Solar payoff....worth it?

[txaggies07]

I agree, we have a 5000 sf house, 2 EV's, 2 Air Conditioners, 2 EV's, a pool and spa, and we average about 40 kWh per day, or 1200 kWh per month - more in the hot months, less in the winter. I can't imagine using 5X that amount - although I do not live in AZ!!!

Weather plays a huge part. Cooling a house from 85 to 75 is way less energy than cooling a house from 100 to 75.

My usage is up over 3500kwh this summer with 4000+sq foot house, 1 EV, pool. In the winter that will fall to 1500kwh or so.

I keep trying to justify solar, but I always come back with a 15y payback.

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[AZBill]

Weather plays a huge part. Cooling a house from 85 to 75 is way less energy than cooling a house from 100 to 75.

Our temps often go over 110 and I have a 3400 sq ft house, 2 A/C units, pool, spa, 2 EVs. My usage falls to 3500 kwh in winter.

As for me doing the work, if I were younger, yes I would do that. At age 65, no way, and a 15-20 year return is just not worth it. I will be getting some more quotes, but in AZ the typical cost is at least $2.50 per watt, so if I need 30kw, it would be at least $75K.

 

[TRP]

These topics have also been discussed on other threads. From a purely $$ standpoint, using your numbers, you estimate $950 annual savings on a $22,000 investment. That works out to 4.3% TAX FREE rate of return on net invested capital. Unless you are over 72 years old, I would use an equity line of credit rather than taking money out of your retirement nest egg - see your tax advisor. In that case, you might still do better than break even - interest expense for HELOC (deductible) vs savings (tax free). Last year we increased our solar and battery setup by 50% so that our 2 EV's would be fueled by solar and we are net producers of zero emission energy. Since I am in SoCal, our electricity cost is more than double yours, on average, so easy to justify from a $$investment standpoint, we get about 7% tax free rate of return. However, even if I broke even I would still have done it. Have you seen the movie "Chasing Coral" or "Chasing Ice"? Given the bigger picture of the planet, and the effects of GHG and the resulting climate changes, it is an absolute no-brainer for anyone willing to look beyond next month's electric bill. Look beyond your lifetime, what can you do for those who are going to live in the conditions we all leave behind? That is what I say!

You make a very compelling argument, sir. Thank you

 

[engnrng]

Weather plays a huge part. Cooling a house from 85 to 75 is way less energy than cooling a house from 100 to 75.

My usage is up over 3500kwh this summer with 4000+sq foot house, 1 EV, pool. In the winter that will fall to 1500kwh or so.

I keep trying to justify solar, but I always come back with a 15y payback.

What relevance does years of payback have? Use Return on Investment - and compare your savings with any other investment that yields a TAX FREE return! Your utility bills are paid with after-tax dollars. Wake up, folks! Years of payback is a useless and misleading payback measure. And, the feeling that you have reduced your GHG emissions that run your home - Priceless!!

 

[TRP]

What relevance does years of payback have? Use Return on Investment - and compare your savings with any other investment that yields a TAX FREE return! Your utility bills are paid with after-tax dollars. Wake up, folks! Years of payback is a useless and misleading payback measure. And, the feeling that you have reduced your GHG emissions that run your home - Priceless!!

This is what I was trying to calculate and my Oklahoma math skills are failing me. How do I calculate my ROI on this, either monthly or annually?

This seems to be a much better metric as opposed to paying for itself over time.

 

[AZBill]

What relevance does years of payback have? Use Return on Investment - and compare your savings with any other investment that yields a TAX FREE return! Your utility bills are paid with after-tax dollars. Wake up, folks! Years of payback is a useless and misleading payback measure. And, the feeling that you have reduced your GHG emissions that run your home - Priceless!!

You are assuming cash up front, no interest paid on a loan, which effectively does lower the ROI. You are also assuming full return on the initial cost when selling your house in the future. Solar panels, like car batteries, degrade over time, making them less valuable in the future. Most panel warranties are in the range of 20-25 years and include clauses about degradation, so if you sell your house then, will you really get your initial investment back?

I have also been looking at the ROI of just installing a battery, charging it off-peak, then using it to reduce my peak load. That may be a much better deal for me personally, but I am still crunching the numbers.

 

[engnrng]

You are assuming cash up front, no interest paid on a loan, which effectively does lower the ROI. You are also assuming full return on the initial cost when selling your house in the future. Solar panels, like car batteries, degrade over time, making them less valuable in the future. Most panel warranties are in the range of 20-25 years and include clauses about degradation, so if you sell your house then, will you really get your initial investment back?

