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How long until you start seeing a return on investment? Right now my electricity bill for my home is ~100 a month in Texas. I would need to keep the same panels

How long until you start seeing a return on investment? Right now my electricity bill for my home is ~100 a month in Texas. I would need to keep the same panels without maintenance fees for 33.33 years by your price point of 40k

schrodinger 10y ago
You can also sell electricity generated by your panels back to the grid.
- ericabiz 10y ago
  Effectiveness of this varies by state or region. For instance, when I was in the Bay Area 10 years ago and looked into this, PG&E would let your electricity bill get to 0, but wouldn't let you go into rebate territory. They just wouldn't pay you for the additional electricity generated. I think other states/utilities have different options. Most solar quotes take this into consideration, and quote you for enough solar to get into the minimum bill for your region (most utilities have a few hundred Kwh you can use per month at an obscenely low rate, and then it ramps up from there--solar is quoted so that you'll always stay within that cheapest range.) For my current house in Austin, I'm still interested in solar, but it was both more cost-effective and had a shorter payback time to re-insulate to R36 in the attic and redo our horrible system (which had no ducts at all--agh, stupid 1956 house) than it was to do solar at the time.
- blacksmith_tb 10y ago
  Sadly, not in very many places. In most US states, for example, utilities have lobbied to get laws that don't allow residential customers to sell power back to them, at most net-metering agreements will allow you to get credits from any excess power your panels generate (which is how my utility handles mine - unfortunately, since I generate more than I use, I can't actually make use of those credits fully, and I'm giving away some power to the grid).
qaq 10y ago
Y but now it's 7K and not 40K.
krschultz 10y ago
Payback of 6 years with the new cost, even for your low electric bill.
- toomuchtodo 10y ago
  Excellent example of why solar panels (in the right locations) and LEDs are a better investment than the S&P500 right now. You spend dollars now to eliminate the need for future dollars.
  - antisthenes 10y ago
    While that is true, keep in mind that future dollars are less expensive than present dollars. But it stands to reason that the prices of energy will rise faster than the rates of inflation, so it would still be a good investment.
    - Someone 10y ago
      If everybody buys solar, electricity prices will only rise faster than inflation in periods without much sun. It might even be profitable to play a 'buy when it is free or cheaper, use when it costs money' strategy. You can get there by buying large batteries, charging them from your neighbor's solar panels when there is lots and lots of sun (they may even sell at prices below zero), and discharging them, selling to you neighbors, when there is little sun and wind.
      - toomuchtodo 10y ago
        I'm already investigating buying 50+ MW at a time of Tesla Powerpacks in certain markets exactly for this purpose, as an independent generator. Buy power when people are paying you to take it, releasing it back to the grid at the most expensive times.
- mrec 10y ago
  And presumably a lower bill implies lower energy usage, so he'd need fewer panels to cover it.
michaelbuckbee 10y ago
I've been trying to do this calculation myself. One factor I hadn't initially put in was the fact that I didn't need to think about a backup generator for our (east coast) storms.
- brians 10y ago
  You might—I do. Your inverter won't power the house when the grid supply is down. Why? Well, because if the grid supply's down, it's probably because there's a line down somewhere. Therefore there's a lineman trying to pick that line up somewhere. He's going to be handling both ends of a broken, downed line. The generator-side line is tagged out, that's safe. The house-side line? Well, that's up to you—and so your equipment will deactivate to avoid creating a safety hazard for grid maintenance staff.
  - maxerickson 10y ago
    An auxiliary grid independent outlet is apparently becoming a feature on newer inverters: http://www.sma-america.com/newsroom/current-news/news-details/news/12929-sma-strengthens-sunny-boy-tl-us-series-with-two-new-powerful-models.html http://www.sma-america.com/newsroom/current-news/news-detail... A generator probably beats a lot of battery systems (which along with the right inverter and a transfer switch is another way to use the solar for backup power).
- ChuckMcM 10y ago
