Can solar be worth it??

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TomatoTomahto
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Re: Can solar be worth it??

Post by TomatoTomahto »

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 »

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 »

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 »

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 »

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 »

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 »

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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Re: Can solar be worth it??

Post by DesertDiva »

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 »

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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Re: Can solar be worth it??

Post by welsie »

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 »

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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Re: Can solar be worth it??

Post by krafty81 »

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 »

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 »

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 »

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
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Re: Can solar be worth it??

Post by Valuethinker »

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
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Joined: Mon May 07, 2018 11:53 am

Re: Can solar be worth it??

Post by Thegame14 »

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 »

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.
Wellfleet
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Re: Can solar be worth it??

Post by Wellfleet »

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.
Thegame14
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Re: Can solar be worth it??

Post by Thegame14 »

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.
Broken Man 1999
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Re: Can solar be worth it??

Post by Broken Man 1999 »

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 then I shall not go. " -Mark Twain
Wellfleet
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Re: Can solar be worth it??

Post by Wellfleet »

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 »

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.
Thegame14
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Re: Can solar be worth it??

Post by Thegame14 »

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 »

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 »

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.
ddurrett896
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Re: Can solar be worth it??

Post by ddurrett896 »

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 »

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 »

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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BrandonBogle
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Re: Can solar be worth it??

Post by BrandonBogle »

Yes, I know I'm reviving an old thread. However, the conversation in it is still directly relevant.
---
I am personally considering putting a 10 kW grid-tied system at my house right now while living in a low-electricity cost area.

The installation would cost $2.52k - fed 26% credit - utility incentive = $11k. It includes:
28 360W panels
Turkey install
25 year panel + product, optimizer, inverter warranty
20 year labor warranty include roof repairs
First year production output guarantee

They show a $1,165 annual savings, but I’ve asked for clarification on how that is calculated. Using their production numbers and my prior two years of actual usage, I get $860 annual savings.

Meanwhile, I pay 8.5808¢ per kWh part of the year, or 7.6361¢ after the first 350 kWh (at the regular rate) from Nov - June. I would qualify for net metering while remaining on the same rate plan, or switching to ToU if I wanted to. I prefer not to, as even before Covid-19, I work from home full time and thus, a/c and heat are running during mid-day/afternoon/evening.

If I punch in my details into the PWatts calculator at https://pvwatts.nrel.gov , it reports about 40% greater output than their estimates. I suspect they are underestimating production because of the guarantee, but I also think PWatts is overestimating since it is using my locale to judge vs. my specific house.

I charge an electric vehicle and have an all electric house, including water heater, stove, and clothes dryer. I don’t even have a gas feed to the house.

I’m very tempted even though an 11-12 year payback period (at today’s rates) is not great. It seems like the thread's consensus is the solar with these numbers makes sense, but I wanted to see what you all think.
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TomatoTomahto
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Re: Can solar be worth it??

Post by TomatoTomahto »

I would hold out for a turnkey install, those turkey installs never last much beyond Thanksgiving. :D

I know you’re not intending to install batteries, but I would make sure that whatever inverter you have would allow for future install of batteries and provide power in a grid outage. I also have an all electric house (and EV) and I decided that the security of being grid impervious was worth something that doesn’t appear on a spreadsheet break-even analysis.
Okay, I get it; I won't be political or controversial. The Earth is flat.
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Re: Can solar be worth it??

Post by Nate79 »

BrandonBogle wrote: Sat Jul 11, 2020 8:31 am Yes, I know I'm reviving an old thread. However, the conversation in it is still directly relevant.
---
I am personally considering putting a 10 kW grid-tied system at my house right now while living in a low-electricity cost area.

The installation would cost $2.52k - fed 26% credit - utility incentive = $11k. It includes:
28 360W panels
Turkey install
25 year panel + product, optimizer, inverter warranty
20 year labor warranty include roof repairs
First year production output guarantee

They show a $1,165 annual savings, but I’ve asked for clarification on how that is calculated. Using their production numbers and my prior two years of actual usage, I get $860 annual savings.

