Solar payoff....worth it?

[Mach1E]

nnnooooo..... it actually IS doubling your money because you 'saved' enough to cover your original net cost by not paying a utility bill (like a dividend), and the you still have the asset (like principle). The 'good equipment' has a 25 year warranty, so you will more than double your original net investment with cash you are not paying the Utility co, especially if their rates increase at annual average rate of 4-5%.

It would only be doubling your money if the 10 year old equipment is still worth what you paid for 10 years ago.

It’s not. It’s not even close. What would it cost to remove a 10 yr old system and what could you sell it for? We could do the math, but I would imagine if you paid $25,000 for a system installed 10 yrs ago, you’d be lucky to net a few grand for the used panels.

Again, we could do the math, but it wouldn’t even matter. Who installs a solar system and plans to remove it and sell 10 years later? I was assuming the end value of the system is zero and doing the math that way.

And yes, utility rates increase each year, but at about the rate of inflation.
So that’s a wash.

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[Scooby24]

Not absolutes at all.

I was just correcting the math.

If your system pays for itself in 4 years (instead of 11-15 like the other people), clearly your return is significantly higher!

Individual results may vary.

My post is not for nor against solar. It was just clearing up how to calculate the return so people can make their own “is it worth it” decision.

For me, here in Florida? The return is terrible. Systems are expensive, they require a new roof, and every 10 yrs your insurance company makes you get a new roof, which means taking the panels off and reinstalling.

The break even point is easier measured in decades than years for me.

You didn't answer my question regarding the lack of factoring in that money not saved is money spent.

Let's say I didn't invest in solar and in 25 years I pay a total of 100k in electricity.

If I invested in something else returning 6% profit but then still had to pay 100k in electricity what have I earned? I'd need to invest in something that could double my return to break even. And that's assuming I didn't take that money spent (100K) and invest it, resulting in greater returns.

I don't think your typical investment calculations work here when you're considering an investment in reduction of an expense.

Should I also start on my use case where my solar is now paying for my expenses in crypto mining that is also making me an additional 10k a year, now with no expense in power?

 

[DYohn]

My advice is not to install residential solar (or wind) thinking you will "make money" or return power to the grid. Do it to get as close as possible to divorcing yourself from the grid. Make the utility meter stop. That's how you save, by ending or minimizing your electric utility bills. If breaking even is important to you, then it's a simple matter of calculating how much you spent and dividing by how much your utility bill goes down. If you stop paying the utility $200 a month, then you are paying back your solar cost at the rate of $2400 per year. But in my opinion, if all you care about is return on investment, look for something else that will net you $200 a month on your $30K investment.

Far more important to me than any of that is getting as off the grid as I can. YMMV.

 

[Scooby24]

It would only be doubling your money if the 10 year old equipment is still worth what you paid for 10 years ago.

It’s not. It’s not even close. What would it cost to remove a 10 yr old system and what could you sell it for? We could do the math, but I would imagine if you paid $25,000 for a system installed 10 yrs ago, you’d be lucky to net a few grand for the used panels.

Again, we could do the math, but it wouldn’t even matter. Who installs a solar system and plans to remove it and sell 10 years later? I was assuming the end value of the system is zero and doing the math that way.

And yes, utility rates increase each year, but at about the rate of inflation.
So that’s a wash.

Who's taking off a 10 year solar system when they are warranted for 25 years at producing at least 80%?!

 

[Mach1E]

You didn't answer my question regarding the lack of factoring in that money not saved is money spent.

Let's say I didn't invest in solar and in 25 years I pay a total of 100k in electricity.

If I invested in something else returning 6% profit but then still had to pay 100k in electricity what have I earned? I'd need to invest in something that could double my return to break even. And that's assuming I didn't take that money spent (100K) and invest it, resulting in greater returns.

I don't think your typical investment calculations work here when you're considering an investment in reduction of an expense.

You can calculate opportunity cost if you like. It’s just more math.

But if the “what would you do with your monthly savings?” Question is answered by: “I’ll invest it in X” then the math is the same.

Your first question will be: Why?

Because here are the scenarios:
Scenario A: Pay $25k for solar, save $200/mo in electricity. Invest $200/mo

Scenario B: pay $0 for solar, pay $200/mo in electric bills, invest $25,000 today.

If you like I can run those numbers (or whatever scenario you like), but the results won’t change much.

The $25,000 initial money would have to be either to buy solar or invested if you want to look at opportunity cost.

 

[Mach1E]

Who's taking off a 10 year solar system when they are warranted for 25 years at producing at least 80%?!

No one!

That’s my point!

So you wouldn’t have “doubled your money in 10 years,” just like I said in the first place.

In that scenario, after 10 years, $10k went out to pay for the system, $10k came back in. Net return zero.

 

[Scooby24]

You can calculate opportunity cost if you like. It’s just more math.

But if the “what would you do with your monthly savings?” Question is answered by: “I’ll invest it in X” then the math is the same.

Your first question will be: Why?

Because here are the scenarios:
Scenario A: Pay $25k for solar, save $200/mo in electricity. Invest $200/mo

Scenario B: pay $0 for solar, pay $200/mo in electric bills, invest $25,000 today.

If you like I can run those numbers (or whatever scenario you like), but the results won’t change much.

The $25,000 initial money would have to be either to buy solar or invested if you want to look at opportunity cost.

