Can solar be worth it??

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TomatoTomahto
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Re: Can solar be worth it??

Post by TomatoTomahto » Sat Feb 23, 2019 4:36 pm

Epsilon Delta wrote:
Sat Feb 23, 2019 3:25 pm
I don't think a small battery will work. A standard solar system will try to shove the maximum power into it. If it manages it's very bad for the battery. If it can't dump the power most systems will trip a protection rule and not produce any power. What is needed is for the system to cut back on the power but I don't think most inverters do that.
“Small” is relative. Sonnen’s smallest configuration is 5kwh, but has the software to throttle back the solar.
Okay, I get it; I won't be political or controversial. The Earth is flat.

bberris
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Re: Can solar be worth it??

Post by bberris » Sun Feb 24, 2019 8:21 am

quantAndHold wrote:
Fri Feb 22, 2019 7:09 pm
welsie wrote:
Fri Feb 22, 2019 6:47 pm
Keep in mind, there is also institutional risk for your investment. At least in California, there has been a pretty consistent (and I would argue logical) move to transfer more of customers energy payments from variable to fixed costs, as well as moving to TOU (time of use) rates which credit for energy produced at the prevailing rate for that time period. As both these factors change, the benefit of roof top solar will decline as an "investment" so just keep this in mind. I would not recommend rooftop solar to any member of my family who lives in California for these reasons.
First, I haven’t seen any mass move in CA to fixed costs, unless you consider my minimum monthly bill increasing from $6 to $10 over the past 10 years to be that.

TOU billing actually helps people with solar, since the highest rates are at exactly the same time that their solar panels are generating the most electricity.
The utility has to keep up the distribution system and power generation capacity. As revenue from sale of electricity declines, fixed costs and billings have to go up.

Thegame14
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Re: Can solar be worth it??

Post by Thegame14 » Sun Feb 24, 2019 2:12 pm

live in NJ, we were paying $2,000 a year for electric. We needed a new roof so added solar to it. Total cost Solar Panels were $30,000 for a 10,00 KwH system, $8,000 for new roof GAF certified 50 year warranty, $2,500 for new electric panel. The cost of the electric panel and part of the roof were allowed for the 30% govt credit, so total cost was about $40,000, less credit of $12K, cost was 28K, net. We also earn about 10 SREC's per year that sell for about $200, so we save $2,000 in electric and get another $2,000 in our pockets for SREC's, so positive $4,000 less our financing costs means a payback of 7-10 years depending on if we pay off the financing early or not. SRECS we get for 15 years so that is about $30,000 in SRECS plus we save about $2,000 a year on electric, no adj for inflation because solar also loses some effectiveness overtime, so call that a wash, panels are warrantied for 30 years, so that is $60K, plus should work at 70% effectiveness after that so let's say 40 years, that is a layout of $28K and a positive of $110K, and we are helping to save the world.

If we add an addition onto the house or get a solar car eventually, plan to add more panels as well. Love being able to invest, save money and know I am doing my small part to help the planet....

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prudent
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Re: Can solar be worth it??

Post by prudent » Mon Feb 25, 2019 11:51 am

I removed some posts discussing climate change, which is off-topic by forum policy. Replies should address economic aspects of solar power from a personal consumer standpoint.
If readers can't do anything with the content of a topic other than argue about it, it does not belong here. Examples include:
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mervinj7
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Re: Can solar be worth it??

Post by mervinj7 » Mon Feb 25, 2019 12:04 pm

welsie wrote:
Fri Feb 22, 2019 6:47 pm
Keep in mind, there is also institutional risk for your investment. At least in California, there has been a pretty consistent (and I would argue logical) move to transfer more of customers energy payments from variable to fixed costs, as well as moving to TOU (time of use) rates which credit for energy produced at the prevailing rate for that time period. As both these factors change, the benefit of roof top solar will decline as an "investment" so just keep this in mind. I would not recommend rooftop solar to any member of my family who lives in California for these reasons.
I live in CA and we recently got solar. When we were considering the institutional risks involved, we considered the duration of the risk vs the duration of the breakeven point. Could the fixed costs of having a meter attached to the house go up over the next 10-20 years? Sure. Will they drastically go up within the 5 years that it will take for me to breakeven on my install? Not likely. Even if the monthly min charge tripled from $10 to $30, it would enough take us only an extra 2 months past the initial five years to breakeven again. Since my entire system is warrantied for 25 years and with solar rights for customers in CA being one of the few agenda items that has bipartisan support, I'm not too concerned of the future of solar in my state.

https://pv-magazine-usa.com/2019/02/20/ ... alifornia/
bberris wrote:
Sun Feb 24, 2019 8:21 am
quantAndHold wrote:
Fri Feb 22, 2019 7:09 pm
First, I haven’t seen any mass move in CA to fixed costs, unless you consider my minimum monthly bill increasing from $6 to $10 over the past 10 years to be that.

