4 ms·

My parents own an off-grid home with ~12 panels (about 3.3kW installed power I think). If it didn't cost over 30K to pull power to the house, it'd be impossibl

My parents own an off-grid home with ~12 panels (about 3.3kW installed power I think). If it didn't cost over 30K to pull power to the house, it'd be impossible to make the math work for solar. If you don't count the climate externalities I doubt there's one city on Earth where the payback period (before incentives) is less than 10 years. So there's no point in making a spreadsheet at this point, really. You're either buying solar out of need, a desire to "green" your life further, or you're being paid by the government to do it, or buying at a loss.

mortehu 6y ago
Why are you treating 10 years as if it's infinity? Lots of houses last longer than 10 years.
- zemvpferreira 6y ago
  It's just a bad rate of return for an investment. Put the same amount of money in a better investment vehicle (say the stereotypical index fund) and you'll be able to afford buying the same amount of electricity from the grid as the panels would generate and have enough spare to go out to dinner every week.
  - mortehu 6y ago
    You have to compare to investments with similar risk profiles. For example, 10 year treasury bonds only recoup 11.4% of their cost after 10 years. That doesn't mean nobody will accept that return. Not everyone is in a situation where equity index funds make the most sense as a marginal investment.
    - zemvpferreira 6y ago
      Are you also expecting your bonds to be worth literally zero after around 15 to 20 years?
      - deleted 6y ago
        [deleted]
      - ClumsyPilot 6y ago
        When you sell a house, do take it apart brick by brick and sell the bricks, door and windows on ebay? Obviously you sell the entire house and all improvements are reflected in increased value of the house. So no, the value of solar is not zero at the end of 10 years.
        zemvpferreira 6y ago
        Are you betting on your solar install to last forever? What do you estimate the useful life span is for the average solar panel installed?
        ClumsyPilot 6y ago
        The argument doesn't even make sence - which part of a house lasts forever? A roof lasts 15 years, you can buy solar panels with 50 year warranty. Don't bet or estimate, we have mountains of data on this: https://www.nrel.gov/docs/fy12osti/51664.pdf https://www.nrel.gov/docs/fy12osti/51664.pdf
  - ogre_codes 6y ago
    This ignores the other benefits of solar. The fact that I'll stay powered up when everyone else is black is important in rural areas even on-grid. The fact that you know your power is green. It also ignores the possibility that energy costs will go up over those 10 years. Essentially you are fixing your energy costs indefinitely. Of course I'm not-quite normal kind of guy regardless. I paid too much for a very efficient house. I own my house. I own my cars. To me, the idea of turning unknown future costs into known present costs is fantastic. Not a lot of people agree with that concept.
    - zemvpferreira 6y ago
      There are absolutely other benefits to solar other than return on investment, but this thread was about solar being 'worth it' financially. Also worth it to add in this context that the 5 or 6 solar-dependent/off-grid homes I've seen built and lived in have been anything but reliable. It seems to take a while to fine tune the system to the point of not having a blackout every 3 months.
      - ogre_codes 6y ago
        > There are absolutely other benefits to solar other than return on investment When you are talking about a purchase which you live with day to day for 10+ years, "Return on Investment" is never going to be a straight financial calculation. People don't buy a house based on straight ROI, nor are most home improvements based purely on ROI. I don't see why solar should be the exception.
        zemvpferreira 6y ago
        Maybe it shouldn't, but ROI seems to be the particular topic in this discussion.
    - yablak 6y ago
      At least here in CA, if you are on the grid but don't have a battery then you will go black with everyone else even if you have solar. This is a safety measure for the technicians from the electrical company fixing the issue. According to another comment the additional cost of a battery is between $6,000 to $10,000.
  - FabHK 6y ago
    10% annual yield is great for an investment. In real terms, the S&P 500 price return was about 3.2% p.a. since the peak in 1968, 5.2% since 1988, and less than 3% since 2000. Real total (ie with dividends) return p.a. over a decade has been between -4% and 17%, with an average of around 7%. As things stand currently, I'd not plan on more than 6% total return in real terms over the next two decades.
    - zemvpferreira 6y ago
      Please don't disregard that with investing in solar panels, you're eventually losing your principal. It's only after the 10-year payback that you actually start making yields i.e. for a 15-year life span, those hypothetical panels are only making 50% back over 15 years - a 3% return at best.
      - toomuchtodo 6y ago
        Inverters usually have a 12 year warranty you pay a fee to extend to 25 years. Panels have a 25 year warranty, and we'll produce at 90% of rated power after that point.
- inglor_cz 6y ago
  The question is if the panels last longer than 10 years without major degradation.
  - gilrain 6y ago
    And the answer is yes.
- deleted 6y ago
  [deleted]
literallycancer 6y ago
10 years to recoup an investment in real estate seems OK.
- zemvpferreira 6y ago
  I'd say buying panels is very far from an investment in real estate. If you buy an apartment to rent, say, you can count on having return in the form of rents every month and on the property appreciating over time. So you can justify a very long payback period because at the end of 20 years the asset will be worth more than at year zero. Solar panels generate cashflow in the form of electricity but they depreciate over time. So the payback period (in the form of cashflow) has to be much shorter than for an apartment or home.
  - jacobolus 6y ago
    A house with 10-year-old solar panels on top is surely going to be worth more than a house with no solar panels on top, even if the cost of new panels comes down significantly over that time. As you point out, the panels continue generating returns for a long time after that. Moreover, people should not buy a house with the expectation that it will inevitably be worth more in 20 years than it is today. Appreciation of land values is far from a universal law of nature.
  - ClumsyPilot 6y ago
    There is no reason to believe that real estate should increase in value for the next 50 years for any reason except financial manipulation. We have birthrates of 1.6 in most of Europe, and the global population is about to peak in every contry except in African countries*
    - stjohnswarts 6y ago
      *African countries.
ClumsyPilot 6y ago
"payback period (before incentives) is less than 10 years." There is a massive assumption in there that you can have a non-risky investment with a 10% rate of return idefinately. Given that we can barely go 10 years from crisis to crisis (2008 and covid) this assumption cannot possibly be justified.

