Page 1 of 2

Solar - after 1 year the results are in.

Posted: Tue Sep 15, 2020 10:08 am
by SmallCityDave
We bought solar a little over a year ago it wasn't a political decision nor was it to save the world it was a decision to save money in the long run and keep our outgo low in our retirement years.

Upfront spent $16,000 on the solar after tax credits it ended up being $10,000. The home is all electric no natural gas* (with the exception of propane for the stove, we also installed a wood burning stove). As far as heating and cooling we have as and forced electric heat plus a eveporative cooler and the previously mentioned wood burning stove, we primarily used the evaporative cooler and it was about 50/50 between the electric heat and wood burning stove.

I'll try to keep the numbers as straight forward as I can but some variables changed such as the installation of the wood burning stove (at a cost of under $1500). The home is older it was built in the 70's it's just under 1700sq ft, our electric bill was $179 per month prior to solar and it's our family of 4 my wife works from home and our kids are home schooled so we spend a good amount of time at home. Solar is a 7.2kw system plus my .8kw that I bought on CL so a total of 8kw.

It was hard for us to have informed expectations of yearly/monthly savings the 3-4 companies we met with gave us numbers all over the map, I did some simple calculations and I was thinking we could save $1000 per year but I was hopeful to save $100 per month. We just received our last bill from the electric company and our average bill has been $59 per month, I'm not sure it's worth it on paper but we are happy with the results.

Re: Solar - after 1 year the results are in.

Posted: Tue Sep 15, 2020 10:11 am
by livesoft
I guess that's only $8500 more to go, right?

Re: Solar - after 1 year the results are in.

Posted: Tue Sep 15, 2020 10:12 am
by Escapevelocity
Nice! What part of the country do you live?

Re: Solar - after 1 year the results are in.

Posted: Tue Sep 15, 2020 10:15 am
by squirm
Much of it depends on the solar credits from the utility. I'm surprised you didn't see a a drop to zero with a system of that size.

Re: Solar - after 1 year the results are in.

Posted: Tue Sep 15, 2020 11:25 am
by JS-Elcano
squirm wrote: Tue Sep 15, 2020 10:15 am Much of it depends on the solar credits from the utility. I'm surprised you didn't see a a drop to zero with a system of that size.
Don't you have to pay simply be hooked up to the public utility? Like a base charge? That could easily be most of that remaining $59.

Re: Solar - after 1 year the results are in.

Posted: Tue Sep 15, 2020 11:31 am
by Brianmcg321
squirm wrote: Tue Sep 15, 2020 10:15 am Much of it depends on the solar credits from the utility. I'm surprised you didn't see a a drop to zero with a system of that size.
That does seem like a pretty large system for a house that size. I’m betting most of the bill is a connection charge and misc fees.

Re: Solar - after 1 year the results are in.

Posted: Tue Sep 15, 2020 11:33 am
by sperry8
SmallCityDave wrote: Tue Sep 15, 2020 10:08 am We bought solar a little over a year ago it wasn't a political decision nor was it to save the world it was a decision to save money in the long run and keep our outgo low in our retirement years.

Upfront spent $16,000 on the solar after tax credits it ended up being $10,000. The home is all electric no natural gas* (with the exception of propane for the stove, we also installed a wood burning stove). As far as heating and cooling we have as and forced electric heat plus a eveporative cooler and the previously mentioned wood burning stove, we primarily used the evaporative cooler and it was about 50/50 between the electric heat and wood burning stove.

I'll try to keep the numbers as straight forward as I can but some variables changed such as the installation of the wood burning stove (at a cost of under $1500). The home is older it was built in the 70's it's just under 1700sq ft, our electric bill was $179 per month prior to solar and it's our family of 4 my wife works from home and our kids are home schooled so we spend a good amount of time at home. Solar is a 7.2kw system plus my .8kw that I bought on CL so a total of 8kw.

It was hard for us to have informed expectations of yearly/monthly savings the 3-4 companies we met with gave us numbers all over the map, I did some simple calculations and I was thinking we could save $1000 per year but I was hopeful to save $100 per month. We just received our last bill from the electric company and our average bill has been $59 per month, I'm not sure it's worth it on paper but we are happy with the results.
That seems about right... a 7 year payback horizon. And then it's on to the gains. And hey, you are helping save the environment, so thank you :sharebeer

Re: Solar - after 1 year the results are in.