TOU billing actually helps people with solar, since the highest rates are at exactly the same time that their solar panels are generating the most electricity.
The utility has to keep up the distribution system and power generation capacity. As revenue from sale of electricity declines, fixed costs and billings have to go up.
Our electric grid is based on an 100 year old model of centralized power distribution with long high voltage transmission lines running to communities. It worked quite well for a long time but as power generation gets more decentralized, it's clear that the traditional utility business model (more money for more electric usage) needs to change.

Ping Pong
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Re: Can solar be worth it??

Post by Ping Pong » Mon Feb 25, 2019 12:27 pm

dodecahedron wrote:
Sat Feb 23, 2019 10:40 am
Also, I do have a $10 per panel annual fee to the solar farm operator, so for me with 20 panels that is $200/year. This covers insurance on the panels and maintenance (stuff like replacing inverters as needed.)

It is a 20 year contract, with possibilities to extend at that point at a newly negotiated price if the technology still makes sense.)
So after 20 years they can charge whatever they want? Sounds similar to the trappings of a timeshare at the 20 year mark. Hopefully your contract has an out clause in which you can lose your panels in exchange for not paying. Timeshares generally don’t even have such a clause. It’s till death and beyond.

ohai
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Re: Can solar be worth it??

Post by ohai » Mon Feb 25, 2019 12:34 pm

I don't know if this applies to you guys' systems, but I was reading an article a couple of weeks ago about how difficult it is to transfer some of these solar long term contracts to new owners of a house. This creates come complications when you sell the house.

Like all sorts of long term contracts, you need to price in optionality. In other words, you have to demand a meaningful premium above fair value to make up for some future obligations of servicing the contract.

DesertDiva
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Location: In the desert

Re: Can solar be worth it??

Post by DesertDiva » Mon Feb 25, 2019 12:40 pm

Big Dog wrote:
Fri Feb 22, 2019 11:00 pm
one other thing not discussed is the condition of your roof. If your roof shingles are 10+ years old, and you spring a leak, it can be mighty expensive to disassemble the solar panels to fix the roof.
That issue was a big turnoff for us. We did not get a satisfactory answer as to how adding solar panels would affect the performance of our new roof. My DH then asked about putting them on a detached carport, and the response was a flat "we can't do that". Our energy bills aren't tremendous, so 1) the high upfront costs aren't worth it, and 2) compromising our current roofing system isn't a risk we want to take.

Thegame14
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Re: Can solar be worth it??

Post by Thegame14 » Mon Feb 25, 2019 12:46 pm

ohai wrote:
Mon Feb 25, 2019 12:34 pm
I don't know if this applies to you guys' systems, but I was reading an article a couple of weeks ago about how difficult it is to transfer some of these solar long term contracts to new owners of a house. This creates come complications when you sell the house.

Like all sorts of long term contracts, you need to price in optionality. In other words, you have to demand a meaningful premium above fair value to make up for some future obligations of servicing the contract.
That is only if you LEASE the solar, not purchase.

welsie
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Joined: Tue Feb 12, 2019 6:11 pm

Re: Can solar be worth it??

Post by welsie » Mon Feb 25, 2019 1:30 pm

quantAndHold wrote:
Sat Feb 23, 2019 1:33 pm
welsie wrote:
Fri Feb 22, 2019 7:37 pm
quantAndHold wrote:
Fri Feb 22, 2019 7:09 pm
welsie wrote:
Fri Feb 22, 2019 6:47 pm
Keep in mind, there is also institutional risk for your investment. At least in California, there has been a pretty consistent (and I would argue logical) move to transfer more of customers energy payments from variable to fixed costs, as well as moving to TOU (time of use) rates which credit for energy produced at the prevailing rate for that time period. As both these factors change, the benefit of roof top solar will decline as an "investment" so just keep this in mind. I would not recommend rooftop solar to any member of my family who lives in California for these reasons.
First, I haven’t seen any mass move in CA to fixed costs, unless you consider my minimum monthly bill increasing from $6 to $10 over the past 10 years to be that.

TOU billing actually helps people with solar, since the highest rates are at exactly the same time that their solar panels are generating the most electricity.
Your example is pretty massive, that is a 66% increase in fixed charges, I am pretty sure your variable rate didn't increase by 66% in the last decade. I don't think the last 10 years is a good indicator of what the next 20 years will look like in California. We are going to 60% renewable by 2030 and 100% renewable by 2045. By way of reference, the current goal is 33% renewable by 2020. So in the next few decades that $10/month charge may end up being $20/$30, which will be graduated in by either decreasing or keeping variable rates constant. This is my critique of a model which assumes 6% variable rate increases, when it may in fact be i.) much smaller, ii.) zero or iii.) negative. This undermines the business case for solar as a homeowner.

With TOU it depend on the profile of generation of your utility (which impacts how rates are determined), but in California the most expensive energy to acquire for most utilities is between 4-8PM. This is because renewable solar is going offline (the sun is going down) and gas generation/open market purchases, are going up. This is usually explained by something called the duck curve (https://en.wikipedia.org/wiki/Duck_curve). The solar panels on your roof are not producing heavily during this time (or at all for part of it). This issue will become more pressing over the next decade or so. Right now, at 33%, there are days when California utilities are selling excess solar generation at a loss. As a result, they have continued incentive to lower rates/encourage usage during solar generation hours. Utilities are grappling with this right now, so past performance is not a very good measure.

