Solar not actually a good investment?

The size of my PV system will be just a little more than is needed to produce enough power for both our EVs in a year.

The way I think about it is this:

The reason I'm getting solar panels is to charge our cars.

The panels generate power, which I store in the grid, and take back out of the grid in the evening to charge my cars. It's as if I had an oil pump on my property, which I used to pump oil out of the ground, stored it in a big tank, and then poured it into my cars when I needed to refill them.

Due to net metering, this will make the cost of the electricity itself for the cars, from the utility, zero.

Due to financial incentives from the State of Washington, I will actually make $0.36/kWh until July of 2020 for every kWh that my array produces (which are used by my cars). Thus I'm getting paid $0.36/kWh to fuel my cars.

I have a loan to purchase the solar panels. Its payments will be about $186/mo. This is a "fuel" cost, since I'm using the panels to charge my cars, essentially.

On average our cars use a total of 440 kWh per month. So for now, the state will pay me $158 to fuel my cars, and I will pay my bank $186/mo to fuel my cars. The net fuel cost for my cars is thus $28/mo.

If we had ICE vehicles at 30mpg, we'd be paying about $214/mo for gas. Thus, our fuel costs are approx. 13% what they would be for ICE vehicles, until July 2020. After that point, our fuel costs are fixed for another 8 years at $186/mo, in actual dollars. After than, zero cost until the panels need replacing. The cost of fueling an ICE is likely to be much higher by 2020, and will continue to increase at least to match inflation.

Tyrel

QueenBee said:

And I would argue that you still must pay the utility rate, except you are paying it to your PV investment instead of the utility.

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Certainly our system is like that since the costs were similar when we installed it. However, in some places, like Hawaii, the cost for PV electricity may be only about 1/5 that of grid electricity. In that case, I think there is an important difference.

Agreed on all the rest.

WA does allow you to sell back electricity. Joe; an Oly guy has two NEVs he powers with his solar panels. He gets a check every quarter or so and that check is max'd out so he essentially generates slightly more power than he can use or sell. PSE pockets the power for free. Because his panels were put in at 3 different times (he learned so much from his installation that he started his own solar company...) the rates of payback vary. His last upgrade (done because he had several extended family members living with him) pays the least but also was the cheapest. At first, I questioned his motives but he is basically buying his power at roughly 8 cents a kwh but selling it back at a 150-450% markup. its literally a pyramid scheme! so the last install was to build up enough to insure he got all his power for free plus the max payback (and he had the 3 extra family members which almost tripled his power output from when it was just him and his wife)

As in all good ideas; there are several ways to "justify" the decision. There is no one right way or wrong way. It all boils down to what you are comfortable with.

Most may look at an EV as just transportation because that is what it is. For me; its also a hobby. A pastime. It has allowed me to meet a lot of people, do things I most likely would not have done, etc. So its value to me goes way beyond "gas money" and for the OP that I believe is also true. Call it a hobby, call it a game or call it a quest. But whatever you call it; you have to admit it does have its personal rewards

DaveinOlyWA said:

WA does allow you to sell back electricity. Joe; an Oly guy has two NEVs he powers with his solar panels. He gets a check every quarter or so and that check is max'd out so he essentially generates slightly more power than he can use or sell. PSE pockets the power for free. Because his panels were put in at 3 different times (he learned so much from his installation that he started his own solar company...) the rates of payback vary. His last upgrade (done because he had several extended family members living with him) pays the least but also was the cheapest. At first, I questioned his motives but he is basically buying his power at roughly 8 cents a kwh but selling it back at a 150-450% markup. its literally a pyramid scheme! so the last install was to build up enough to insure he got all his power for free plus the max payback (and he had the 3 extra family members which almost tripled his power output from when it was just him and his wife)

As in all good ideas; there are several ways to "justify" the decision. There is no one right way or wrong way. It all boils down to what you are comfortable with.

