Incendiary wrote: ↑
Mon Jul 10, 2017 8:28 pm
For those of you who have looked into solar panels, how did you decide if it was worth doing or not? I'm talking from a purely economic perspective, not factoring in environmental concerns. The installer told us a break even period of nine years, but looking at the electric bills it seems more like 15 years. And that doesn't take into account TVM. I'm wondering what I'm missing.
Our solar installer payback analysis wasn't incorrect but is less comprehensive than the analysis here on this forum.
For the ones presented by my installers, here are the areas where they could improve:
1. Since I'm paying cash for my installation, incorporate my cost of capital. In my case, I instead used as my target for comparison a hypothetical amortizing municipal bond. This is because your saved electricity costs are equivalent to a combination of tax-free interest on your investment plus some return of capital. The solving for the rate on this bond gives me my after-tax IRR.
2. Account for a terminal value on the installation after 20 years. (this usually has a negligible effect on the outcome of the analysis)
3. Account for the the 1% per annum degradation in electricity generation. (this usually has a negligible effect on the outcome of the analysis)
4. Either price in one replacement of a central inverter if you're using power optimizers (which you should be if you're optimizing for ROI/IRR)
One thing I've noticed is that there's a lot of variation in both pricing of installation and in expense of the panels themselves. It definitely pays to shop around. And it's critical to think carefully about whether you want the best ROI or whether you want other ineffable qualities. For instance, you'll get the best ROI from the cheapest panels. OTOH, I wouldn't blame anyone for wanting to "buy American" and support domestic industry, even though you sacrifice the best ROI for this.
Finally, it also pays to remember that saving energy almost always has the best ROI. Switching to LED lighting, adding insulation and weatherstripping, and getting newer windows almost always has great payback periods. If you have a pool getting a dual-speed or variable speed pool pump will pay for itself in a year or two. We recently replaced a TV and achieved 2.5 year payback period.
It's also footnoted that small-scale residential and commercial solar photovoltaic are estimated to have generated an additional 0.6% of electricity in 2017.
emoore wrote: ↑
Tue May 22, 2018 11:39 am
Nice to see those renewable percentages rise. Hopefully in 2018 renewables pass nuclear and maybe even coal. That would be a surprise to a lot of people.
Not new but you should take a look at the EIA projection for 2018 and 2019, https://www.eia.gov/todayinenergy/detail.php?id=34612
Long-term forecasts from the EIA
project renewables overtaking coal in 2040, and non-hydro renewables alone overtaking coal by 2050. That's a long way away.