Posted: Tue Sep 15, 2020 11:44 am
by squirm
JS-Elcano wrote: Tue Sep 15, 2020 11:25 am
squirm wrote: Tue Sep 15, 2020 10:15 am Much of it depends on the solar credits from the utility. I'm surprised you didn't see a a drop to zero with a system of that size.
Don't you have to pay simply be hooked up to the public utility? Like a base charge? That could easily be most of that remaining $59.
Perhaps, depends on the utility.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 9:45 am
by SmallCityDave
Escapevelocity wrote: Tue Sep 15, 2020 10:12 am Nice! What part of the country do you live?
Arizona.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 9:49 am
by SmallCityDave
JS-Elcano wrote: Tue Sep 15, 2020 11:25 am
squirm wrote: Tue Sep 15, 2020 10:15 am Much of it depends on the solar credits from the utility. I'm surprised you didn't see a a drop to zero with a system of that size.
Don't you have to pay simply be hooked up to the public utility? Like a base charge? That could easily be most of that remaining $59.
You got it, cost for service is +/- $35.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 10:59 am
by ncbill
Gimme a break...how many people can get nearly 50% tax credits on a solar install anymore?

The economics really change when you're paying it all out of pocket.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 11:06 am
by SmileyFace
Thanks for sharing your story.

I noticed that the solar companies never calculate the Opportunity Cost of all the $$ they want you to pluck down. Every time I do the math the payoff is well over a decade and that is BEFORE I calculate in the Opportunity cost of the big money I would be putting down. Our Electricity costs are relatively low - others may do well with solar - with us - it just doesn't economically make sense.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 11:19 am
by Valuethinker
DaftInvestor wrote: Wed Sep 16, 2020 11:06 am Thanks for sharing your story.

I noticed that the solar companies never calculate the Opportunity Cost of all the $$ they want you to pluck down. Every time I do the math the payoff is well over a decade and that is BEFORE I calculate in the Opportunity cost of the big money I would be putting down. Our Electricity costs are relatively low - others may do well with solar - with us - it just doesn't economically make sense.
So the years to payback calculation assumes a discount rate of 0%.

Given where government bond yields are, for a risk-free investment, that's probably not a bad return.

If you run =XIRR() on the cash flows, including the outflow of investment, you will get a pa return from the investment.*

Internal Rate of Return is just the discount rate that will bring the Net Present Value (the discounted value of future cash flows) back to zero (costs of the investment and discounted benefits from it are equal).

You can then compare that IRR to what you could get on other investments. And make an assessment of how risky this is. That would take into account your opportunity cost. Remember to get the other returns on an after tax basis.***

To my mind it's definitely less risky than stocks, but more risky than US Treasury bonds.

* 2 choices:

1. assume 0 terminal value after say 25 years. So just model 25 years of cash flow. If you do it in real terms (today's dollars), and you assume electricity prices stay constant in real terms, that makes it easier.

The panels will likely last 25 years (there is a fade to performance over that time-- but there are over 30 year old panels still working out there). The inverters last 10-15 years, I believe. So you have to factor in replacement of those.

2. assume a terminal value after say 15 years. Logically a new buyer would pay the present value of the cash flows then - ie the remaining 10 years. But one could be more conservative and take the depreciated value. Assuming straight line depreciation, value it at 40% of cost.

*** Unless you are repaying a debt or using a tax protected account. But probably you shouldn't be doing this if either of the other investment opportunities is available to you.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 11:28 am
by Nicolas
You’re also taking a risk that you’re going to stay in that house long enough to realize the full payback. I have no such confidence in my staying in any one place that long so I’ve never seriously considered solar. Also I’m quite a bit north of you.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 12:32 pm
by inbox788
Nicolas wrote: Wed Sep 16, 2020 11:28 am You’re also taking a risk that you’re going to stay in that house long enough to realize the full payback. I have no such confidence in my staying in any one place that long so I’ve never seriously considered solar. Also I’m quite a bit north of you.
That may not be as big a concern depending on where you are. Take the numbers with a grain of salt with all the variables, but you'll recoup some of that investment if you sell, and there's even the possibility of making a profit if you get lucky with the right location and right buyer.