Meanwhile, I pay 8.5808¢ per kWh part of the year, or 7.6361¢ after the first 350 kWh (at the regular rate) from Nov - June. I would qualify for net metering while remaining on the same rate plan, or switching to ToU if I wanted to. I prefer not to, as even before Covid-19, I work from home full time and thus, a/c and heat are running during mid-day/afternoon/evening.

If I punch in my details into the PWatts calculator at https://pvwatts.nrel.gov , it reports about 40% greater output than their estimates. I suspect they are underestimating production because of the guarantee, but I also think PWatts is overestimating since it is using my locale to judge vs. my specific house.

I charge an electric vehicle and have an all electric house, including water heater, stove, and clothes dryer. I don’t even have a gas feed to the house.

I’m very tempted even though an 11-12 year payback period (at today’s rates) is not great. It seems like the thread's consensus is the solar with these numbers makes sense, but I wanted to see what you all think.
How many quotes have you gotten? We got 3 quotes and there was about a 10% spread between them. So you need to first shop around and then compare all of their calculations. As much as possible try to make the quotes apples to apples.
Last edited by Nate79 on Sat Jul 11, 2020 9:39 am, edited 1 time in total.
Thegame14
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Re: Can solar be worth it??

Post by Thegame14 »

adam61 wrote: Sun Feb 10, 2019 7:23 pm I’ve been looking at solar just to see since I have a great roof for it and reasonable usage 1500-200kWh of monthly use. I only pay about $1600-2000 a year for electricity. Most of the quotes have been 40-60k fora 5-8KW system. They keep using inflation and other things to make it seem like an 8-10 year payback but I just don’t see it. Unless costs are down or electricity goes way up even with the 30% credit I can’t find a way to justify it. Am I missing a variable? Texas if that matters for credits/costs.
I got a 8KW system for $30K, and It also generate about 10 SREC's per year, which sell for around $200 each, so that is another $2,000 per year for 15 years so excluding inflation, the SREC's pay for the system alone, also the 30% credit makes it a net $21K system, that generates $30K in SREC's and then on average my yearly electricity was $2,000 and now it is probably $200-300 a year, mostly due to system down time due to arc fault errors. So the system costs net $21K and on average saves/pockets me $4,000 a year, so that is a 5.2 year payback, but it also increases the value of my house and my state cannot raise my taxes due to that as well.
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BrandonBogle
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Re: Can solar be worth it??

Post by BrandonBogle »

TomatoTomahto wrote: Sat Jul 11, 2020 9:16 am I would hold out for a turnkey install, those turkey installs never last much beyond Thanksgiving. :D
Lol! Gotta love autocorrect, either on the computer or between my mind and fingers ;)
TomatoTomahto wrote: Sat Jul 11, 2020 9:16 am I know you’re not intending to install batteries, but I would make sure that whatever inverter you have would allow for future install of batteries and provide power in a grid outage. I also have an all electric house (and EV) and I decided that the security of being grid impervious was worth something that doesn’t appear on a spreadsheet break-even analysis.
Yes. This is a string inverter with individual power optimizers. They offer Tesla PowerWalls and other company battery solutions as well. In the past 9 years, I’ve had two outages over 4 hours, two outages 2-4 hours, three one-hour outages, and a handful of 15 min or less outages. The two big outages were both weather-related.

While I wouldn’t mind battery storage, the low need brings about too high of a cost. In fact, I looked at solar 4 years ago when I had my roof replaced and for more money, I would have ended up with a 7 kW system. The numbers didn’t work then. With more competitive pricing now, I felt 2020 would be a good time. Maybe in a few years, battery-augments will be more economical.
Nate79 wrote: Sat Jul 11, 2020 9:28 am How many quotes have you gotten? We got 3 quotes and there was about a 10% spread between them. So you need to first shop around and then compare all of their calculations. As much as possible try to make the quotes apples to apples.
Three so far through EnergySage. A fourth is being worked up right now by a recommendation from another person locally. Already I can tell it will be between this new one + one from EnergySage, as the other two were 1) overly optimistic IMO on generation numbers, 2) not engineer/data-driven numbers with the analysis shown to me (mock-up of placement, Lidar walkaround my property, irradiance overlay on my roof), but more salesman-like presentation of things, 3) price over $3 / W before incentives vs. the $2.23 / W the lead contender has.
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TomatoTomahto
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Re: Can solar be worth it??

