#### ERD50

##### Give me a museum and I'll fill it. (Picasso) Give me a forum ...

I didn't want to derail this other thread, but it's hard to not comment on some of these over-optimistic payback calculations for solar (or other $ saving) systems. The most common error is to not include opportunity costs, ongoing costs, and end of life value. From that thread:

1) I'd conservatively estimate the opportunity cost of that $29,000 investment as providing a 3%, inflation adjusted cash flow (that's > 100% historically safe over 30 years). $29K * 3.0% = $870. So your $150/month is $1,800/year, minus the cash flow is a $930 annual savings (and that allows for inflation adjusted bills). So $29,000/ $930 is a > 31 year payback.

2) What is your solar system worth after 30 years? Historically, that $29K invested is at a minimum balance of ~$15K (inflation adjusted), and an median of $74K.

3) And how many inverters have been replaced? Bad connections repaired? How much has the system degraded? Have they had to have been taken down to repair/replace the roof?

4) The rest of the taxpayers paid for the rebates/credits. While that doesn't factor into your costs, it actually does factor into the payback overall for solar. It's still a cost, it didn't go away.

I hope it all works out for you, but a 16 year payback just doesn't cover it.

link to FICALC, showing opportunity costs: http://tinyurl.com/ykmafkbf

-ERD50

Originally Posted by ivinsfan View Post

I don't know where you live, but can you come back some time and tell us if this worked out the way you expected it to? Also do you think you will recoup the cost of it when you sell your home? I think one of the worlds big questions is how well does this kind of system really work money wise.

My average electric bill used to be about $150 per month, it's now $0 (thanks to net metering). The solar cost me about $29,000 (after tax and utility rebates). So it's got a 16 year pay-back period (and a 30 year warranty). I was 48 when we installed it in the spring, so it should pay off when I'm 64 years old. Just from that basic math (and not accounting for utility rate increases), assuming I live to 75 I'll "profit" $20,000 in my lifetime. ...

1) I'd conservatively estimate the opportunity cost of that $29,000 investment as providing a 3%, inflation adjusted cash flow (that's > 100% historically safe over 30 years). $29K * 3.0% = $870. So your $150/month is $1,800/year, minus the cash flow is a $930 annual savings (and that allows for inflation adjusted bills). So $29,000/ $930 is a > 31 year payback.

2) What is your solar system worth after 30 years? Historically, that $29K invested is at a minimum balance of ~$15K (inflation adjusted), and an median of $74K.

3) And how many inverters have been replaced? Bad connections repaired? How much has the system degraded? Have they had to have been taken down to repair/replace the roof?

4) The rest of the taxpayers paid for the rebates/credits. While that doesn't factor into your costs, it actually does factor into the payback overall for solar. It's still a cost, it didn't go away.

I hope it all works out for you, but a 16 year payback just doesn't cover it.

link to FICALC, showing opportunity costs: http://tinyurl.com/ykmafkbf

-ERD50

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