  Well one issue with grid-tied systems is that when the grid is offline they provide no power (they explicitly don't want to back feed into the power lines and kill some lineman who things power is off). So one of the certification issues is to make sure that your inverters recognize that state and shut down. But a side benefit of putting in the system was we did a lot of electrical panel work, and as as result put 8 circuits on to a transfer switch (the incremental cost was the transfer switch and the electrictian's time wasn't materially affected.) So when the power does go out we can fire up a generator and switch over to gen power easily.
1024core 10y ago
33.3333 * 7 / 40 = 5.83 years
Osiris30 10y ago
I keep a close look at the economic of rooftop pricing in TX - it's still not profitable switching but getting close. Cons: - Retail cost of electricity is already v low in most of TX (Houston, Dallas) - so it's hard to compete. - not much competition in the solar rooftop installation space (due to first point above) - No net metering policies in Houston, Dallas. Pros - High solar yield
- toomuchtodo 10y ago
  Keep in mind that the 30% tax credit will eventually taper off. It might behoove you to wait now, but not forever.
  - copperx 10y ago
    What is this 30% tax credit you speak of?
    - esmi 10y ago
      http://energy.gov/savings/residential-renewable-energy-tax-credit http://energy.gov/savings/residential-renewable-energy-tax-c...
cmarschner 10y ago
ROI can only be one factor. The other is that you are suddenly using clean energy. Doesn't this make you feel better?
- dragontamer 10y ago
  The typical American median household income is $51k. Spending $40,000 of that on "clean energy" so that they can "feel better" is well outside of the typical person's price range. Even $7000 would be cost-prohibitive, especially if they're paying or saving up for their kids. A cold can of beer also makes you feel better. Its a hell of a lot cheaper too. The answer for the typical American is to wait for utility-scale to build Solar out for them. When the city as a whole notices that solar is cheaper than running peaker plants or whatever, then the city / municipality can purchase an entire field of solar (AND the energy storage needed to make it useful) and give it out for the whole town. And in the mean time, you can drink your beer on the porch while you wait for progress to be made.
  - kragen 10y ago
    US$40K was the cost when Chuck did it in 2003. Now we're talking about US$7000 over 25 years, which is US$23 a month. US$23 a month is not "well outside of the typical person's price range" in the US. If you want to "save up for your kids", the way to do it is to invest your money in the investments that have the highest ROI, as long as you have enough liquidity to weather emergencies. Pay off your 23% credit card before your 17% credit card, pay off your 17% credit card before you start putting up solar panels that will have a 16% internal rate of return, and put up the solar panels before you buy the cold can of beer with its 0% ROI. Twenty years from now, you'll be drinking your beer on the porch and sending your kids to college, while your typical American loser neighbors are whining about their credit card and electric bills.
    - dragontamer 10y ago
      > US$40K was the cost when Chuck did it in 2003. Now we're talking about US$7000 over 25 years, which is US$23 a month. Chuck is replacing a $2000 inverter in just 10 years. If your emergencies include "fixing the damn solar panels that you bought", that's your own damn fault. In any case, when middle-class Americans start buying solar en masse, I'll admit I'm wrong. But for now, I'm going to bet you that this is a luxury that is not cost-effective for the typical middle-class American. It ain't like a Washing Machine, Refrigerator or Water Heater. I'll tell you that much.
ChuckMcM 10y ago
That is a slightly more nuanced question than you might think. First, I work from a baseline cost of $19K, even though the list price was closer to $40K I didn't pay that for the system so I use the actual cost in my calculations. Second there is the point where the money you've saved is equal to the money you paid, we hit that point about 10 years in. And then, depending on the life of your system (which has "positive cashflow" at that point) determines your overall rate of return. The replacment inverter (which is actually going to replace both inverters) is $2K ("upgrade" pricing from the manufacturer) And as the inverter was failing our system was under performing (so not generating as much power). The question will be how much longer am I willing to run the panels. The warranty is 25 years, so in theory another 10 years but the manufacturer (Sharp) no longer