Most may look at an EV as just transportation because that is what it is. For me; its also a hobby. A pastime. It has allowed me to meet a lot of people, do things I most likely would not have done, etc. So its value to me goes way beyond "gas money" and for the OP that I believe is also true. Call it a hobby, call it a game or call it a quest. But whatever you call it; you have to admit it does have its personal rewards

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Dave, I've tried to explain this to you way too many times. I don't mean to be condosencding but we've had this conversation way to many times. AFAIK no utility in WA state buys electricity from residential costumers. I'll try to explain this again. In Washington the state government pays between 15 cents and 54 cents per kilowatt hour generated. This varies based on where the equipment is manufactured. This is administered and paid through the utilities but the money comes from the state. This has nothing to do with how much power is used. AFAIK all utilities in WA that net meter do so by taking how much you take from the grid minus how you put back on the grid. If this is negative it carries over to the next month and then once a year all negative balance is lost thus generating more than you use is giving the utility free power but you still get credit from the state.

Dave, I get thst you aren't a details person but the details matter when calculating the payback on a tens of thousand dollar investment. Also, this story doesn't support the idea that installing solar saves money from not having to buy gas.

I am not judging the reasons one would justify installing solar I'm just trying to make the point that it is not sound financial sense to make an attempt at calculating the ROI of solar by including the cost savings for not having to buy gas. It makes me very uncomfortable when people do this especially when they are selling solar or do not have their own solar.

Based on the second half of your message you seem to have gotten the impression that I'm not I'm favor of solar/EVs and that I don't recognize the immense non financial benefits. This couldn't be farther from the truth. Installing solar PV was the best home improvement I could have ever done and buying the LEAF was the best car I could buy even considering today's EVs. Although in retrospect maybe your message wasn't in response to me?

Reg. you are correct about roi in Hawaii. On the Big Island a kwh is right at $.45. It makes all of the sense in the world to install with the incentives that Hawaii and the Feds give

QueenBee said:

AFAIK no utility in WA state buys electricity from residential costumers.

Click to expand...

Actually, according to Jake Wade, PSE Net Metering Program Manager, in response to a question I had about producing more than I use:

PSE said:

Another route would be to look at putting in an array, and send all of the power back to PSE. We have a power purchase agreement for commercial power generators who wish to export power. This is called schedule 91 and it currently pays $0.05 per kWh.

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So PSE will buy power at 5 cents per kWh. But only if you aren't doing net metering also. It's either-or.

Computerizer said:

The way I think about it is this:

The reason I'm getting solar panels is to charge our cars.

The panels generate power, which I store in the grid, and take back out of the grid in the evening to charge my cars. It's as if I had an oil pump on my property, which I used to pump oil out of the ground, stored it in a big tank, and then poured it into my cars when I needed to refill them.

Due to net metering, this will make the cost of the electricity itself for the cars, from the utility, zero.

Due to financial incentives from the State of Washington, I will actually make $0.36/kWh until July of 2020 for every kWh that my array produces (which are used by my cars). Thus I'm getting paid $0.36/kWh to fuel my cars.

I have a loan to purchase the solar panels. Its payments will be about $186/mo. This is a "fuel" cost, since I'm using the panels to charge my cars, essentially.

On average our cars use a total of 440 kWh per month. So for now, the state will pay me $158 to fuel my cars, and I will pay my bank $186/mo to fuel my cars. The net fuel cost for my cars is thus $28/mo.

If we had ICE vehicles at 30mpg, we'd be paying about $214/mo for gas. Thus, our fuel costs are approx. 13% what they would be for ICE vehicles, until July 2020. After that point, our fuel costs are fixed for another 8 years at $186/mo, in actual dollars. After than, zero cost until the panels need replacing. The cost of fueling an ICE is likely to be much higher by 2020, and will continue to increase at least to match inflation.

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Tyrel, so I have a challenge for you. Calculate how much you will save over say 20 years for the following scenarios preferably using the calcs you've already done.