Post by TomatoTomahto »

BrandonBogle wrote: Sat Jul 11, 2020 10:01 am
TomatoTomahto wrote: Sat Jul 11, 2020 9:16 am I know you’re not intending to install batteries, but I would make sure that whatever inverter you have would allow for future install of batteries and provide power in a grid outage. I also have an all electric house (and EV) and I decided that the security of being grid impervious was worth something that doesn’t appear on a spreadsheet break-even analysis.
Yes. This is a string inverter with individual power optimizers. They offer Tesla PowerWalls and other company battery solutions as well. In the past 9 years, I’ve had two outages over 4 hours, two outages 2-4 hours, three one-hour outages, and a handful of 15 min or less outages. The two big outages were both weather-related.
In your case, I wouldn’t do battery now either. In NJ we had an 8 day outage, and moved to MA just in time for some March 2018 Nor’easters with consequent outages. After installing batteries, we have not had extended outages (neighbors, you’re welcome), but don’t count tomorrow :D
[/quote]
Okay, I get it; I won't be political or controversial. The Earth is flat.
quantAndHold
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Re: Can solar be worth it??

Post by quantAndHold »

San Diego.

We were early adopters (2008), so our solar system was more expensive than current ones. We hit the breakeven point a couple of years ago. So now we get about $2k/year worth of power from our paid off system. We had to pay $250 for a service call in 2013. If I hadn’t been an absentee landlord at the time, it was something I could have done myself (a fuse blew). Other than that, it just works. We get out a hose and wash the panels once a year. That is all.

Every calculation and prediction that the sales guy gave during his sales pitch came true, BTW. His prediction of the amount our panels would generate, what our bills would be, and how the price of electricity would increase. All correct. At the time, we got multiple bids, and the predictions the salespeople made were remarkably similar. At the time, it seemed like it was a fairly well solved math problem.

The fixed rate interconnect fee has gone up, though. In 2009 it was $6.50/month. Now it’s $10.45. So we spend an extra $48/year to be connected to the grid. There’s that, I suppose.

A friend, who has a well to feed an avocado grove put in solar to run the pump on the well. He financed it with a 15 year loan. The payments on the loan are half what he was paying for electricity before.

We lived in Seattle for a few years, and didn’t put in solar. The lack of direct sunshine, abundant trees, and low, low electric rates made it not pencil out. It’s not universally a good idea everywhere.
Yes, I’m really that pedantic.
Valuethinker
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Re: Can solar be worth it??

Post by Valuethinker »

BrandonBogle wrote: Sat Jul 11, 2020 8:31 am Yes, I know I'm reviving an old thread. However, the conversation in it is still directly relevant.
---
I am personally considering putting a 10 kW grid-tied system at my house right now while living in a low-electricity cost area.

The installation would cost $2.52k - fed 26% credit - utility incentive = $11k. It includes:
28 360W panels
Turkey install
25 year panel + product, optimizer, inverter warranty
20 year labor warranty include roof repairs
First year production output guarantee

They show a $1,165 annual savings, but I’ve asked for clarification on how that is calculated. Using their production numbers and my prior two years of actual usage, I get $860 annual savings.

Meanwhile, I pay 8.5808¢ per kWh part of the year, or 7.6361¢ after the first 350 kWh (at the regular rate) from Nov - June. I would qualify for net metering while remaining on the same rate plan, or switching to ToU if I wanted to. I prefer not to, as even before Covid-19, I work from home full time and thus, a/c and heat are running during mid-day/afternoon/evening.