makes them and cannot replace them under warranty (they can only offer to repay you to buy a panel from some other vendor with equivalent specs and size). So from a money perspective, had I used the $19K and put it into an S&P 500 ETF in 2003, it would have doubled by now (SPX was 1,008 in 2003, its over 2,016 today). So "bad investment" comparatively. If the panels continue for an additional 8 years and PG&E's costs stay about the same then I'll have generated about $20K in value from them so that would pencil out to a ARR of about 3.5%. Initially I funded the panels with a refinance of the house loan and that was at 6% but that has since been refinanced even lower. However had it not been, at my original purchase I'd still be running a deficit trying to both pay back the house and generate cash from the solar. Interestingly for me, with the $7K it would cost to re-implement that system today, and 4% mortgage rates, it would have a rate of return of closer to 14% (10% if you subtract 4% as the cost of capital for a mortgage refi) and pay for itself in a bit more than 3 years and have doubled the return in 6. The challenge is additional regulatory changes which get incorporated into new installations versus the regulation regime I operate under based on my 2003 install date. I wonder sometimes what the trigger is for resetting the project's origin date.
- Retric 10y ago
  Don't forget about taxes. Interest on that 6% loan get's deducted from your income which is an arguable subsidy. Alternatively, you also avoid paying taxes on your S&P returns. In many cases solar is really close to a no brainier. Which is why Florida Utility's have tried so hard to block residential adoption.
kayoone 10y ago
Ops point was that the original price of 40k in 2003 is now 7k for the total installation. That will change your math somewhat :) So even with your low power bill it's more like 6 years.
amelius 10y ago
> How long until you start seeing a return on investment? Why can't the utility companies do the financing (upfront investment), place them on our roofs, and get a little bit of the profit? Seems like a win-win situation. And otherwise government, or specialized banks?
m3mnoch 10y ago
this argument kind of annoys me. "yeah, but how long before you see a return on investment?" how about instantly? this is what we did: 1) calculated our monthly electricity payment: $160 or so a month. 2) priced out solar to push our payment to net-zero-ish: the savings really start multiplying once you get down into the regulated tiers. 3) replaced our electricity bill with a solar installation loan. what did we get in return? instant insulation from rate hikes: http://business.time.com/2011/12/16/plugged-in-then-pay-up-electricity-costs-rise-300-in-5-years/ http://business.time.com/2011/12/16/plugged-in-then-pay-up-e... instant equity on our house. oh, and look! i can now have a solar-powered car! but yeah, if i happen to still live in this house in 15 years, sure, no electricity bill. and, i'm sure somewhere along the line i'll end up "making all my money back".
- up_and_up 10y ago
  > instant equity on our house. Depends. Solar doesnt necessarily add value. Depends on the appraisal. I only know because I tried to buy a home with solar panels. The homeowner had raised the price of the home to include his investment in the panels but the appraiser wouldnt include the panels in the appraisal.
  - TheIronYuppie 10y ago
    Appraisals are not strictly tied to price of homes. Only the value for the loan. That's not to say you're not going to associate the two together (if you're buying a house with a loan), but the $30k one way or the other isn't a huge percentage of a 30 year loan.
    - up_and_up 10y ago
      Depends on where you buy. A 200K home in the midwest, 30K is a big percentage. The assumption being made here is that investing in solar automatically raises the value of the home. I am saying not necessarily. The example above was an appraisal in Madison WI, which, though in the midwest, definitely has plenty of solar installs.
    - 10y ago
ryanmarsh 10y ago
$100 a month in the summer in Texas? You living in a shoe box in the panhandle or what? I spend $700 a month in August. Tell us your secret for real.
- driverdan 10y ago
  I live in TX and have never spent anywhere near $700/m on electric. Either you keep your AC at 65 or something is very wrong.
  - majewsky 10y ago
    And I'm sitting here in Germany with my €30/mo bill. :)
- eru 10y ago
  What are you setting your AC to?
- warmwaffles 10y ago
  I live in a brand new home. Spray foam insulation. Keep the AC at around 74 year round. I also have natural gas running in to my house for my stove and water heater. All of my light bulbs are LED.