At a high level, net metering made sense when you wanted people to use renewables. Now we have a policy mandate in California and roof top solar is most costly than utility scale solar...as a result the utilities have little incentive to overtly subsidize this and they are slowly moving away from it. They are doing it slowly in part so as not to piss off people who put in solar systems already, but they are moving none the less. This is why I don't think it is good investment right now because of policy risk (at least in California) if your goal is purely financial.
Interesting that you registered a Bogleheads account just to dump on solar in California, but anyway...

The $10 interconnect fee is only charged if I don’t buy at least $120 worth of power during the course of the year. My system is intentionally sized to provide 85% of my power. So I do buy enough power to soak up that $10 fee. When I was getting bids, the installers were well aware of current laws, prospective laws, and the best options financially.

In the summertime, my electric meter is still running backwards until after 6 pm. As the sun goes down, so does my need for air conditioning, and hence my power usage.

The contract I have with SDG&E is grandfathered in. Newer contracts are better in some ways, and worse in others. The net is about the same, however.

You’re leaving out the fact that the state of California wants very badly to be carbon neutral, and isn’t above using regulation to achieve that. There’s always going to be a push/pull between what the utilities are trying to do and what the state says they can do. I would expect the future of solar in California to be different than the present, but I would expect it to rhyme.

The bottom line is that places with high electric rates and a lot of sun are going to benefit from solar. Much of California fits that criteria.
That wasn't my first post, but this is an area where I have knowledge. I am not dumping on solar, I am saying it is more risky than most people realize for institutional reasons, especially in California. I am not saying you shouldn't buy roof top solar, I am saying it is risky and the numbers people rely (or are marketed to them) are often unreliable for making a long term financial decision which is why I would not recommend it to friend and family.

For example, it is commonly marketed that the kWH rates for electricity will increase faster than the rate of inflation over the next 20 years...that is a very suspect assumption and could cause somebody to miscalculate the value of solar. What if they go down and rate increases come through fixed fees? What if you are moved to TOU rates and your usage is such that you are generating during a period where rates are a third as high as your time period of peak usage? I am not saying these changes will occur, but they may...and if they do it could impact someone calculations.

The purpose of this forum is to help people make informed financial decisions by seeking input from others. I am not dumping on solar by doing just that, giving people information.

I am not saying one can't have a usage profile where it can't make sense. If you live in Palm Spring and are using appliances during the day and don't run your A/C at night you are likely insulated from gradual change to the rate structure. That is not the typically load of most users, even in California (https://en.wikipedia.org/wiki/Duck_curve), and this is something utilities are working on right now through their rate structure and TOU rates.

My post was not say it is impossible for solar to be a good investment, just that it is rife with issues. California is moving to 100% renewable and the economics of roof top solar and home energy storage are poor when compared to the economics of utility scale solar/wind/water and storage, therefore utilities (both MOUs and IOUs) are going to continue to move away from the implicit subsidy provided to roof top solar users.

I am aware of this because we are doing that in our community, Edison is trying to do that, so are others, this will be an issue over the next few decades. I am not saying don't put solar on your roof, I am saying make sure your IRR is high enough to accommodate very real risks that can mess with your calculations.

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dodecahedron
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Re: Can solar be worth it??

Post by dodecahedron » Tue Feb 26, 2019 12:59 am

Ping Pong wrote:
Mon Feb 25, 2019 12:27 pm
dodecahedron wrote:
Sat Feb 23, 2019 10:40 am
Also, I do have a $10 per panel annual fee to the solar farm operator, so for me with 20 panels that is $200/year. This covers insurance on the panels and maintenance (stuff like replacing inverters as needed.)

It is a 20 year contract, with possibilities to extend at that point at a newly negotiated price if the technology still makes sense.)
So after 20 years they can charge whatever they want? Sounds similar to the trappings of a timeshare at the 20 year mark. Hopefully your contract has an out clause in which you can lose your panels in exchange for not paying. Timeshares generally don’t even have such a clause. It’s till death and beyond.
No, I will have option (¨possibilities¨) to continue but not obligation to continue after 20 years. My assumption is that a much better technology is likely to be available by then anyway.

krafty81
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Location: San Diego, CA

Re: Can solar be worth it??

Post by krafty81 » Tue Feb 26, 2019 1:33 am

quantAndHold wrote:
Fri Feb 22, 2019 7:09 pm
welsie wrote:
Fri Feb 22, 2019 6:47 pm
Keep in mind, there is also institutional risk for your investment. At least in California, there has been a pretty consistent (and I would argue logical) move to transfer more of customers energy payments from variable to fixed costs, as well as moving to TOU (time of use) rates which credit for energy produced at the prevailing rate for that time period. As both these factors change, the benefit of roof top solar will decline as an "investment" so just keep this in mind. I would not recommend rooftop solar to any member of my family who lives in California for these reasons.
First, I haven’t seen any mass move in CA to fixed costs, unless you consider my minimum monthly bill increasing from $6 to $10 over the past 10 years to be that.