Solar power can boost your home's value — especially in these 10 states
https://www.cnbc.com/2019/10/05/solar-p ... -most.html

Here's How Much Adding Solar Panels Will Boost Your Home's Value
https://money.com/home-value-solar-panels/

It's psychological, but if I saw a bill less than $100, I'd turn up the AC and use more. I'm already doing that with lights -- more efficient, less cost means more use (remember we used to keep 7 watt night lights on all the time?). I wish these high efficiency AC units came down in cost and maintenance and were more reliable.
Higher SEER (18+) doesn’t always mean more overall savings
Higher SEER ratings don’t always mean more savings—in the long run.
https://www.cooltoday.com/blog/whats-a- ... in-florida

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 12:46 pm
by quantAndHold
Nicolas wrote: Wed Sep 16, 2020 11:28 am You’re also taking a risk that you’re going to stay in that house long enough to realize the full payback. I have no such confidence in my staying in any one place that long so I’ve never seriously considered solar. Also I’m quite a bit north of you.
That assumes you get zero for the solar system when you sell.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 12:56 pm
by crumbgrabber
quantAndHold wrote: Wed Sep 16, 2020 12:46 pm
That assumes you get zero for the solar system when you sell.
What do you think is a reasonable way to determine the value of a system if you do sell? I suppose it's highly dependent on the buyer's interest?

This has a very large effect on calculations of payback time for solar panels, and I've struggled to come up with a number I trust.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 1:05 pm
by TravelGeek
JS-Elcano wrote: Tue Sep 15, 2020 11:25 am Don't you have to pay simply be hooked up to the public utility? Like a base charge? That could easily be most of that remaining $59.
Or could be easily a lot less. We are paying $10.85 per month for the access to the grid.
SmallCityDave wrote: Wed Sep 16, 2020 9:49 am
You got it, cost for service is +/- $35.
Ouch!

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 1:09 pm
by Tingting1013
crumbgrabber wrote: Wed Sep 16, 2020 12:56 pm
quantAndHold wrote: Wed Sep 16, 2020 12:46 pm
That assumes you get zero for the solar system when you sell.
What do you think is a reasonable way to determine the value of a system if you do sell? I suppose it's highly dependent on the buyer's interest?

This has a very large effect on calculations of payback time for solar panels, and I've struggled to come up with a number I trust.
I can’t imagine that your house would appreciate more than the cost of installing the panels.

For my house that’s $10k. Literally a rounding error.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 1:17 pm
by alpenglow
inbox788 wrote: Wed Sep 16, 2020 12:32 pm
It's psychological, but if I saw a bill less than $100, I'd turn up the AC and use more. I'm already doing that with lights -- more efficient, less cost means more use (remember we used to keep 7 watt night lights on all the time?). I wish these high efficiency AC units came down in cost and maintenance and were more reliable.
Instead of reconciling at the end of the year at wholesale rates, I'm using the extra electricity to charge my Prius Prime.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 1:24 pm
by quantAndHold
crumbgrabber wrote: Wed Sep 16, 2020 12:56 pm
quantAndHold wrote: Wed Sep 16, 2020 12:46 pm
That assumes you get zero for the solar system when you sell.
What do you think is a reasonable way to determine the value of a system if you do sell? I suppose it's highly dependent on the buyer's interest?

This has a very large effect on calculations of payback time for solar panels, and I've struggled to come up with a number I trust.
It’s hard to figure the value of a house no matter what, because they’re all different, but if I were looking at two identical houses, the one that can generate $120/month in electricity is clearly worth more than the one that can’t.

If I use a time value of money calculator to get the present value of a series of cash flows, with $120/month at a 2.5% interest rate and a holding period of ten years, I get a present value just north of $12k. Assuming panels last more than ten years (mine are warrantied for 25), and electric rates tend to go up over time, $12k is probably a conservative value for the system.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 1:28 pm
by quantAndHold
Tingting1013 wrote: Wed Sep 16, 2020 1:09 pm
crumbgrabber wrote: Wed Sep 16, 2020 12:56 pm
quantAndHold wrote: Wed Sep 16, 2020 12:46 pm
That assumes you get zero for the solar system when you sell.
What do you think is a reasonable way to determine the value of a system if you do sell? I suppose it's highly dependent on the buyer's interest?

This has a very large effect on calculations of payback time for solar panels, and I've struggled to come up with a number I trust.
I can’t imagine that your house would appreciate more than the cost of installing the panels.

For my house that’s $10k. Literally a rounding error.
If it’s a rounding error, then the cost of installing the panels is also a rounding error.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 1:29 pm
by Tingting1013
quantAndHold wrote: Wed Sep 16, 2020 1:28 pm
Tingting1013 wrote: Wed Sep 16, 2020 1:09 pm
crumbgrabber wrote: Wed Sep 16, 2020 12:56 pm
quantAndHold wrote: Wed Sep 16, 2020 12:46 pm
That assumes you get zero for the solar system when you sell.
What do you think is a reasonable way to determine the value of a system if you do sell? I suppose it's highly dependent on the buyer's interest?