schrodinger 10y ago

You can also sell electricity generated by your panels back to the grid.

ericabiz 10y ago
Effectiveness of this varies by state or region. For instance, when I was in the Bay Area 10 years ago and looked into this, PG&E would let your electricity bill get to 0, but wouldn't let you go into rebate territory. They just wouldn't pay you for the additional electricity generated. I think other states/utilities have different options. Most solar quotes take this into consideration, and quote you for enough solar to get into the minimum bill for your region (most utilities have a few hundred Kwh you can use per month at an obscenely low rate, and then it ramps up from there--solar is quoted so that you'll always stay within that cheapest range.) For my current house in Austin, I'm still interested in solar, but it was both more cost-effective and had a shorter payback time to re-insulate to R36 in the attic and redo our horrible system (which had no ducts at all--agh, stupid 1956 house) than it was to do solar at the time.
blacksmith_tb 10y ago
Sadly, not in very many places. In most US states, for example, utilities have lobbied to get laws that don't allow residential customers to sell power back to them, at most net-metering agreements will allow you to get credits from any excess power your panels generate (which is how my utility handles mine - unfortunately, since I generate more than I use, I can't actually make use of those credits fully, and I'm giving away some power to the grid).

qaq 10y ago

Y but now it's 7K and not 40K.

krschultz 10y ago

Payback of 6 years with the new cost, even for your low electric bill.

toomuchtodo 10y ago
Excellent example of why solar panels (in the right locations) and LEDs are a better investment than the S&P500 right now. You spend dollars now to eliminate the need for future dollars.
- antisthenes 10y ago
  While that is true, keep in mind that future dollars are less expensive than present dollars. But it stands to reason that the prices of energy will rise faster than the rates of inflation, so it would still be a good investment.
  - Someone 10y ago
    If everybody buys solar, electricity prices will only rise faster than inflation in periods without much sun. It might even be profitable to play a 'buy when it is free or cheaper, use when it costs money' strategy. You can get there by buying large batteries, charging them from your neighbor's solar panels when there is lots and lots of sun (they may even sell at prices below zero), and discharging them, selling to you neighbors, when there is little sun and wind.
    - toomuchtodo 10y ago
      I'm already investigating buying 50+ MW at a time of Tesla Powerpacks in certain markets exactly for this purpose, as an independent generator. Buy power when people are paying you to take it, releasing it back to the grid at the most expensive times.
mrec 10y ago
And presumably a lower bill implies lower energy usage, so he'd need fewer panels to cover it.

michaelbuckbee 10y ago

I've been trying to do this calculation myself. One factor I hadn't initially put in was the fact that I didn't need to think about a backup generator for our (east coast) storms.

brians 10y ago
You might—I do. Your inverter won't power the house when the grid supply is down. Why? Well, because if the grid supply's down, it's probably because there's a line down somewhere. Therefore there's a lineman trying to pick that line up somewhere. He's going to be handling both ends of a broken, downed line. The generator-side line is tagged out, that's safe. The house-side line? Well, that's up to you—and so your equipment will deactivate to avoid creating a safety hazard for grid maintenance staff.
- maxerickson 10y ago
  An auxiliary grid independent outlet is apparently becoming a feature on newer inverters: http://www.sma-america.com/newsroom/current-news/news-details/news/12929-sma-strengthens-sunny-boy-tl-us-series-with-two-new-powerful-models.html http://www.sma-america.com/newsroom/current-news/news-detail... A generator probably beats a lot of battery systems (which along with the right inverter and a transfer switch is another way to use the solar for backup power).
ChuckMcM 10y ago
Well one issue with grid-tied systems is that when the grid is offline they provide no power (they explicitly don't want to back feed into the power lines and kill some lineman who things power is off). So one of the certification issues is to make sure that your inverters recognize that state and shut down. But a side benefit of putting in the system was we did a lot of electrical panel work, and as as result put 8 circuits on to a transfer switch (the incremental cost was the transfer switch and the electrictian's time wasn't materially affected.) So when the power does go out we can fire up a generator and switch over to gen power easily.