TOU billing actually helps people with solar, since the highest rates are at exactly the same time that their solar panels are generating the most electricity.
Have to disagree with above comment on highest rates being during solar collection periods. New TOU guidance here in San Diego will certainly raise my electric bill as the CHEAPEST hours are during solar collection periods, then gets expensive around 6-9 PM. Looks to me like two things will happen to me. 1)I will get less money back for contributing to the grid (cheaper power) and 2) I pay more in the evenings than I did before. Another California fleece job. Am I missing something?

mervinj7
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Re: Can solar be worth it??

Post by mervinj7 » Tue Feb 26, 2019 1:26 pm

krafty81 wrote:
Tue Feb 26, 2019 1:33 am
Have to disagree with above comment on highest rates being during solar collection periods. New TOU guidance here in San Diego will certainly raise my electric bill as the CHEAPEST hours are during solar collection periods, then gets expensive around 6-9 PM. Looks to me like two things will happen to me. 1)I will get less money back for contributing to the grid (cheaper power) and 2) I pay more in the evenings than I did before. Another California fleece job. Am I missing something?
I believe the second cheapest rate (off-peak) is during peak solar times for new solar customers in San Diego. However, the rates are still high enough (~$0.28/kWh) that it can still make financial sense for many customers. The most important thing to consider is duration of institutional risk vs your potential payback period. For example, if your effective payback on a 25 year warrantied system went from 5 years to 6 years (20% increase), does it really matter?

https://blog.aurorasolar.com/sdge-new-t ... ember-2017

HIinvestor
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Re: Can solar be worth it??

Post by HIinvestor » Tue Feb 26, 2019 10:02 pm

Our rates for electricity are north of $.33 KWh, so higher the others are quoting. With that and the state+Fed rebate = 65% of the cost of our 9 panels so our our net cost was $4k or so, it seemed reasonable to us. We get sun most of the year.

curmudgeon
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Re: Can solar be worth it??

Post by curmudgeon » Tue Feb 26, 2019 10:19 pm

mervinj7 wrote:
Tue Feb 26, 2019 1:26 pm
krafty81 wrote:
Tue Feb 26, 2019 1:33 am
Have to disagree with above comment on highest rates being during solar collection periods. New TOU guidance here in San Diego will certainly raise my electric bill as the CHEAPEST hours are during solar collection periods, then gets expensive around 6-9 PM. Looks to me like two things will happen to me. 1)I will get less money back for contributing to the grid (cheaper power) and 2) I pay more in the evenings than I did before. Another California fleece job. Am I missing something?
I believe the second cheapest rate (off-peak) is during peak solar times for new solar customers in San Diego. However, the rates are still high enough (~$0.28/kWh) that it can still make financial sense for many customers. The most important thing to consider is duration of institutional risk vs your potential payback period. For example, if your effective payback on a 25 year warrantied system went from 5 years to 6 years (20% increase), does it really matter?

https://blog.aurorasolar.com/sdge-new-t ... ember-2017
It's definitely something I pay attention to as I am evaluating my own options. I think SDGE has a funky "cheapest rate" period stuck into mid-day in March and April which is separate from the rest of the TOU. I'd read that there are some times in certain months (when AC use hasn't picked up) that solar production is essentially useless in CA (wholesale rates are negative in the afternoon). The problem is that big power plants don't turn off and on easily, and people still want their lights on at night.

The net metering stuff is really nice for folks with solar systems, but it means that the rest of customers get stuck paying more. I will probably try to jump in myself this year before they close the door on net metering, but I feel bad for those who may get stuck holding the bag. I do anticipate higher fixed charges up here in PG&E country; those trees along the power lines have to be trimmed whether I've got solar or not.

Valuethinker
Posts: 39045
Joined: Fri May 11, 2007 11:07 am

Re: Can solar be worth it??

Post by Valuethinker » Wed Feb 27, 2019 4:46 am

welsie wrote:
Mon Feb 25, 2019 1:30 pm
quantAndHold wrote:
Sat Feb 23, 2019 1:33 pm
welsie wrote:
Fri Feb 22, 2019 7:37 pm
quantAndHold wrote:
Fri Feb 22, 2019 7:09 pm
welsie wrote:
Fri Feb 22, 2019 6:47 pm
Keep in mind, there is also institutional risk for your investment. At least in California, there has been a pretty consistent (and I would argue logical) move to transfer more of customers energy payments from variable to fixed costs, as well as moving to TOU (time of use) rates which credit for energy produced at the prevailing rate for that time period. As both these factors change, the benefit of roof top solar will decline as an "investment" so just keep this in mind. I would not recommend rooftop solar to any member of my family who lives in California for these reasons.
First, I haven’t seen any mass move in CA to fixed costs, unless you consider my minimum monthly bill increasing from $6 to $10 over the past 10 years to be that.