This has a very large effect on calculations of payback time for solar panels, and I've struggled to come up with a number I trust.
I can’t imagine that your house would appreciate more than the cost of installing the panels.

For my house that’s $10k. Literally a rounding error.
If it’s a rounding error, then the cost of installing the panels is also a rounding error.
A rounding error as a % of the home value, not necessarily as a % of cash flow.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 1:31 pm
by SmallCityDave
crumbgrabber wrote: Wed Sep 16, 2020 12:56 pm
quantAndHold wrote: Wed Sep 16, 2020 12:46 pm
That assumes you get zero for the solar system when you sell.
What do you think is a reasonable way to determine the value of a system if you do sell? I suppose it's highly dependent on the buyer's interest?

This has a very large effect on calculations of payback time for solar panels, and I've struggled to come up with a number I trust.
I spoke with an appraiser in our area it's about $7k. I don't consider this an investment but it's doing better then the cd's we have ;)

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 1:41 pm
by mervinj7
crumbgrabber wrote: Wed Sep 16, 2020 12:56 pm
quantAndHold wrote: Wed Sep 16, 2020 12:46 pm
That assumes you get zero for the solar system when you sell.
What do you think is a reasonable way to determine the value of a system if you do sell? I suppose it's highly dependent on the buyer's interest?

This has a very large effect on calculations of payback time for solar panels, and I've struggled to come up with a number I trust.
RE agent said $5k-$7k. However, most buyers don't care what the size of the system is or actually how old it is. Having solar installed is also an indication that you are more likely to have an upgraded panel. The bigger upsell (in our blackout prone area), is solar installed along with battery backup.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 1:46 pm
by harikaried
alpenglow wrote: Wed Sep 16, 2020 1:17 pmInstead of reconciling at the end of the year at wholesale rates, I'm using the extra electricity to charge my Prius Prime.
Not sure how long our current rate schedule will last, but our 3.8kW system sent back almost net 150kWh in the past month during peak hours earning us $70 in energy credits. Then in the evening for every 1kWh we sent back at peak rates, we can charge 12kWh for our Tesla.

We don't expect to have any excess credits by the end of the year, so our monthly electricity bill should be down from $110 to $25 (basic service charge of $15). We originally paid $10k and got 30% tax credit, so currently it looks like 7 years breakeven if rates and usage don't change.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 1:53 pm
by quantAndHold
Tingting1013 wrote: Wed Sep 16, 2020 1:29 pm
quantAndHold wrote: Wed Sep 16, 2020 1:28 pm
Tingting1013 wrote: Wed Sep 16, 2020 1:09 pm
crumbgrabber wrote: Wed Sep 16, 2020 12:56 pm
quantAndHold wrote: Wed Sep 16, 2020 12:46 pm
That assumes you get zero for the solar system when you sell.
What do you think is a reasonable way to determine the value of a system if you do sell? I suppose it's highly dependent on the buyer's interest?

This has a very large effect on calculations of payback time for solar panels, and I've struggled to come up with a number I trust.
I can’t imagine that your house would appreciate more than the cost of installing the panels.

For my house that’s $10k. Literally a rounding error.
If it’s a rounding error, then the cost of installing the panels is also a rounding error.
A rounding error as a % of the home value, not necessarily as a % of cash flow.
It sounds like you think those things are different.

If OP had paid for his solar with a HELOC that he paid off over 10 years, he would have been saving about $20/month, and the cost would have been the same every month, instead of lumpy, like electric costs tend to be. His cash flow would actually be better. And the loan would eventually be paid off, and he’d be saving $120/month.

But yes, a good valuation for a solar system is what comparable systems cost today. And that’s either pocket change or it’s not, but the amount of money doesn’t get larger or smaller because of what you compare it to.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 2:57 pm
by Independent George
What is the expected lifespan of the solar panels, and what does it cost to maintain them?

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 3:35 pm
by HoberMallow
Independent George wrote: Wed Sep 16, 2020 2:57 pm What is the expected lifespan of the solar panels, and what does it cost to maintain them?
Most panels have a 25 year warranty. The inverter warranty is usually shorter - 12 or 15 years - and from what I've heard they usually fail before the panels.