A. Just Driving an EV
B. Just Installing PV
C. Driving an EV and installing PV

Unless you consider the impact of tiered rates or were installing a system that would cover 100% of your usage I'm hoping this exercise will help demonstrate the point I'm trying to make.

Also, let it be known that I predict phase 2 of your solar project is not too far away. Gotta get the first phase installed and the tax refund fist and then I think the wheels will start spinning again

Computerizer said:

QueenBee said:

AFAIK no utility in WA state buys electricity from residential costumers.

Click to expand...

Actually, according to Jake Wade, PSE Net Metering Program Manager, in response to a question I had about producing more than I use:

PSE said:

Another route would be to look at putting in an array, and send all of the power back to PSE. We have a power purchase agreement for commercial power generators who wish to export power. This is called schedule 91 and it currently pays $0.05 per kWh.

Click to expand...

So PSE will buy power at 5 cents per kWh. But only if you aren't doing net metering also. It's either-or.

Click to expand...

Ah thanks, yeah, I forgot that you figured that out when we were talking about a second meter/etc. . I retract what I said. To correct my self: AFAIK no utility in WA state buys electricity from residential costumers who are net metering and in the example of PSE you would need to produce nearly twice as much as you consume annually before it would make sense to switch to this schedule.

QueenBee said:

Based on the second half of your message you seem to have gotten the impression that I'm not I'm favor of solar/EVs and that I don't recognize the immense non financial benefits. This couldn't be farther from the truth. Installing solar PV was the best home improvement I could have ever done and buying the LEAF was the best car I could buy even considering today's EVs. Although in retrospect maybe your message wasn't in response to me?

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oh no! not directed to you at all. just a comment that no one has really voiced that is all but true for a lot of us and is that the LEAF or EVs in general is not "just another car"

DaveinOlyWA said:

QueenBee said:

Based on the second half of your message you seem to have gotten the impression that I'm not I'm favor of solar/EVs and that I don't recognize the immense non financial benefits. This couldn't be farther from the truth. Installing solar PV was the best home improvement I could have ever done and buying the LEAF was the best car I could buy even considering today's EVs. Although in retrospect maybe your message wasn't in response to me?

Click to expand...

oh no! not directed to you at all. just a comment that no one has really voiced that is all but true for a lot of us and is that the LEAF or EVs in general is not "just another car"

Click to expand...

Sorry for jumping to conclusions. After I wrote that I realized that probably wasn't directed at me. Anyway, there are so many great reasons to drive an EV and install solar I don't want anyone to take shortcuts on their justifications because it is a serious amount of money and green washing is a real threat people just trying to make the right decisions.

QueenBee said:

A. Just Driving an EV
B. Just Installing PV
C. Driving an EV and installing PV

Unless you consider the impact of tiered rates or were installing a system that would cover 100% of your usage I'm hoping this exercise will help demonstrate the point I'm trying to make.

Click to expand...

Alright, this was hard because it's later in the evening AND I just got back from vacation, but I managed to do some math...

Savings over 20 years, in today's dollars:

A. 2 EVs only: $52,000
B. PV only: $0. 20 years is actually our second break-even due to the loan structure and such. (We profit immediately, but then have some negative time while we're still making loan payments but not getting the state incentives after 2020.)
C. 2 EVs and PV: $52,000

not really a fair analysis when the impact of EVs verses ICE is not included here...

Installing solar pv replaced buying power from the grid not anything to do with buying gas. Driving EVs is what caused the OP to not have to buy gas and that can be done with or without solar panels.

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In economics there is a concept called "Opportunity Cost". I think this what is in contention. Opportunity cost is the consequence of taking one course of action versus another. Thus, I could put my money in a bank with a CD yielding perhaps 1%. So in a year's time it would yield $100 on an investment of $10,000. Or I could put that same money into a different investment that may yield $200 per year. If I decide on the CD my opportunity cost would be $100. Of course there are many reasons one may want to forego the $200 investment, but the exercise helps to analyze each investment.