TOU billing actually helps people with solar, since the highest rates are at exactly the same time that their solar panels are generating the most electricity.
Your example is pretty massive, that is a 66% increase in fixed charges, I am pretty sure your variable rate didn't increase by 66% in the last decade. I don't think the last 10 years is a good indicator of what the next 20 years will look like in California. We are going to 60% renewable by 2030 and 100% renewable by 2045. By way of reference, the current goal is 33% renewable by 2020. So in the next few decades that $10/month charge may end up being $20/$30, which will be graduated in by either decreasing or keeping variable rates constant. This is my critique of a model which assumes 6% variable rate increases, when it may in fact be i.) much smaller, ii.) zero or iii.) negative. This undermines the business case for solar as a homeowner.

With TOU it depend on the profile of generation of your utility (which impacts how rates are determined), but in California the most expensive energy to acquire for most utilities is between 4-8PM. This is because renewable solar is going offline (the sun is going down) and gas generation/open market purchases, are going up. This is usually explained by something called the duck curve (https://en.wikipedia.org/wiki/Duck_curve). The solar panels on your roof are not producing heavily during this time (or at all for part of it). This issue will become more pressing over the next decade or so. Right now, at 33%, there are days when California utilities are selling excess solar generation at a loss. As a result, they have continued incentive to lower rates/encourage usage during solar generation hours. Utilities are grappling with this right now, so past performance is not a very good measure.

At a high level, net metering made sense when you wanted people to use renewables. Now we have a policy mandate in California and roof top solar is most costly than utility scale solar...as a result the utilities have little incentive to overtly subsidize this and they are slowly moving away from it. They are doing it slowly in part so as not to piss off people who put in solar systems already, but they are moving none the less. This is why I don't think it is good investment right now because of policy risk (at least in California) if your goal is purely financial.
Interesting that you registered a Bogleheads account just to dump on solar in California, but anyway...

The $10 interconnect fee is only charged if I don’t buy at least $120 worth of power during the course of the year. My system is intentionally sized to provide 85% of my power. So I do buy enough power to soak up that $10 fee. When I was getting bids, the installers were well aware of current laws, prospective laws, and the best options financially.

In the summertime, my electric meter is still running backwards until after 6 pm. As the sun goes down, so does my need for air conditioning, and hence my power usage.

The contract I have with SDG&E is grandfathered in. Newer contracts are better in some ways, and worse in others. The net is about the same, however.

You’re leaving out the fact that the state of California wants very badly to be carbon neutral, and isn’t above using regulation to achieve that. There’s always going to be a push/pull between what the utilities are trying to do and what the state says they can do. I would expect the future of solar in California to be different than the present, but I would expect it to rhyme.

The bottom line is that places with high electric rates and a lot of sun are going to benefit from solar. Much of California fits that criteria.
That wasn't my first post, but this is an area where I have knowledge. I am not dumping on solar, I am saying it is more risky than most people realize for institutional reasons, especially in California. I am not saying you shouldn't buy roof top solar, I am saying it is risky and the numbers people rely (or are marketed to them) are often unreliable for making a long term financial decision which is why I would not recommend it to friend and family.

For example, it is commonly marketed that the kWH rates for electricity will increase faster than the rate of inflation over the next 20 years...that is a very suspect assumption and could cause somebody to miscalculate the value of solar. What if they go down and rate increases come through fixed fees? What if you are moved to TOU rates and your usage is such that you are generating during a period where rates are a third as high as your time period of peak usage? I am not saying these changes will occur, but they may...and if they do it could impact someone calculations.

The purpose of this forum is to help people make informed financial decisions by seeking input from others. I am not dumping on solar by doing just that, giving people information.

I am not saying one can't have a usage profile where it can't make sense. If you live in Palm Spring and are using appliances during the day and don't run your A/C at night you are likely insulated from gradual change to the rate structure. That is not the typically load of most users, even in California (https://en.wikipedia.org/wiki/Duck_curve), and this is something utilities are working on right now through their rate structure and TOU rates.

My post was not say it is impossible for solar to be a good investment, just that it is rife with issues. California is moving to 100% renewable and the economics of roof top solar and home energy storage are poor when compared to the economics of utility scale solar/wind/water and storage, therefore utilities (both MOUs and IOUs) are going to continue to move away from the implicit subsidy provided to roof top solar users.

I am aware of this because we are doing that in our community, Edison is trying to do that, so are others, this will be an issue over the next few decades. I am not saying don't put solar on your roof, I am saying make sure your IRR is high enough to accommodate very real risks that can mess with your calculations.
I think, to defend Welsie, that what Welsie says checks out with those who are experts in power markets.

We are in a new world, a world of "duck curves" with zero wholesale costs of electricity and vast changes in the underlying technology. From Edison's Pearl Street (?) plant through to the first 1000 MW steam turbine (Con Ed's "Big Al" an Alis-Chalmers turbine, still revered in the power plant world) it was all about centralization of power and economies of scale in production -- a grid with supernodes sending power to the most extended parts - a nervous system for industrial civilization.

Essentially what is happening is now the reverse. We are talking about essentially zero marginal cost electricity. Capacity is at the ends of the network, not at the centre.

The grid ceases to be a per unit charging model. The grid becomes like your broadband - you pay a fee based on availability and on the capacity you use (kw or GB of data, depending). An availability model rather than a throughput model.

