nash031
Thinks s/he gets paid by the post
That’s before the tax credit.
Going Solar
- Thread starter RobbieB
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That’s before the tax credit.
Valid points, there's also flip sides though.
In some countries (e.g. Belgium) people with solar panels are being taxed with a recently introduced 'prosumer fee' now, reducing savings quite a bit.
In several countries solar is nearly or at unsubsidized levels. It was true however that in many places there were very generous subsidies for a few years, which resulted in an ROI we'll likely never see again for rooftop residential.
The difference is optionality. At any stage you can decide to put in panels. Once they're up though, you've committed. So if rates go up, you can always respond with panels. Now .. if rates go down .. you don't have the option (economically speaking) to remove the panels, while the non-committed person can still sit on his/her hands.
As always, it's highly dependent on a specific situation.
ERD50
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Thanks, but like the others I found, that gives me a result, it doesn't explain the calculations clearly enough for me.
But as I dig through the spreadsheet, I see their 'income' calculation. But how does 'depreciation' fit into this? Do homeowners depreciate a solar system? Then they factor taxes into that? A quick google says "No" for a principal residence. And then only against 'income', but does that apply to 'savings' (assume I don't produce more than I use)? I'm lost there.
It's not clear to me at all. If I invest $12,000 in a 30 year bond, I expect dividends and a return of my $12,00 principal. But if I invest $12,000 in solar panels with a 30 year life, at the end of 30 years, aren't they worth near zero? Isn't that the definition of 'lifetime'? And at that point, don't I incur a cost to remove them? Does that make them a negative worth at 30 years?
Shouldn't I list $12,000/30 years as a 'cost' against income? For the rates in IL, that about cuts my annual savings in half.
And unless I timed a roof replacement just right, and get a full 30 years from my roof, the solar panels will add to the cost of a roof replacement. How is that factored in?
-ERD50
Where I live (Hawaii) the only limit on PV systems is what the grid can absorb. So far, here, they keep upping that amount as they make improvements to the grid's ability to handle the unpredictability of PV. But the number of systems is not otherwise constrained by the government.
There is no preset limit I am aware of on tax rebates, either at the federal or Hawaii state level. But of course those programs can be cut by the whim of Congress.
As far as tiering goes - most states have incentive programs with a fixed limit on the amount of PV power they will accept in different districts of the state. Hawaii has maxed out tier-1 (net metering at 100%) but I know parts of Washington State still has openings in tier-1. You really need to check your state to know what your options are.
nash031
Thinks s/he gets paid by the post
Income is savings + expected return on net metering based on parameters you enter. I expect very little return from net metering in my area, and am only looking to offset the power bill.
A whole lot of other questions there. Some good. Some way, way too nit-picky for me. While I’m an engineer, good enough is good enough. I don’t want to worry about depreciating the solar panels - I am not going to take them off of my roof and sell them to someone else. My roof is four years old, and the life expectancy of a solar system is 20-25 years, so it’ll line up with roof replacement time down the road, again, well enough, and it’ll probably be the next owner’s problem at that point.
I’m satisfied with my decision, and I know you have gone to great lengths throughout this and many other threads to talk down residential solar as essentially a scam. You do not need to buy solar. PVcalc is plenty detailed for me to make an informed decision, and if my money would’ve been better served in another place by 2-3 or 5%, then I’ll live with that.
Solar in Illinois probably doesn’t make as much sense as it does here in Southern California with high rates and far more efficient sun exposure all year, so I don’t blame you for being skeptical for yourself. That said, the energy you are willing to devote scrutinizing other people’s decisions (both in this thread and others) is uncanny. I hope you’ve enjoyed your research.
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ERD50
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I asked for two reasons. 1) The link you provided included depreciation. 2) It wasn't clear to me how people use ROI, since you don't get your capital back on a solar system.
OK, just pointing out it certainly is a consideration.
Wow. I don't ever recall saying it is a scam. I do think that that facts show that in general, commercial sized installation makes a lot more sense in every way over residential installs. But if someone wants to install a residential system, that's their call (though I do wish they wouldn't use other people's money to do it - I would call the subsidies a scam, but that's another story/subject).
That's why I'm asking, does PVcalc take into account that you don't get your capital back? It seems to me that the ROI calc is looked at to compare to another investment option - but alternate investments should return your capital (all, or some depending on the vehicle).