There is minimal to no maintenance needed. I usually spray our panels with a garden hose once or twice a year to clean off accumulated dust, but I live in Los Angeles and we have no rain for 6 or 7 months straight. If you have regular rain throughout the year you probably wouldn't even need to do that.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 3:48 pm
by HoberMallow
Valuethinker wrote: Wed Sep 16, 2020 11:19 am
DaftInvestor wrote: Wed Sep 16, 2020 11:06 am Thanks for sharing your story.

I noticed that the solar companies never calculate the Opportunity Cost of all the $$ they want you to pluck down. Every time I do the math the payoff is well over a decade and that is BEFORE I calculate in the Opportunity cost of the big money I would be putting down. Our Electricity costs are relatively low - others may do well with solar - with us - it just doesn't economically make sense.
So the years to payback calculation assumes a discount rate of 0%.

Given where government bond yields are, for a risk-free investment, that's probably not a bad return.

If you run =XIRR() on the cash flows, including the outflow of investment, you will get a pa return from the investment.*
To run the OP's actual numbers, assuming a $10,000 cost, a return of $1,440* annually, and a terminal value of zero, here are the IRRs.
  • After 8 years: 3.0%
  • After 10 years: 7.2%
  • After 15 years: 11.6%
  • After 20 years: 13.2%
As Valuethinker noted, those are after tax returns. If your alternative is investing in a taxable account, and you're likely to stay in your house more than 10 years, those are pretty hard to beat.

* The $1,440 annual return is the OP's electricity bill before solar ($179) minus the bill after solar ($59) times 12 months.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 3:58 pm
by Tingting1013
quantAndHold wrote: Wed Sep 16, 2020 1:53 pm
Tingting1013 wrote: Wed Sep 16, 2020 1:29 pm
quantAndHold wrote: Wed Sep 16, 2020 1:28 pm
Tingting1013 wrote: Wed Sep 16, 2020 1:09 pm
crumbgrabber wrote: Wed Sep 16, 2020 12:56 pm

What do you think is a reasonable way to determine the value of a system if you do sell? I suppose it's highly dependent on the buyer's interest?

This has a very large effect on calculations of payback time for solar panels, and I've struggled to come up with a number I trust.
I can’t imagine that your house would appreciate more than the cost of installing the panels.

For my house that’s $10k. Literally a rounding error.
If it’s a rounding error, then the cost of installing the panels is also a rounding error.
A rounding error as a % of the home value, not necessarily as a % of cash flow.
It sounds like you think those things are different.
Of course they are different. My Bay Area neighbors are mostly living in >$1M houses with <$100k income. Asking them to pony up $10k (even with a loan) is not a small ask. This is why solar panels are only on a small minority of houses. Most people can’t afford them.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 4:28 pm
by harikaried
Tingting1013 wrote: Wed Sep 16, 2020 3:58 pmMy Bay Area neighbors are mostly living in >$1M houses with <$100k income. Asking them to pony up $10k (even with a loan) is not a small ask. This is why solar panels are only on a small minority of houses. Most people can’t afford them.
I guess that's why Tesla offers subscriptions (instead of leases) https://www.tesla.com/support/energy/so ... tion-solar

The savings are not as large as a purchase, but there's no up front cost or long-term contracts with immediate reduction in expenses.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 4:35 pm
by Nicolas
Here’s another possible gotcha: (This proposal was ultimately withdrawn)

Did you install solar panels on your house? We Energies wants you to pay a surcharge.

We Energies argues that homeowners with solar panels don't pay their full share of the fixed costs of its transmission and distribution system, thereby shifting costs to customers who don’t have solar panels.

The utility wants customers with solar panels to pay a monthly surcharge tied to how much electricity they can generate. 

The proposed surcharge — $3.53 a month for each kilowatt of solar generating capacity — is part of We Energies’ rate case before the Public Service Commission.

Utilities throughout the country have proposed similar surcharges. Michigan and Iowa recently rejected such proposals.


https://www.jsonline.com/story/money/bu ... 279743001/

We Energies drops proposal for surcharge on homeowners, small businesses that go solar

https://www.jsonline.com/story/news/loc ... 738581001/

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 5:06 pm
by Slacker
HoberMallow wrote: Wed Sep 16, 2020 3:35 pm
Independent George wrote: Wed Sep 16, 2020 2:57 pm What is the expected lifespan of the solar panels, and what does it cost to maintain them?
Most panels have a 25 year warranty. The inverter warranty is usually shorter - 12 or 15 years - and from what I've heard they usually fail before the panels.