Consumers also become producers & storers of energy. Our flexibility, ability to flex our own demand, becomes an important asset that grid operators will pay us for.

We aren't there yet, but we can see we will be there in 20, 30, 40 years. When coupled with the urgency of decarbonization, this spells huge disruptive changes.

A technological change as big as the one in the 1900-1940 period that brought us the electricity grid itself.

The institutional arrangements are racing to catch up. Disruption.

Alvin Toffler coined the term "future shock" to describe the vertiginous sense of dislocation and disruption that this increasing rate of change brings on.

It's happened to printed and broadcast media. Retail. Financial services. Whole industries being turned into dinosaurs.

Welcome to future shock, in that most staid and conservative of engineering industries - power.

Thegame14
Posts: 1287
Joined: Mon May 07, 2018 11:53 am

Re: Can solar be worth it??

Post by Thegame14 » Wed Feb 27, 2019 12:50 pm

welsie wrote:
Mon Feb 25, 2019 1:30 pm
quantAndHold wrote:
Sat Feb 23, 2019 1:33 pm
welsie wrote:
Fri Feb 22, 2019 7:37 pm
quantAndHold wrote:
Fri Feb 22, 2019 7:09 pm
welsie wrote:
Fri Feb 22, 2019 6:47 pm
Keep in mind, there is also institutional risk for your investment. At least in California, there has been a pretty consistent (and I would argue logical) move to transfer more of customers energy payments from variable to fixed costs, as well as moving to TOU (time of use) rates which credit for energy produced at the prevailing rate for that time period. As both these factors change, the benefit of roof top solar will decline as an "investment" so just keep this in mind. I would not recommend rooftop solar to any member of my family who lives in California for these reasons.
First, I haven’t seen any mass move in CA to fixed costs, unless you consider my minimum monthly bill increasing from $6 to $10 over the past 10 years to be that.

TOU billing actually helps people with solar, since the highest rates are at exactly the same time that their solar panels are generating the most electricity.
Your example is pretty massive, that is a 66% increase in fixed charges, I am pretty sure your variable rate didn't increase by 66% in the last decade. I don't think the last 10 years is a good indicator of what the next 20 years will look like in California. We are going to 60% renewable by 2030 and 100% renewable by 2045. By way of reference, the current goal is 33% renewable by 2020. So in the next few decades that $10/month charge may end up being $20/$30, which will be graduated in by either decreasing or keeping variable rates constant. This is my critique of a model which assumes 6% variable rate increases, when it may in fact be i.) much smaller, ii.) zero or iii.) negative. This undermines the business case for solar as a homeowner.

With TOU it depend on the profile of generation of your utility (which impacts how rates are determined), but in California the most expensive energy to acquire for most utilities is between 4-8PM. This is because renewable solar is going offline (the sun is going down) and gas generation/open market purchases, are going up. This is usually explained by something called the duck curve (https://en.wikipedia.org/wiki/Duck_curve). The solar panels on your roof are not producing heavily during this time (or at all for part of it). This issue will become more pressing over the next decade or so. Right now, at 33%, there are days when California utilities are selling excess solar generation at a loss. As a result, they have continued incentive to lower rates/encourage usage during solar generation hours. Utilities are grappling with this right now, so past performance is not a very good measure.

At a high level, net metering made sense when you wanted people to use renewables. Now we have a policy mandate in California and roof top solar is most costly than utility scale solar...as a result the utilities have little incentive to overtly subsidize this and they are slowly moving away from it. They are doing it slowly in part so as not to piss off people who put in solar systems already, but they are moving none the less. This is why I don't think it is good investment right now because of policy risk (at least in California) if your goal is purely financial.
Interesting that you registered a Bogleheads account just to dump on solar in California, but anyway...

The $10 interconnect fee is only charged if I don’t buy at least $120 worth of power during the course of the year. My system is intentionally sized to provide 85% of my power. So I do buy enough power to soak up that $10 fee. When I was getting bids, the installers were well aware of current laws, prospective laws, and the best options financially.

In the summertime, my electric meter is still running backwards until after 6 pm. As the sun goes down, so does my need for air conditioning, and hence my power usage.

The contract I have with SDG&E is grandfathered in. Newer contracts are better in some ways, and worse in others. The net is about the same, however.

You’re leaving out the fact that the state of California wants very badly to be carbon neutral, and isn’t above using regulation to achieve that. There’s always going to be a push/pull between what the utilities are trying to do and what the state says they can do. I would expect the future of solar in California to be different than the present, but I would expect it to rhyme.

The bottom line is that places with high electric rates and a lot of sun are going to benefit from solar. Much of California fits that criteria.
That wasn't my first post, but this is an area where I have knowledge. I am not dumping on solar, I am saying it is more risky than most people realize for institutional reasons, especially in California. I am not saying you shouldn't buy roof top solar, I am saying it is risky and the numbers people rely (or are marketed to them) are often unreliable for making a long term financial decision which is why I would not recommend it to friend and family.