Yes, solar makes a lot more sense in the high kWh areas, and so far, doesn't seem to cut it in IL. But maybe someday it will. I like to stay on top of things. And I do enjoy the research. That's why I'm trying to understand this ROI measurement.
-ERD50
Texas Proud
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Just a nit... you are depreciating them if you take the cost of them into account for the PV value... IOW, you dish out $15K or so for panels and installation... you get reduced electricity cost for say 20 to 25 years... you get nothing back on those old panels... well, that means they were depreciated down to zero in the calc... it is not an accounting issue as some might think..
If you are doing NPV of those cash flows then it also takes into account opportunity costs as the NPV rate is that opportunity cost... if you use the right rate all is included....
NW-Bound
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Electricity is so expensive in California that if home solar power does not make sense there, it won't work elsewhere. Hawaii is the same.
Here in AZ, my power does not cost as much, but I am building a solar system with lithium battery storage as a hobby project. As the system has many homebrewed parts, it's a hobby, and one does not care about that the same way one treats an investment. I am sure that I will get power from my system, but how much I will save and the time to pay off will be whatever it will be.
I will not and cannot apply for any tax credit, as this is a DIY project. My labor is "free", but I do keep track of the material costs. It's a long way from done, but I will have a thread when I have interesting things to show.
nash031
Thinks s/he gets paid by the post
I look forward to reading about it! Part of my interest here is also "clean" energy. I am a huge proponent of nuclear power (as a nuclear engineer) and am disappointed with the choices made here to get away from it in favor of more expense clean alternatives which are continuing to drive prices higher. I think this is a pretty good situation for us in So Cal to be able to have clean energy at significantly reduced costs from that on the grid, which is only getting more and more expensive over time. The tax credit certainly doesn't hurt, and I understand people's political feelings in that regard as a fiscal conservative myself. That said, I think it's cynical to not take advantage of such measures if they make sense, kind of like I'm sure a lot of people don't love SS or Medicare from a politically principled perspective, but still take advantage of them when the time comes.Electricity is so expensive in California that if home solar power does not make sense there, it won't work elsewhere. Hawaii is the same.
Here in AZ, my power does not cost as much, but I am building a solar system with lithium battery storage as a hobby project. As the system has many homebrewed parts, it's a hobby, and one does not care about that the same way one treats an investment. I am sure that I will get power from my system, but how much I will save and the time to pay off will be whatever it will be.
I will not and cannot apply for any tax credit, as this is a DIY project. My labor is "free", but I do keep track of the material costs. It's a long way from done, but I will have a thread when I have interesting things to show.
nash031
Thinks s/he gets paid by the post
Indeed, I fully depreciate them in my calculations as a full cost of payback before I ever get into "making money" on the system. After a roughly 4 year payoff period to get to "break even", that's where my savings ("income") starts and factors into the roughly 8% CAGR over the ten year period I used for my calculations (our estimated time in this house). That number may be overly optimistic... it may undersell the value. I can imagine any number of scenarios where the calculations aren't fully correct, but as mentioned in my post to ERD, at some point "good enough" is good enough.
aja8888
Moderator Emeritus
My bold above - we paid into those plans (SS &n Medicare) and are receiving our investment back. But credits for solar are not something we all paid into. Much different.
nash031
Thinks s/he gets paid by the post
I said "essentially a scam" - that's me inferring things - as you've pointed out to anyone who will read your feelings on commercial installs vs. residential and your principles regarding "other people's money". Yes, I understand those points. Yes, principally I agree with them. Since commercial solar group installs aren't really a "thing" (at least here), and the credit is available, I'm fine doing it this way.
PVcalc shows at the bottom the cash flow, and that cash flow is negative for the first four years for my system before it ever returns "income". After that, the "income", which is really just savings, accrues at a rate roughly 8% CAGR on my initial investment. I did not account for any value retained by the installation on my house, nor did I account for replacing the roof and those additional costs caused by removing panels, as I do not expect to front those costs myself. I did account for expected maintenance costs and insurance - probably overly conservatively in both respects.
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nash031
Thinks s/he gets paid by the post
While true, given the choice with my principles, I'd keep and manage that money myself. That was my only point. Obviously there is not a direct comparison between them. Maybe a better comparison is tax deductions for various other things like children, energy efficient home improvements, mortgage interest, etc. We may principally disagree with them, but most everyone takes advantage of them if they can.