I'd definitely argue someone spending 200/month on solar shouldn't be spending 25k on a system.
I'm spending 450/mo in the summer with mining, 250 in the winter.

My math is 15k for Solar, save ~300/month, return ~1k month in crypto not factoring loss or gains in value.

I'm betting it's going to be REAL hard finding a 25k investment that's going to return me roughly 40% gains in a single year.

 

[Mach1E]

I'd definitely argue someone spending 200/month on solar shouldn't be spending 25k on a system.
I'm spending 450/mo in the summer with mining, 250 in the winter.

My math is 15k for Solar, save ~300/month, return ~1k month in crypto not factoring loss or gains in value.

I'm betting it's going to be REAL hard finding a 25k investment that's going to return me roughly 40% gains in a single year.

Ok let’s use your math:

The math is straight forward:

Invest $15k
Or
Invest $300/mo

Only missing part is the interest rate. I’ll use 6% from your example before.

$15k at 6% in 10 yrs- $26,862
$300/mo at 6% in 20 yrs- $49,163.

At that math you should definitely get solar!

Other people here are talking $100,000 for an install though for $400/mo savings. Clearly not the same result.

In the $25k example vs $200/mo, the $25k would get $44,771 in 10 yrs vs $32,775 for $200/mo.

Side note, if using crypto as a base for investing it’ll be worth $0 in 10 yrs. ?

 

[Scooby24]

Ok let’s use your math:

The math is straight forward:

Invest $15k
Or
Invest $300/mo

Only missing part is the interest rate. I’ll use 6% from your example before.

$15k at 6% in 10 yrs- $26,862
$300/mo at 6% in 20 yrs- $49,163.

At that math you should definitely get solar!

Other people here are talking $100,000 for an install though for $400/mo savings. Clearly not the same result.

In the $25k example vs $200/mo, the $25k would get $44,771 in 10 yrs vs $32,775 for $200/mo.

Side note, if using crypto as a base for investing it’ll be worth $0 in 10 yrs. ?

Yeah...just like they were saying about bitcoin back in 2008...oh wait.

 

[DYohn]

Bitcoin is already worth $0 in a half dozen countries including China. I predict the same will happen elsewhere, starting with the EU. You can spend it in El Salvador. Or Nigeria.

 

[Scooby24]

Oh you mean communist China that cannot control the supply of a currency would outlaw it? Boy, couldn't have predicted that.

 

[DYohn]

Oh you mean communist China that cannot control the supply of a currency would outlaw it? Boy, couldn't have predicted that.

Not trying to argue with you but yes, China, the People's Republic, the one that supplies most of the world's commodities, is the world's second largest economy, and the largest US trade partner. That one. Bitcoin is worthless when dealing with them.

 

[Mach1E]

Yeah...just like they were saying about bitcoin back in 2008...oh wait.

Since it didn’t exist in 2008, they would be correct.

I don’t think that in 10 years we will still have thousands of competing currencies that all still exist and are widely used for transactions…….

And I definitely don’t trust the one that was created in 2009 by an anonymous group who disappeared in 2011 and funds drugs, sex traffickers, terrorists and money launderers while requiring TONS of electricity for transactions (which is horrible for the planet by the way, back on topic).

 

[txaggies07]

I'd definitely argue someone spending 200/month on solar shouldn't be spending 25k on a system.
I'm spending 450/mo in the summer with mining, 250 in the winter.

My math is 15k for Solar, save ~300/month, return ~1k month in crypto not factoring loss or gains in value.

I'm betting it's going to be REAL hard finding a 25k investment that's going to return me roughly 40% gains in a single year.

The bitcoin is irrelevant to the discussion unless you can only bitcoin with solar. Since that amount is the same in both the solar and grid options it is a wash in the calculations.

 

[txaggies07]

If I could replace 300/month with a 15k system the math would look quite a bit different. Google's calculator is estimating my system will cost me $57k after rebates. The google calculator is estimating 17 year payback (but with a negative NPV at 4% discount rate which means it is a money loser if you can invest it). Also, my electricity prices have not been increasing equal to inflation, but have been falling in respect to inflation.

For everyone really interested in calculating their optionality, you need to do the following:

• Setup a do-nothing case
  • assumed electricity prices either flat with/without inflation depending on your local history
  • assumed alternate use for cash (if solar costs 25k up front, the equivalent case would be what investment you would instead put that 25k in)
• Setup a solar case
  • Initial installation cost
  • Any residual electricity costs
  • Investment of electricity bill savings after break even point (if looking beyond breakeven which is where solar actually starts to look interesting).
• Alternative cases
  • In my case I was interested in finding what investment returns I would need to make solar better than investment at given opportunity time frames.
• Plot the cash flows over time
• Make sure to account for inflation where needed
• Make sure to account for taxes where needed

If you are doing this for the Environment and not to save money, great. If you are doing it to save money just run the analysis. Monthly cashflows are not actually that important. Don't drop 25k to avoid paying 200/month so you can feel good about spending 200 les per month. Make sure it makes sense for your long term financial health. Car salesman use the trick about focusing on your monthly payment to avoid focusing on total cost. There is a reason they do that. Try to avoid those tactics.

If you have any questions you can always PM me too. I am not trying to push one way or another with solar. If it works for you then awesome, if it doesn't then I hope prices come down to the point it does. I would love if it worked out in my case, but it doesn't yet. Maybe one day.

FYI, I was an economist until a month ago when I switched roles at my company.

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