For example, it is commonly marketed that the kWH rates for electricity will increase faster than the rate of inflation over the next 20 years...that is a very suspect assumption and could cause somebody to miscalculate the value of solar. What if they go down and rate increases come through fixed fees? What if you are moved to TOU rates and your usage is such that you are generating during a period where rates are a third as high as your time period of peak usage? I am not saying these changes will occur, but they may...and if they do it could impact someone calculations.

The purpose of this forum is to help people make informed financial decisions by seeking input from others. I am not dumping on solar by doing just that, giving people information.

I am not saying one can't have a usage profile where it can't make sense. If you live in Palm Spring and are using appliances during the day and don't run your A/C at night you are likely insulated from gradual change to the rate structure. That is not the typically load of most users, even in California (https://en.wikipedia.org/wiki/Duck_curve), and this is something utilities are working on right now through their rate structure and TOU rates.

My post was not say it is impossible for solar to be a good investment, just that it is rife with issues. California is moving to 100% renewable and the economics of roof top solar and home energy storage are poor when compared to the economics of utility scale solar/wind/water and storage, therefore utilities (both MOUs and IOUs) are going to continue to move away from the implicit subsidy provided to roof top solar users.

I am aware of this because we are doing that in our community, Edison is trying to do that, so are others, this will be an issue over the next few decades. I am not saying don't put solar on your roof, I am saying make sure your IRR is high enough to accommodate very real risks that can mess with your calculations.
Then you are doing it wrong. PLEASE tell me how this is a bad investment. I paid $40K for solar panels $30K, new Roof 8K, upgraded electric panel $2K, total cost $40K, now I get a 10K federal credit for the panels, so now I have paid $30K, but the value of my house has now increased by $40K, so IMMEDIATELY, I am now up $10K in value. Now I save $2K a year for guaranteed 30 year warranty on my electric, so that is $60K in savings, and I get about 10 SREC's per year that sell for around $200, so that is $2K per year for 15 years, for a total of $30K. State of NJ cannot increase my property taxes based on my house value going up due to solar. So I am now $10K profit on house value, 60K of savings on electric, and $30K in my pocket for SREC's for a total unadjusted for inflation either way, for price going up or inflation for time value of money, $100K... Panels have 30 year warrant, roof 50 year warranty, the only way to lose is to RENT or LEASE solar, you HAVE to BUY.....

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Epsilon Delta
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Re: Can solar be worth it??

Post by Epsilon Delta » Wed Feb 27, 2019 1:56 pm

We have always had zero cost marginal rates for electricity. It's just that they happened at 2AM and were hidden in the regulatory process instead of exposed to the consumer.

Industrial users have been metered and bill for their peak power usage, rather than by the energy used, for a long time. Under that billing model any energy that does not affect the peak is free.

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Re: Can solar be worth it??

Post by Wellfleet » Wed Feb 27, 2019 2:13 pm

Thegame14 wrote:
Wed Feb 27, 2019 12:50 pm

Then you are doing it wrong. PLEASE tell me how this is a bad investment. I paid $40K for solar panels $30K, new Roof 8K, upgraded electric panel $2K, total cost $40K, now I get a 10K federal credit for the panels, so now I have paid $30K, but the value of my house has now increased by $40K, so IMMEDIATELY, I am now up $10K in value. Now I save $2K a year for guaranteed 30 year warranty on my electric, so that is $60K in savings, and I get about 10 SREC's per year that sell for around $200, so that is $2K per year for 15 years, for a total of $30K. State of NJ cannot increase my property taxes based on my house value going up due to solar. So I am now $10K profit on house value, 60K of savings on electric, and $30K in my pocket for SREC's for a total unadjusted for inflation either way, for price going up or inflation for time value of money, $100K... Panels have 30 year warrant, roof 50 year warranty, the only way to lose is to RENT or LEASE solar, you HAVE to BUY.....
I preface my comments with the fact that I want solar but cannot makes the numbers work in my favor yet. I would question your house value rising by $40k due to a new roof and solar panels. I have not seen that happen in my market. That's an example of the funny math the solar companies are giving me.

I think solar should cost what a new roof replacement costs, maybe a little more for the electrical. 3x in my market makes no sense.

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Re: Can solar be worth it??

Post by Thegame14 » Wed Feb 27, 2019 2:26 pm

how can solar cost the same as a new roof, either way you are getting a new roof, then you have to pay the cost of the panels, plus the cost to install the panels, and then the inverter.

How could my house NOT increase by $40K when I put $40K of work into it that is 100% transferable to the new owner. it isn't a lease, it is ownership.

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Re: Can solar be worth it??

Post by Broken Man 1999 » Wed Feb 27, 2019 2:27 pm

It can be. Unfortunately, not for DW and I.

Our home has too much shade, in the form of mature oak trees. Our electric bill might be higher with solar if the trees were trimmed enough to get more exposure to the sun.

We have reasonable electricity rates, and average over the year about $215/month on around 2800 sqft of air conditioned living space. I'm OK with that, we have all-electric kitchen, a garage refrigerator, a kegerator, a couple of small wine refrigerators, and a pond pump. Certainly some room to cut our overall use.