There is minimal to no maintenance needed. I usually spray our panels with a garden hose once or twice a year to clean off accumulated dust, but I live in Los Angeles and we have no rain for 6 or 7 months straight. If you have regular rain throughout the year you probably wouldn't even need to do that.
Our panels AND inverter have a 25 year warranty.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 5:47 pm
by ohboy!
HoberMallow wrote: Wed Sep 16, 2020 3:35 pm
Independent George wrote: Wed Sep 16, 2020 2:57 pm What is the expected lifespan of the solar panels, and what does it cost to maintain them?
Most panels have a 25 year warranty. The inverter warranty is usually shorter - 12 or 15 years - and from what I've heard they usually fail before the panels.

There is minimal to no maintenance needed. I usually spray our panels with a garden hose once or twice a year to clean off accumulated dust, but I live in Los Angeles and we have no rain for 6 or 7 months straight. If you have regular rain throughout the year you probably wouldn't even need to do that.
Should make the roof last longer too but when needing a new roof it is a added hassle.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 9:06 pm
by ossipago
My breakeven (residential in DC) is about 3 years but that is largely due to SRECs. They constitute 75% of the benefit for me. We haven't been through a full year yet but are on track for a roughly 30% return per year on our investment.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 9:40 pm
by Boglelicious123
ossipago wrote: Wed Sep 16, 2020 9:06 pm My breakeven (residential in DC) is about 3 years but that is largely due to SRECs. They constitute 75% of the benefit for me. We haven't been through a full year yet but are on track for a roughly 30% return per year on our investment.
Forgive my ignorance here, but I just looked up what SREC means. Are you in a state that gives these out? Is it given automatically when you put up solar panels in one of those named states?

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 9:47 pm
by ossipago
Boglelicious123 wrote: Wed Sep 16, 2020 9:40 pm
ossipago wrote: Wed Sep 16, 2020 9:06 pm My breakeven (residential in DC) is about 3 years but that is largely due to SRECs. They constitute 75% of the benefit for me. We haven't been through a full year yet but are on track for a roughly 30% return per year on our investment.
Forgive my ignorance here, but I just looked up what SREC means. Are you in a state that gives these out? Is it given automatically when you put up solar panels in one of those named states?
Yes, DC provides SRECs. Each state is different. But I think most have renewable targets for state or local utilities to meet. You get credits for your solar production in the form of SRECs, and sell them on the open market at the clearing price. Usually, that happens through a broker.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 10:13 pm
by Nearly A Moose
ossipago wrote: Wed Sep 16, 2020 9:47 pm
Boglelicious123 wrote: Wed Sep 16, 2020 9:40 pm
ossipago wrote: Wed Sep 16, 2020 9:06 pm My breakeven (residential in DC) is about 3 years but that is largely due to SRECs. They constitute 75% of the benefit for me. We haven't been through a full year yet but are on track for a roughly 30% return per year on our investment.
Forgive my ignorance here, but I just looked up what SREC means. Are you in a state that gives these out? Is it given automatically when you put up solar panels in one of those named states?
Yes, DC provides SRECs. Each state is different. But I think most have renewable targets for state or local utilities to meet. You get credits for your solar production in the form of SRECs, and sell them on the open market at the clearing price. Usually, that happens through a broker.
Fellow DC resident here, considering solar on my rowhome. Looks like we can get about 8-10kW of panels on the roof, limited by the neighbors’ (poorly maintained vine-strangled) tree :annoyed . Have you found the SREC market easy to use and otherwise working as advertised? As far as I can tell, our utility rates are low enough that it’s the SREC market that makes the numbers work.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 10:27 pm
by bottlecap
I'm more interested in the overall "return" on the $16,000.00 rather than anyone's personal benefit. What are the life of the panels? Do they require maintenance? What electricity rates are you paying? That’s what makes this stuff interesting.

JT

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 10:38 pm
by mervinj7
bottlecap wrote: Wed Sep 16, 2020 10:27 pm I'm more interested in the overall "return" on the $16,000.00 rather than anyone's personal benefit. What are the life of the panels? Do they require maintenance? What electricity rates are you paying? That’s what makes this stuff interesting.