1024core 10y ago

33.3333 * 7 / 40 = 5.83 years

Osiris30 10y ago

I keep a close look at the economic of rooftop pricing in TX - it's still not profitable switching but getting close. Cons: - Retail cost of electricity is already v low in most of TX (Houston, Dallas) - so it's hard to compete. - not much competition in the solar rooftop installation space (due to first point above) - No net metering policies in Houston, Dallas. Pros - High solar yield

toomuchtodo 10y ago
Keep in mind that the 30% tax credit will eventually taper off. It might behoove you to wait now, but not forever.
- copperx 10y ago
  What is this 30% tax credit you speak of?
  - esmi 10y ago
    http://energy.gov/savings/residential-renewable-energy-tax-credit http://energy.gov/savings/residential-renewable-energy-tax-c...

cmarschner 10y ago

ROI can only be one factor. The other is that you are suddenly using clean energy. Doesn't this make you feel better?

dragontamer 10y ago
The typical American median household income is $51k. Spending $40,000 of that on "clean energy" so that they can "feel better" is well outside of the typical person's price range. Even $7000 would be cost-prohibitive, especially if they're paying or saving up for their kids. A cold can of beer also makes you feel better. Its a hell of a lot cheaper too. The answer for the typical American is to wait for utility-scale to build Solar out for them. When the city as a whole notices that solar is cheaper than running peaker plants or whatever, then the city / municipality can purchase an entire field of solar (AND the energy storage needed to make it useful) and give it out for the whole town. And in the mean time, you can drink your beer on the porch while you wait for progress to be made.
- kragen 10y ago
  US$40K was the cost when Chuck did it in 2003. Now we're talking about US$7000 over 25 years, which is US$23 a month. US$23 a month is not "well outside of the typical person's price range" in the US. If you want to "save up for your kids", the way to do it is to invest your money in the investments that have the highest ROI, as long as you have enough liquidity to weather emergencies. Pay off your 23% credit card before your 17% credit card, pay off your 17% credit card before you start putting up solar panels that will have a 16% internal rate of return, and put up the solar panels before you buy the cold can of beer with its 0% ROI. Twenty years from now, you'll be drinking your beer on the porch and sending your kids to college, while your typical American loser neighbors are whining about their credit card and electric bills.
  - dragontamer 10y ago
    > US$40K was the cost when Chuck did it in 2003. Now we're talking about US$7000 over 25 years, which is US$23 a month. Chuck is replacing a $2000 inverter in just 10 years. If your emergencies include "fixing the damn solar panels that you bought", that's your own damn fault. In any case, when middle-class Americans start buying solar en masse, I'll admit I'm wrong. But for now, I'm going to bet you that this is a luxury that is not cost-effective for the typical middle-class American. It ain't like a Washing Machine, Refrigerator or Water Heater. I'll tell you that much.