In a sense both sides have a point. For example, someone buys a TV set on sale. The retail price was $500. The savings on the sale amounted to $100. The purchaser says, "I saved $100". The other person says, "You didn't 'Save' any money, you spent $400". As far as the purchaser was concerned his opportunity cost of purchasing the set for $500 versus for $400 is $100.

So it seems that if putting in a PV system and driving an EV versus not putting in a PV system and driving an ICE causes the person to "save" $300 per month, then that is the opportunity cost of the two courses of action. On top of that however, one needs to weigh the opportunity cost against the total investment to see if the course of action is still financially advisable.

ERG4ALL said:

Installing solar pv replaced buying power from the grid not anything to do with buying gas. Driving EVs is what caused the OP to not have to buy gas and that can be done with or without solar panels.

Click to expand...

In economics there is a concept called "Opportunity Cost". I think this what is in contention. Opportunity cost is the consequence of taking one course of action versus another. Thus, I could put my money in a bank with a CD yielding perhaps 1%. So in a year's time it would yield $100 on an investment of $10,000. Or I could put that same money into a different investment that may yield $200 per year. If I decide on the CD my opportunity cost would be $100. Of course there are many reasons one may want to forego the $200 investment, but the exercise helps to analyze each investment.

In a sense both sides have a point. For example, someone buys a TV set on sale. The retail price was $500. The savings on the sale amounted to $100. The purchaser says, "I saved $100". The other person says, "You didn't 'Save' any money, you spent $400". As far as the purchaser was concerned his opportunity cost of purchasing the set for $500 versus for $400 is $100.

So it seems that if putting in a PV system and driving an EV versus not putting in a PV system and driving an ICE causes the person to "save" $300 per month, then that is the opportunity cost of the two courses of action. On top of that however, one needs to weigh the opportunity cost against the total investment to see if the course of action is still financially advisable.

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To extend this what I'm trying to say is that the two actions are not dependent or economically related to each other* so to look at the ROI/opportunity cost/etc. of each them together as a whole does not make sound fiscal sense.

The results that Computerizer posted demonstrate what I was expecting. They'll be hugely positive over the next twenty years but this is not because they installed solar it is because they drive two EVs. Obviously installing PV for them was done because they are comfortable with the payback, are able to finance the investment and are actually initially cash flow positive. Since the money was borrowed they are completely OK with the extended break even point because of all the other non-financial benefits that solar has. I have no doubt that they'll look back at both of these decisions as the correct ones.

To me it's important to see that solar PV does not save gas so that you can ensure you are comfortable with the real impact that installing a solar PV system is going to have to ensure that it is going to meet ones needs and expectations. PV is an obvious additional purchase for an EV driver because it supports many of the same reasons that a person would buy an EV but it's critical to understand that installing solar PV and driving an EV does not decrease the break even point/ROI/etc. more than doing each one individually*.


* Except in the previously outlined scenarios (TOU, tiered rates, 100% production, non grid tie).

QueenBee said:

* Except in the previously outlined scenarios (TOU, tiered rates, 100% production, non grid tie).

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This thread is getting long; what does the 100% production mean in this context?

sparky said:

QueenBee said:

* Except in the previously outlined scenarios (TOU, tiered rates, 100% production, non grid tie).

Click to expand...

This thread is getting long; what does the 100% production mean in this context?

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If you are producing more electricity than you are using adding an EV will be beneficial because many utilities net metering either do not give you credit for the additional production over the course of a year, pay you a reduced rate, etc. So in cases like that the EV increases the ROI on the PV.

Queenbee, yes! That is the beauty of producing more than you can use. Plug in the car and household energy and driving doesn't cost a thing. I will never be able to use all of the energy that is going back to the power company. We can actually use hot water to wash clothes. What a concept.