I have also been looking at the ROI of just installing a battery, charging it off-peak, then using it to reduce my peak load. That may be a much better deal for me personally, but I am still crunching the numbers.

For me, my ROI on the battery portion was actually negative unless I include the like cost of a generator and switch in my calculations. I chose battery because in the case of earthquake or fire, the gas lines are shut down, so a generator would not function unless I stored gasoline on site. As far as the supposition that solar panels degrade and reduce their value over time, you could be right, but a percentage point per year easily covers that, so my ROI might be 6% instead of 7% - still a no-brainer. And, warranties are structured to protect the guarantor - if they are for 25 years, functional life is probably 1.5x to 2x that. Still a no-brainer.

 

[engnrng]

This is what I was trying to calculate and my Oklahoma math skills are failing me. How do I calculate my ROI on this, either monthly or annually?

This seems to be a much better metric as opposed to paying for itself over time.

Annual utility savings divided by net invested cost (after Fed Energy Tax Credit or other incentives) = annual ROI. If you get a number like 0.07, that is 7%.

 

[TRP]

Annual utility savings divided by net invested cost (after Fed Energy Tax Credit or other incentives) = annual ROI. If you get a number like 0.07, that is 7%.

Puts us at about 4.3%

 

[engnrng]

Puts us at about 4.3%

Yes, that is what I got based on your early numbers. " using your numbers, you estimate $950 annual savings on a $22,000 investment. That works out to 4.3% TAX FREE rate of return on net invested capital. " Keeping in mind that also includes battery on-site, that is actually pretty good, IMHO.

 

[DYohn]

I put 14Kw of panels on my roof here in the Phoenix area for about $30K in 2015. I don't know nor care what the "payoff" is, I am just happy to have ~$40 a month electricity bills. I plan to expand the system by a few Kw to get my average daily generation up above 60Kwh this fall, and install battery backup as soon as I can afford it.

 

[TRP]

Yes, that is what I got based on your early numbers. " using your numbers, you estimate $950 annual savings on a $22,000 investment. That works out to 4.3% TAX FREE rate of return on net invested capital. " Keeping in mind that also includes battery on-site, that is actually pretty good, IMHO.

Thank you for helping me understand all of this. I've got some work to do but I am getting a handle on it.

 

[txaggies07]

What relevance does years of payback have? Use Return on Investment - and compare your savings with any other investment that yields a TAX FREE return! Your utility bills are paid with after-tax dollars. Wake up, folks! Years of payback is a useless and misleading payback measure. And, the feeling that you have reduced your GHG emissions that run your home - Priceless!!

Payback is a useful metric. You are right in that it isn't the only metric.

My full analysis includes IRR and PV cashflows. Additionally, I made the decision based on projected future cashflows comparing solar with alternative investments that I am making now. I just didn't want to go into a huge amount of detail on a thread. Solar is extremely hard to justify when prices are $8c/kwhr.

 

[engnrng]

Payback is a useful metric. You are right in that it isn't the only metric.

My full analysis includes IRR and PV cashflows. Additionally, I made the decision based on projected future cashflows comparing solar with alternative investments that I am making now. I just didn't want to go into a huge amount of detail on a thread. Solar is extremely hard to justify when prices are $8c/kwhr.

Wondering if your "full analysis" includes your portion of the $trilliions that will be needed in the next decade or three to repair storm damage, move a few million people away from sea level rise, deaths from high heat records, flooding, etc? Just an FYI, $10 Trillion spread out over 200 million taxpayers is $50,000 average. Just sayin'..... Apparently it is just me so far, but either the solar justification from cost analysis alone must also include future costs, or there is a lot more to zero emissions than just simple short term localized household $$ costs. Anyone who has exposure to sunlight on their roof or in their yard who has not yet installed solar is just not paying attention to the big picture. Like I said, I may be the only one who thinks that way. I actually feel the same way about EV's!

 

[bruceski88]

OK, just to show my unique situation. Here's a goggle earth pic. That red flag is the house. I know, you can't see it. That clearing to the right is the pasture. That's our only option for clear sky.

Maybe I'm chasing my tail thinking we can make this work for us, but I'm trying. LOL

Check out mysolarpod.com. They sell a ground based system you could install yourself once you get a sub-panel wired to the site. You can also go on the enphase web store and see how much all the hardware costs. Of course a solar company probably gets better prices. I think a large system could be done at about $2/w. 1 watt of capacity might make 3whr of power in a day if optimally situated. Don’t know if you can get the cost low enough given cheap electricty you can buy.