If I punch in my details into the PWatts calculator at https://pvwatts.nrel.gov , it reports about 40% greater output than their estimates. I suspect they are underestimating production because of the guarantee, but I also think PWatts is overestimating since it is using my locale to judge vs. my specific house.

I charge an electric vehicle and have an all electric house, including water heater, stove, and clothes dryer. I don’t even have a gas feed to the house.

I’m very tempted even though an 11-12 year payback period (at today’s rates) is not great. It seems like the thread's consensus is the solar with these numbers makes sense, but I wanted to see what you all think.
That's an amazingly low electricity price (I live in the UK and pay about 3.5x that). It's not a given that your numbers will rise towards mine, of course.

11-12 year payback period, compared to US 10 year Treasury bond yield of 0.646%, sounds pretty good to me.

To do a proper comparison, though, you'd need to lay out the cash flows in a row on an Excel spreadsheet.

To do an IRR the first cash flow has to be negative. (=XIRR(date, values) is more accurate). The positive cash flows are then every year thereafter to, say, 25 years (assume the system has zero residual value at that point).

I am guessing you would get an IRR of 5-6%. Depends a lot on what power price inflation you assume (say 2% pa? ie enough to keep up with CPI-U inflation?). You've also assumed that if you sell the house before 25 years, the buyer would pay you the value of the residual value of the cash flows at that point i.e sell after 14 years, the present value then of the 11 remaining years of cash flows).

EDIT: so I just ran the =IRR, with -11000 in year 1 and $860 pa for 25 years afterwards. That's actually slightly pessimistic, the actual calculation would be -11000+860= 10,140 + 860 for 24 years afterwards. And lo and behold ... IRR = 6.0% I swear I did not know that when I put the numbers in :? :?

If you assume power prices rise exactly in line with CPI, then you can do this is real terms, you don't have to consider inflation. EDIT which I have just done above.

However you've lost liquidity on that money, and I am assuming you did not borrow to do this. But 6% IRR on conservative numbers, in this market environment, does not look at all bad to me. That's the kind of return the next 25 years we will see on stocks, if we are lucky (if interest rates rise & stock markets fall at some point, then prospective bond and equity returns will increase). Note that that number is nominal but post tax.

The attraction of "free gasoline" as an electric car owner would probably tip it for me on that point alone ;-).
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BrandonBogle
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Re: Can solar be worth it??

Post by BrandonBogle »

Valuethinker wrote: Sat Jul 11, 2020 11:11 am EDIT: so I just ran the =IRR, with -11000 in year 1 and $860 pa for 25 years afterwards. That's actually slightly pessimistic, the actual calculation would be -11000+860= 10,140 + 860 for 24 years afterwards. And lo and behold ... IRR = 6.0% I swear I did not know that when I put the numbers in :? :?

If you assume power prices rise exactly in line with CPI, then you can do this is real terms, you don't have to consider inflation. EDIT which I have just done above.

However you've lost liquidity on that money, and I am assuming you did not borrow to do this. But 6% IRR on conservative numbers, in this market environment, does not look at all bad to me. That's the kind of return the next 25 years we will see on stocks, if we are lucky (if interest rates rise & stock markets fall at some point, then prospective bond and equity returns will increase). Note that that number is nominal but post tax.

The attraction of "free gasoline" as an electric car owner would probably tip it for me on that point alone ;-).
Thank you ValueThinker! That is great feedback I should also point out that my basis for a 11-12 year payback is using simple match of the expected output (per the installers proposal) at my current electric rates, even accounting for the discount in some months. This gives me a savings number lower than the installer's estimate. I've asked them to help me understand how they calculate their numbers.

That said, based experiences by others in my area, the PVWatts site, and other proposals for my property, I suspect they are underestimating the production numbers. So if either production numbers are higher or some nuance in savings calculations weren't account for and I should have numbers closer to the installer's estimate, then payback will go down significantly. Somewhere on the order of 7 years. So far, I'm making decisions based on these pessimistic views though - acknowledging that a portion of this decision is simply "to do my part" for the environment vs. strictly a financial decision.