ERD50
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Just to be crystal clear, I have absolutely no problem with anyone taking advantage of the subsidy that is offered.
I do have a problem with it being offered, and with anyone who tries to justify it, or promote it to our lawmakers. And especially if you want to see more green energy installed - there are better ways to use that money toward that end.
-ERD50
I do have a problem with it being offered, and with anyone who tries to justify it, or promote it to our lawmakers. And especially if you want to see more green energy installed - there are better ways to use that money toward that end.
-ERD50
nash031
Thinks s/he gets paid by the post
The "scam" here is the solar lease, IMO. During our recent house hunt, we approached a seller about their solar panels, and they told us they were leased panels. We asked them for the contract and terms, after digging, we walked away, and two days later they had to reduce the asking price of the house by $30,000 because the lease was going to be a major turnoff for everyone...
nash031
Thinks s/he gets paid by the post
21 panels going up starting today. Work complete before Thanksgiving. Probably up on the grid in a couple of weeks.
Same here! Except more than 21 panels and will probably bleed into next week. Every panel I see walk by my window makes me happy!
jazz4cash
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I looked at leases from two companies. I wouldn't quite go so far as to say scam, but there was some really crummy details (eg. rate escalator) in the fine print that that the "salesman" seemed to be unaware of. My conclusion was that buying is the only way to go in this area. I went to an open house /seminar at a local installer and they said 80% of their business is leasing. The leasing is so easy...no down payment, pass a credit check, sign up and you are done.
NW-Bound
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I recall that you were buying another home. So, you already moved in and got the solar installation going already? That's fast.
street
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What in years, will the system pay for itself? Are you selling back excess power to Power Supplier? Also what is the price per KWH for sell back??
nash031
Thinks s/he gets paid by the post
Yes. The process for the home started way back in July. If you recall, we broke contract on the first home, and found another in October, closing less than three weeks after offering. I have been researching solar in earnest for about two month prior to settling on our contractor. He took about two weeks for the estimate process which started two days after we moved in, I agreed to his installation and estimate about a week after he provided it. I was stunned last week when he emailed and wanted to know if they could start Monday and be done Wednesday. I figured the paperwork would take longer, but owning the land, having no HOA or city ordinances to answer to streamlined it. I think it’ll take a bit of time to get up on the grid, but am hopeful for that to be done by the end of the month.
Start to finish from initial contact to up on the grid could be as fast as five weeks. Typical estimates are two to three months from my research.
He was also the last contractor contacted after I’d received about six quotes. So the whole process probably more like eight weeks from first estimate to up on grid. I’ll update when we are connected.
nash031
Thinks s/he gets paid by the post
My calculations have a 4.1 yr payback. We intend to be here for 10 or so years. CAGR estimated right around 8% as a rough estimate and I’m certain that math is probably not spot on. Could be more like 4-5% CAGR. still, as home improvements go... pretty good, and that does not include any increase in home value on resale.
Net metering here is at a wholesale rate, roughly $0.04/kWh. Our system will not be terribly oversized, so sellback isn’t a primary concern. Similar installations in the area have obtained annual electric bills of -$4.00 for the last year. We could see something like that, so it isn’t a windfall in that regard. Primary concern is a fully occupied house with young children, running A/C in hot summers, can save us in excess of $400 per month in the summer months, obviously less in the others. SDGE has high rates to start with, and they scale up with use. Our smaller home closer to the coast ran a $450+ bill one month this summer when we had AC set at 74 and didn’t really monitor its use very well. I’ve estimated that this solar system will meet most of our peak need, and all of our off peak month needs.
I’ll be able to monitor system performance and conduct calcs on exact numbers once it’s up and running.
Ours was about 2 months. Getting the permit took time, then after the install, the county had to inspect it, then the utility company would not hook it to the grid until they inspected it. But we live in a very bureaucratic state.
Do you have a radio-telemetry meter? Our utility has those for normal power but not for PV systems so they have to come up to the house to read the meter, which means we have to be here to open the gate for them. They said they would eventually switch to radio.
nash031
Thinks s/he gets paid by the post
No, I think they come out and read. Either way, it's on the front of the house so... That said, the system installed has online monitoring for total system and each individual panel. I'll be able to see what kWh we're producing and using from the system throughout the day, and can calculate the cost associated with that at the regular grid rates to get actual payoff data over the course of time.
