52
Max. % of Vehicles Used for Vacations needing multiple charges 3.8%

Est. Gross Up for Summer Seasonality 3
Long Trip EVs on Road at Once (3.8%x3x20M) 2,280,706

Cost Per Charger $20,000

Total Infrastructure Needed for Charging $45,614,117,343
Gov't Spending on F-35 $400,000,000,000

One can question the assumptions but I doubt that the real answer is off by an order of magnitude. Some estimates may be overstated and some understated, but I think when the 200 mile range EV is here for the masses, as a nation, we could support building the necessary infrastructure for nationwide travel.

 

[GRA]

Donald got me thinking. What would the cost be if there was 10% penetration of EV? I got some figures from this website and then started noodling with the numbers.

http://www.usa.org/cars/

Registered Passenger Vehicles in U.S. 2004 243,023,485
Cars 136,430,651
SUVs & Pick Up Trucks 91,845,327
Assume 2/3rds are SUVs 61,230,524
Total Long Trip Vehicles 197,661,175

10% Penetration by EVs 19,766,118
Avg. Weeks of Vacation 2
Weeks in a Year 52
Max. % of Vehicles Used for Vacations needing multiple charges 3.8%

Est. Gross Up for Summer Seasonality 3
Long Trip EVs on Road at Once (3.8%x3x20M) 2,280,706

Cost Per Charger $20,000

Total Infrastructure Needed for Charging $45,614,117,343
Gov't Spending on F-35 $400,000,000,000

One can question the assumptions but I doubt that the real answer is off by an order of magnitude. Some estimates may be overstated and some understated, but I think when the 200 mile range EV is here for the masses, as a nation, we could support building the necessary infrastructure for nationwide travel.

Quite a nice analysis, although the LDV fleet peaked around that time (IIRR it was 2005) and has since declined considerably, even taking into account the recession. It remains to be seen whether Gen Y's current lack of enthusiasm for suburban living and a car-based lifestyle is really ingrained, or just an artifact of their high % of under/unemployment and weak purchasing power, and they'll turn into their parents as their earning power and family size grows. But I'm cautiously hopeful that it represents a real change in attitude, and the number of LDVs will continue to decline as more and more people decide they can do without owning a car.

 

[ERG4ALL]

I really was quite overly pessimistic in my analysis. I should have added the effect that if the car can go 200 miles and it takes 3 hours to do so and only 30 minutes to recharge that really lessens the need for as many chargers. Only 1/6th as many would be needed.

 

[Computerizer]

I really was quite overly pessimistic in my analysis. I should have added the effect that if the car can go 200 miles and it takes 3 hours to do so and only 30 minutes to recharge that really lessens the need for as many chargers. Only 1/6th as many would be needed.

Yeah, I was going to bring this up. Having 2,280,706 EVs on road trips doesn't mean you need 2,280,706 chargers. Your first point is fine, though the numbers aren't near that now -- with a LEAF you're going to go about 60 miles every hour and then spend 20 minutes charging. So you're spending 1/3 of the time you're traveling charging.

But also, you don't spend the entire 2 weeks of your road trip traveling. Surely you have to sleep, eat, etc. In fact, most people drive to a place one day, stay there for a couple weeks, and then drive back. I just got back from a 1,303.7-mile, two week road trip. We used public chargers 22 times, and on average about 30 minutes each time. So we spent 11 hours charging out of the 336 hours in the two weeks, which is about 3.3% of the time.

I can lift that to a conservative 5% of the time, and then that would require only 114,035 chargers, at $20,000 each, for $2.3 billion.