Also, this will be cash. The cost is coming out of my travel budget that Covid-19 has left a significant surplus for + the planned and saved "capital improvement" budget for the house (Vanguard Long-Term Tax Exempt). Considering my budget w/o a coronavirus scare has a $1,200 monthly surplus, I can effectively call this done within a year of "fun money".
Valuethinker
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Re: Can solar be worth it??

Post by Valuethinker »

BrandonBogle wrote: Sat Jul 11, 2020 12:18 pm
Valuethinker wrote: Sat Jul 11, 2020 11:11 am EDIT: so I just ran the =IRR, with -11000 in year 1 and $860 pa for 25 years afterwards. That's actually slightly pessimistic, the actual calculation would be -11000+860= 10,140 + 860 for 24 years afterwards. And lo and behold ... IRR = 6.0% I swear I did not know that when I put the numbers in :? :?

If you assume power prices rise exactly in line with CPI, then you can do this is real terms, you don't have to consider inflation. EDIT which I have just done above.

However you've lost liquidity on that money, and I am assuming you did not borrow to do this. But 6% IRR on conservative numbers, in this market environment, does not look at all bad to me. That's the kind of return the next 25 years we will see on stocks, if we are lucky (if interest rates rise & stock markets fall at some point, then prospective bond and equity returns will increase). Note that that number is nominal but post tax.

The attraction of "free gasoline" as an electric car owner would probably tip it for me on that point alone ;-).
Thank you ValueThinker! That is great feedback I should also point out that my basis for a 11-12 year payback is using simple match of the expected output (per the installers proposal) at my current electric rates, even accounting for the discount in some months. This gives me a savings number lower than the installer's estimate. I've asked them to help me understand how they calculate their numbers.

That said, based experiences by others in my area, the PVWatts site, and other proposals for my property, I suspect they are underestimating the production numbers. So if either production numbers are higher or some nuance in savings calculations weren't account for and I should have numbers closer to the installer's estimate, then payback will go down significantly. Somewhere on the order of 7 years. So far, I'm making decisions based on these pessimistic views though - acknowledging that a portion of this decision is simply "to do my part" for the environment vs. strictly a financial decision.

Also, this will be cash. The cost is coming out of my travel budget that Covid-19 has left a significant surplus for + the planned and saved "capital improvement" budget for the house (Vanguard Long-Term Tax Exempt). Considering my budget w/o a coronavirus scare has a $1,200 monthly surplus, I can effectively call this done within a year of "fun money".
I think I am wrong and the number is 6% real (but it is post tax).

That's a pretty good investment return in this environment. It's not without risk, and it has a liquidity cost, but it should generate (at least) as high a return as stocks over the next 25 years.

Big assumption is that if you sell, someone will pay you at least the residual value of the system (the number of years left to 25 x 860 pa savings).

Figures on electricity savings are tricky because it depends in part on whether there is Time of Use tariffs, what (if any) net metering. It does not sound like you have net metering (a fixed price per kwhr to sell back to grid).
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BrandonBogle
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Re: Can solar be worth it??

Post by BrandonBogle »

Valuethinker wrote: Sun Jul 12, 2020 10:21 am Figures on electricity savings are tricky because it depends in part on whether there is Time of Use tariffs, what (if any) net metering. It does not sound like you have net metering (a fixed price per kwhr to sell back to grid).
Thankfully, full retail net metering is available to me (at my discounted rates) and I’m not required to do Time of Use. I previously looked at ToU and the demand changes don’t make it worthwhile for me as I work from home full-time and have more energy usage during the day (mainly to cooling/heating) than at other times. So even if I make sure clothes drying and car charging are off-peak, the demand charges make it around break-even for me. If there is any savings, it’s low enough that “comfort cost” is worth it. Remember, I currently only pay an average of USD$125-$150 per month for an all-electric house, including car charging.
squirm
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Re: Can solar be worth it??

Post by squirm »

depends on your electrical costs, your credits and possible credit changes in the future.
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