ChuckMcM 10y ago

That is a slightly more nuanced question than you might think. First, I work from a baseline cost of $19K, even though the list price was closer to $40K I didn't pay that for the system so I use the actual cost in my calculations. Second there is the point where the money you've saved is equal to the money you paid, we hit that point about 10 years in. And then, depending on the life of your system (which has "positive cashflow" at that point) determines your overall rate of return. The replacment inverter (which is actually going to replace both inverters) is $2K ("upgrade" pricing from the manufacturer) And as the inverter was failing our system was under performing (so not generating as much power). The question will be how much longer am I willing to run the panels. The warranty is 25 years, so in theory another 10 years but the manufacturer (Sharp) no longer makes them and cannot replace them under warranty (they can only offer to repay you to buy a panel from some other vendor with equivalent specs and size). So from a money perspective, had I used the $19K and put it into an S&P 500 ETF in 2003, it would have doubled by now (SPX was 1,008 in 2003, its over 2,016 today). So "bad investment" comparatively. If the panels continue for an additional 8 years and PG&E's costs stay about the same then I'll have generated about $20K in value from them so that would pencil out to a ARR of about 3.5%. Initially I funded the panels with a refinance of the house loan and that was at 6% but that has since been refinanced even lower. However had it not been, at my original purchase I'd still be running a deficit trying to both pay back the house and generate cash from the solar. Interestingly for me, with the $7K it would cost to re-implement that system today, and 4% mortgage rates, it would have a rate of return of closer to 14% (10% if you subtract 4% as the cost of capital for a mortgage refi) and pay for itself in a bit more than 3 years and have doubled the return in 6. The challenge is additional regulatory changes which get incorporated into new installations versus the regulation regime I operate under based on my 2003 install date. I wonder sometimes what the trigger is for resetting the project's origin date.

Retric 10y ago
Don't forget about taxes. Interest on that 6% loan get's deducted from your income which is an arguable subsidy. Alternatively, you also avoid paying taxes on your S&P returns. In many cases solar is really close to a no brainier. Which is why Florida Utility's have tried so hard to block residential adoption.

kayoone 10y ago

Ops point was that the original price of 40k in 2003 is now 7k for the total installation. That will change your math somewhat :) So even with your low power bill it's more like 6 years.

amelius 10y ago

> How long until you start seeing a return on investment? Why can't the utility companies do the financing (upfront investment), place them on our roofs, and get a little bit of the profit? Seems like a win-win situation. And otherwise government, or specialized banks?

m3mnoch 10y ago

this argument kind of annoys me. "yeah, but how long before you see a return on investment?" how about instantly? this is what we did: 1) calculated our monthly electricity payment: $160 or so a month. 2) priced out solar to push our payment to net-zero-ish: the savings really start multiplying once you get down into the regulated tiers. 3) replaced our electricity bill with a solar installation loan. what did we get in return? instant insulation from rate hikes: http://business.time.com/2011/12/16/plugged-in-then-pay-up-electricity-costs-rise-300-in-5-years/ http://business.time.com/2011/12/16/plugged-in-then-pay-up-e... instant equity on our house. oh, and look! i can now have a solar-powered car! but yeah, if i happen to still live in this house in 15 years, sure, no electricity bill. and, i'm sure somewhere along the line i'll end up "making all my money back".

up_and_up 10y ago
> instant equity on our house. Depends. Solar doesnt necessarily add value. Depends on the appraisal. I only know because I tried to buy a home with solar panels. The homeowner had raised the price of the home to include his investment in the panels but the appraiser wouldnt include the panels in the appraisal.
- TheIronYuppie 10y ago
  Appraisals are not strictly tied to price of homes. Only the value for the loan. That's not to say you're not going to associate the two together (if you're buying a house with a loan), but the $30k one way or the other isn't a huge percentage of a 30 year loan.
  - up_and_up 10y ago
    Depends on where you buy. A 200K home in the midwest, 30K is a big percentage. The assumption being made here is that investing in solar automatically raises the value of the home. I am saying not necessarily. The example above was an appraisal in Madison WI, which, though in the midwest, definitely has plenty of solar installs.
  - 10y ago

ryanmarsh 10y ago

$100 a month in the summer in Texas? You living in a shoe box in the panhandle or what? I spend $700 a month in August. Tell us your secret for real.

driverdan 10y ago
I live in TX and have never spent anywhere near $700/m on electric. Either you keep your AC at 65 or something is very wrong.
- majewsky 10y ago
  And I'm sitting here in Germany with my €30/mo bill. :)
eru 10y ago
What are you setting your AC to?
warmwaffles 10y ago
I live in a brand new home. Spray foam insulation. Keep the AC at around 74 year round. I also have natural gas running in to my house for my stove and water heater. All of my light bulbs are LED.