JT
Here you go:
viewtopic.php?t=291738

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 10:40 pm
by ossipago
Nearly A Moose wrote: Wed Sep 16, 2020 10:13 pm
ossipago wrote: Wed Sep 16, 2020 9:47 pm
Boglelicious123 wrote: Wed Sep 16, 2020 9:40 pm
ossipago wrote: Wed Sep 16, 2020 9:06 pm My breakeven (residential in DC) is about 3 years but that is largely due to SRECs. They constitute 75% of the benefit for me. We haven't been through a full year yet but are on track for a roughly 30% return per year on our investment.
Forgive my ignorance here, but I just looked up what SREC means. Are you in a state that gives these out? Is it given automatically when you put up solar panels in one of those named states?
Yes, DC provides SRECs. Each state is different. But I think most have renewable targets for state or local utilities to meet. You get credits for your solar production in the form of SRECs, and sell them on the open market at the clearing price. Usually, that happens through a broker.
Fellow DC resident here, considering solar on my rowhome. Looks like we can get about 8-10kW of panels on the roof, limited by the neighbors’ (poorly maintained vine-strangled) tree :annoyed . Have you found the SREC market easy to use and otherwise working as advertised? As far as I can tell, our utility rates are low enough that it’s the SREC market that makes the numbers work.
Yes, it's easy. As I said, we use a broker and they handle it. No real effort other than the initial setup, which your installer should be able to help with.

I suspect you have the right to trim anything overhanging your property. Not sure you can do anything about simple shade from a tall tree, though.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 10:43 pm
by ossipago
bottlecap wrote: Wed Sep 16, 2020 10:27 pm I'm more interested in the overall "return" on the $16,000.00 rather than anyone's personal benefit. What are the life of the panels? Do they require maintenance? What electricity rates are you paying? That’s what makes this stuff interesting.

JT
Panels are usually warrantied for 25 or 30 years. They degrade by 0.5-1 percent a year. They otherwise need very little maintenance; they are self-cleaning and most new installations use internet-connected monitors that can flag when anything is not showing the expected behavior.

Inverters last 10-15 years, so they are the rate-limiting component.

Re: Solar - after 1 year the results are in.

Posted: Wed Sep 16, 2020 10:45 pm
by Nearly A Moose
ossipago wrote: Wed Sep 16, 2020 10:40 pm
Nearly A Moose wrote: Wed Sep 16, 2020 10:13 pm
ossipago wrote: Wed Sep 16, 2020 9:47 pm
Boglelicious123 wrote: Wed Sep 16, 2020 9:40 pm
ossipago wrote: Wed Sep 16, 2020 9:06 pm My breakeven (residential in DC) is about 3 years but that is largely due to SRECs. They constitute 75% of the benefit for me. We haven't been through a full year yet but are on track for a roughly 30% return per year on our investment.
Forgive my ignorance here, but I just looked up what SREC means. Are you in a state that gives these out? Is it given automatically when you put up solar panels in one of those named states?
Yes, DC provides SRECs. Each state is different. But I think most have renewable targets for state or local utilities to meet. You get credits for your solar production in the form of SRECs, and sell them on the open market at the clearing price. Usually, that happens through a broker.
Fellow DC resident here, considering solar on my rowhome. Looks like we can get about 8-10kW of panels on the roof, limited by the neighbors’ (poorly maintained vine-strangled) tree :annoyed . Have you found the SREC market easy to use and otherwise working as advertised? As far as I can tell, our utility rates are low enough that it’s the SREC market that makes the numbers work.
Yes, it's easy. As I said, we use a broker and they handle it. No real effort other than the initial setup, which your installer should be able to help with.

I suspect you have the right to trim anything overhanging your property. Not sure you can do anything about simple shade from a tall tree, though.
Thanks. Need to revive my efforts on this one. And, yes, I've attacked that tree before, but even with branches trimmed back, it's like having a four-story building immediately to my East. Not so good for sun exposure.

At the risk of imposing, if you had a good experience with your installer, would you consider sending me a PM with the company name? I have a few quotes but wouldn't mind getting more. I've hit up our neighborhood listserve, etc.

Re: Solar - after 1 year the results are in.

Posted: Thu Sep 17, 2020 6:54 am
by bottlecap
mervinj7 wrote: Wed Sep 16, 2020 10:38 pm
bottlecap wrote: Wed Sep 16, 2020 10:27 pm I'm more interested in the overall "return" on the $16,000.00 rather than anyone's personal benefit. What are the life of the panels? Do they require maintenance? What electricity rates are you paying? That’s what makes this stuff interesting.

JT
Here you go:
viewtopic.php?t=291738
Thanks! I appreciate it.

Re: Solar - after 1 year the results are in.

Posted: Thu Sep 17, 2020 9:52 am
by WS1
crumbgrabber wrote: Wed Sep 16, 2020 12:56 pm
quantAndHold wrote: Wed Sep 16, 2020 12:46 pm
That assumes you get zero for the solar system when you sell.
What do you think is a reasonable way to determine the value of a system if you do sell? I suppose it's highly dependent on the buyer's interest?