From the Google sky picture, not much of our roof is visible, and that picture is of a vantage point directly overhead.

There is no way I would reduce my tree shade, though I do trim/thin trees every couple of years to have good air flow in hopes of reducing damage from high winds.

DDs have the ability to go solar as their lots in much newer subdivisions have little shade.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

Wellfleet
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Re: Can solar be worth it??

Post by Wellfleet » Wed Feb 27, 2019 3:11 pm

Thegame14 wrote:
Wed Feb 27, 2019 2:26 pm
how can solar cost the same as a new roof, either way you are getting a new roof, then you have to pay the cost of the panels, plus the cost to install the panels, and then the inverter.
My example is hypothetical,I believe, not your case. My unfounded hunch is that there is significant inflation in the installation. I have a quote for a solar system for $7,000 in materials that I would pick up from a warehouse. I can't figure out why the labor quotes add $20,000 to $25,000 to that cost.
Thegame14 wrote:
Wed Feb 27, 2019 2:26 pm

How could my house NOT increase by $40K when I put $40K of work into it that is 100% transferable to the new owner. it isn't a lease, it is ownership.
House renovations rarely have 100% payback, from what I've read. Energy Sage says you might see an increased value of $10-15k.

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Epsilon Delta
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Re: Can solar be worth it??

Post by Epsilon Delta » Wed Feb 27, 2019 3:17 pm

Thegame14 wrote:
Wed Feb 27, 2019 2:26 pm
How could my house NOT increase by $40K when I put $40K of work into it that is 100% transferable to the new owner. it isn't a lease, it is ownership.
Try painting the house purple with gold leaf trim.

The increase in value is not what you paid, it's what somebody else is willing to pay.

But also notice it's what the single person who wants the house is willing to pay, not a generic person. The generic people that real estate agents consider when valuing properties are unusually conservative.

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Re: Can solar be worth it??

Post by Thegame14 » Wed Feb 27, 2019 3:41 pm

I actually think the value of my house should go up MORE Than the $40K I paid, since that person is getting a brand new roof, upgraded electric panel and a $4K positive income stream for 15 years and then another $2K positive income stream for at least another 15 years after that, so I am pretty sure that is worth more than $40K....... so it isn't a typical home improvement that is a one shot deal this is an income producing asset.

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Re: Can solar be worth it??

Post by smitcat » Wed Feb 27, 2019 3:49 pm

Thegame14 wrote:
Wed Feb 27, 2019 3:41 pm
I actually think the value of my house should go up MORE Than the $40K I paid, since that person is getting a brand new roof, upgraded electric panel and a $4K positive income stream for 15 years and then another $2K positive income stream for at least another 15 years after that, so I am pretty sure that is worth more than $40K....... so it isn't a typical home improvement that is a one shot deal this is an income producing asset.
It will not go up near that value - but if you want to find out please ask an active real estate broker.

Wellfleet
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Re: Can solar be worth it??

Post by Wellfleet » Wed Feb 27, 2019 3:50 pm

We can debate all day but until you sell your home, it's unknown.

The federal study cited here have some interesting data and provides a value closer to $15,000 on average: https://news.energysage.com/home-solar- ... across-us/

Your SREC income over 15 years is excellent but 15 years is a long time for ROI.

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Re: Can solar be worth it??

Post by ddurrett896 » Wed Feb 27, 2019 4:03 pm

Thegame14 wrote:
Wed Feb 27, 2019 3:41 pm
I actually think the value of my house should go up MORE Than the $40K I paid, since that person is getting a brand new roof, upgraded electric panel and a $4K positive income stream for 15 years and then another $2K positive income stream for at least another 15 years after that, so I am pretty sure that is worth more than $40K....... so it isn't a typical home improvement that is a one shot deal this is an income producing asset.
Odds are at the time of the home purchase, like any technology, it would be cheaper at that point to have a new system installed vs buying a used system on a house.

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TomatoTomahto
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Re: Can solar be worth it??

Post by TomatoTomahto » Wed Feb 27, 2019 4:36 pm

Thegame14 wrote:
Wed Feb 27, 2019 3:41 pm
I actually think the value of my house should go up MORE Than the $40K I paid, since that person is getting a brand new roof, upgraded electric panel and a $4K positive income stream for 15 years and then another $2K positive income stream for at least another 15 years after that, so I am pretty sure that is worth more than $40K....... so it isn't a typical home improvement that is a one shot deal this is an income producing asset.
It depends. We bought a house with a large ground based solar installation. It added value to me, and it affected what we paid for the house. According to the realtor, some people were not delighted with the way it looked, and they walked away without making an offer.
Okay, I get it; I won't be political or controversial. The Earth is flat.

wilked
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Re: Can solar be worth it??

Post by wilked » Tue Oct 01, 2019 7:29 pm

I just added a consumption meter to my setup tonight

It looks like this (well, it will after a day or two)

https://www.solaredge.com/sites/default ... toring.pdf

I am on net metering

Am I right that I should strive to be close to 100% on average (of course shorter days in winter, longer in summer). Just wondering how to use this effectively.

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