Computerizer
Well-known member
A friend of mine has been telling me for ages that solar panels at home are not a good investment. I didn't believe him, and instead believed what I hear from companies that install solar panels, that they are a great investment. Eventually I got around to create a spreadsheet to figure out who I should actually believe.
I started with these assumptions:
With these assumptions, I can calculate:
Using these, I can figure cashflow for each year:
2013: Install at very end of year, cost $43,750, tax credit $13,125, net cashflow -$30,625.00
2014: Save $989.45 in my power bill, get $4,857.30 in state production credit, net cashflow $5,846.75
etc...
The cumulative cashflow starts at -$30,625.00, then gets bigger (less negative) until it becomes positive in 2019, at which point the system has "paid for itself". If you include my property value (as if I was going to sell my house), it "pays for itself" in just a couple years.
After 10 years, I will have gained (in cash flow and property value) $45,404.79, in 2023-dollars, which is about $33,785.42 in today's dollars.
If I had instead taken my original $30,625.00 and invested it in stocks, real estate, etc. earning 10% APY, in 10 years it would be worth $79,433.36 in 2023-dollars.
So the question then becomes: WHY would I put solar panels on my roof? I can't say it's because I don't want to use fossil fuels and such -- I already don't. I subscribe to "Green Power" from Puget Sound Energy, and of course I have an electric car. The only other primary reason would be to save money. But as my calculations demonstrated, if I wanted to do that, I'd be better off investing it in something else.
Don't get me wrong -- I WANT to have solar panels at my house. I just need to be able to justify it to myself (and my wife) somehow. How can I do it?
I started with these assumptions:
- Located in Bellingham, WA, I could produce 1028 kWh per year for each 1 kW of installed system.
- I would install a system at my house rated at 8.75 kW
- I would install a Washington-build system, so the state would pay me $0.54/kWh produced through June 2020.
- 30% federal tax credit on installed system price
- Install price of $5 per rated Watt
- I pay $0.11/kWh flat rate to the power company (and would get credit via net metering for the same amount)
- I use about 1500 kWh of power per month (average).
- Having solar panels will increase my property value by $20,000
- General inflation is 3%
- Electricity cost inflation is 4%
- Property value inflation is 5%
With these assumptions, I can calculate:
- Cost of install = $43,750
- Federal tax credit = $13,125
- Generated kWh per year = 8,995
- State production credit per year: $4,857.40 (through June 2020)
- Saved grid cost per year = $989.45 (today's dollars, first year)
Using these, I can figure cashflow for each year:
2013: Install at very end of year, cost $43,750, tax credit $13,125, net cashflow -$30,625.00
2014: Save $989.45 in my power bill, get $4,857.30 in state production credit, net cashflow $5,846.75
etc...
The cumulative cashflow starts at -$30,625.00, then gets bigger (less negative) until it becomes positive in 2019, at which point the system has "paid for itself". If you include my property value (as if I was going to sell my house), it "pays for itself" in just a couple years.
After 10 years, I will have gained (in cash flow and property value) $45,404.79, in 2023-dollars, which is about $33,785.42 in today's dollars.
If I had instead taken my original $30,625.00 and invested it in stocks, real estate, etc. earning 10% APY, in 10 years it would be worth $79,433.36 in 2023-dollars.
So the question then becomes: WHY would I put solar panels on my roof? I can't say it's because I don't want to use fossil fuels and such -- I already don't. I subscribe to "Green Power" from Puget Sound Energy, and of course I have an electric car. The only other primary reason would be to save money. But as my calculations demonstrated, if I wanted to do that, I'd be better off investing it in something else.
Don't get me wrong -- I WANT to have solar panels at my house. I just need to be able to justify it to myself (and my wife) somehow. How can I do it?