This has a very large effect on calculations of payback time for solar panels, and I've struggled to come up with a number I trust.
I just looked at a house with recently installed solar. I asked the broker how she accounted for the solar in coming up with a listing price. I had a real interest in the broader topic of properly valuing(and marketing) major energy improvements. It's kind of alchemy but the answer lies somewhere between the depreciated value of the improvement(PV, Geothermal, etc) and finding the present value of the anticipated energy savings.

Re: Solar - after 1 year the results are in.

Posted: Mon Sep 21, 2020 8:23 pm
by willthrill81
If we could save $1,440 annually, I'd very gladly pay $10k for a solar setup. However, the payback period in our area is 20+ years since we have some of the cheapest grid power in the nation at about 8 cents / kWh, but I won't complain about that. :)

Re: Solar - after 1 year the results are in.

Posted: Tue Sep 22, 2020 8:42 am
by jpelder
willthrill81 wrote: Mon Sep 21, 2020 8:23 pm If we could save $1,440 annually, I'd very gladly pay $10k for a solar setup. However, the payback period in our area is 20+ years since we have some of the cheapest grid power in the nation at about 8 cents / kWh, but I won't complain about that. :)
That's about where I am, too. I think my power costs 10 cents per kWh, and after all the incentives, I'd have to pay $13k for the solar array. It would just be a decent return to pay in cash (about an 8-year breakeven, and a lifetime return in the 5% range), but I'd never break even if I had to borrow. Maybe if I win the lottery :D

Re: Solar - after 1 year the results are in.

Posted: Tue Sep 22, 2020 10:00 am
by harikaried
willthrill81 wrote: Mon Sep 21, 2020 8:23 pmHowever, the payback period in our area is 20+ years since we have some of the cheapest grid power in the nation at about 8 cents / kWh
That's what I thought too with our 8¢/kWh standard rate, but then I noticed the time-of-use rates. Only summer on-peak rates were higher than the standard rate, and solar would be producing from 1pm to 6pm even with A/C usage, so the biggest "downside" of switching to time-of-use becomes a money maker with solar. The other time-of-use rate periods are all cheaper than standard, and we're able to shift most of our electricity usage to the lowest 4¢/kWh rate.

So even with a low standard rate before solar, time-of-use rates allows us to use electricity when sending only 8% back at peak hours resulting in a 7 year payback period.

Re: Solar - after 1 year the results are in.

Posted: Tue Sep 22, 2020 10:15 am
by pondering
Valuethinker wrote: Wed Sep 16, 2020 11:19 am
DaftInvestor wrote: Wed Sep 16, 2020 11:06 am Thanks for sharing your story.

I noticed that the solar companies never calculate the Opportunity Cost of all the $$ they want you to pluck down. Every time I do the math the payoff is well over a decade and that is BEFORE I calculate in the Opportunity cost of the big money I would be putting down. Our Electricity costs are relatively low - others may do well with solar - with us - it just doesn't economically make sense.
So the years to payback calculation assumes a discount rate of 0%.

Given where government bond yields are, for a risk-free investment, that's probably not a bad return.

If you run =XIRR() on the cash flows, including the outflow of investment, you will get a pa return from the investment.*

Internal Rate of Return is just the discount rate that will bring the Net Present Value (the discounted value of future cash flows) back to zero (costs of the investment and discounted benefits from it are equal).

You can then compare that IRR to what you could get on other investments. And make an assessment of how risky this is. That would take into account your opportunity cost. Remember to get the other returns on an after tax basis.***

To my mind it's definitely less risky than stocks, but more risky than US Treasury bonds.

* 2 choices:

1. assume 0 terminal value after say 25 years. So just model 25 years of cash flow. If you do it in real terms (today's dollars), and you assume electricity prices stay constant in real terms, that makes it easier.

The panels will likely last 25 years (there is a fade to performance over that time-- but there are over 30 year old panels still working out there). The inverters last 10-15 years, I believe. So you have to factor in replacement of those.

2. assume a terminal value after say 15 years. Logically a new buyer would pay the present value of the cash flows then - ie the remaining 10 years. But one could be more conservative and take the depreciated value. Assuming straight line depreciation, value it at 40% of cost.

*** Unless you are repaying a debt or using a tax protected account. But probably you shouldn't be doing this if either of the other investment opportunities is available to you.
Did you have the time to model that in a google sheet?