mortehu 6y ago

Why are you treating 10 years as if it's infinity? Lots of houses last longer than 10 years.

zemvpferreira 6y ago
It's just a bad rate of return for an investment. Put the same amount of money in a better investment vehicle (say the stereotypical index fund) and you'll be able to afford buying the same amount of electricity from the grid as the panels would generate and have enough spare to go out to dinner every week.
- mortehu 6y ago
  You have to compare to investments with similar risk profiles. For example, 10 year treasury bonds only recoup 11.4% of their cost after 10 years. That doesn't mean nobody will accept that return. Not everyone is in a situation where equity index funds make the most sense as a marginal investment.
  - zemvpferreira 6y ago
    Are you also expecting your bonds to be worth literally zero after around 15 to 20 years?
    - deleted 6y ago
      [deleted]
    - ClumsyPilot 6y ago
      When you sell a house, do take it apart brick by brick and sell the bricks, door and windows on ebay? Obviously you sell the entire house and all improvements are reflected in increased value of the house. So no, the value of solar is not zero at the end of 10 years.
      - zemvpferreira 6y ago
        Are you betting on your solar install to last forever? What do you estimate the useful life span is for the average solar panel installed?
        ClumsyPilot 6y ago
        The argument doesn't even make sence - which part of a house lasts forever? A roof lasts 15 years, you can buy solar panels with 50 year warranty. Don't bet or estimate, we have mountains of data on this: https://www.nrel.gov/docs/fy12osti/51664.pdf https://www.nrel.gov/docs/fy12osti/51664.pdf
- ogre_codes 6y ago
  This ignores the other benefits of solar. The fact that I'll stay powered up when everyone else is black is important in rural areas even on-grid. The fact that you know your power is green. It also ignores the possibility that energy costs will go up over those 10 years. Essentially you are fixing your energy costs indefinitely. Of course I'm not-quite normal kind of guy regardless. I paid too much for a very efficient house. I own my house. I own my cars. To me, the idea of turning unknown future costs into known present costs is fantastic. Not a lot of people agree with that concept.
  - zemvpferreira 6y ago
    There are absolutely other benefits to solar other than return on investment, but this thread was about solar being 'worth it' financially. Also worth it to add in this context that the 5 or 6 solar-dependent/off-grid homes I've seen built and lived in have been anything but reliable. It seems to take a while to fine tune the system to the point of not having a blackout every 3 months.
    - ogre_codes 6y ago
      > There are absolutely other benefits to solar other than return on investment When you are talking about a purchase which you live with day to day for 10+ years, "Return on Investment" is never going to be a straight financial calculation. People don't buy a house based on straight ROI, nor are most home improvements based purely on ROI. I don't see why solar should be the exception.
      - zemvpferreira 6y ago
        Maybe it shouldn't, but ROI seems to be the particular topic in this discussion.
  - yablak 6y ago
    At least here in CA, if you are on the grid but don't have a battery then you will go black with everyone else even if you have solar. This is a safety measure for the technicians from the electrical company fixing the issue. According to another comment the additional cost of a battery is between $6,000 to $10,000.
- FabHK 6y ago
  10% annual yield is great for an investment. In real terms, the S&P 500 price return was about 3.2% p.a. since the peak in 1968, 5.2% since 1988, and less than 3% since 2000. Real total (ie with dividends) return p.a. over a decade has been between -4% and 17%, with an average of around 7%. As things stand currently, I'd not plan on more than 6% total return in real terms over the next two decades.
  - zemvpferreira 6y ago
    Please don't disregard that with investing in solar panels, you're eventually losing your principal. It's only after the 10-year payback that you actually start making yields i.e. for a 15-year life span, those hypothetical panels are only making 50% back over 15 years - a 3% return at best.
    - toomuchtodo 6y ago
      Inverters usually have a 12 year warranty you pay a fee to extend to 25 years. Panels have a 25 year warranty, and we'll produce at 90% of rated power after that point.
inglor_cz 6y ago
The question is if the panels last longer than 10 years without major degradation.
- gilrain 6y ago
  And the answer is yes.
deleted 6y ago
[deleted]

literallycancer 6y ago

10 years to recoup an investment in real estate seems OK.

zemvpferreira 6y ago
I'd say buying panels is very far from an investment in real estate. If you buy an apartment to rent, say, you can count on having return in the form of rents every month and on the property appreciating over time. So you can justify a very long payback period because at the end of 20 years the asset will be worth more than at year zero. Solar panels generate cashflow in the form of electricity but they depreciate over time. So the payback period (in the form of cashflow) has to be much shorter than for an apartment or home.
- jacobolus 6y ago
  A house with 10-year-old solar panels on top is surely going to be worth more than a house with no solar panels on top, even if the cost of new panels comes down significantly over that time. As you point out, the panels continue generating returns for a long time after that. Moreover, people should not buy a house with the expectation that it will inevitably be worth more in 20 years than it is today. Appreciation of land values is far from a universal law of nature.
- ClumsyPilot 6y ago
  There is no reason to believe that real estate should increase in value for the next 50 years for any reason except financial manipulation. We have birthrates of 1.6 in most of Europe, and the global population is about to peak in every contry except in African countries*
  - stjohnswarts 6y ago
    *African countries.

ClumsyPilot 6y ago

"payback period (before incentives) is less than 10 years." There is a massive assumption in there that you can have a non-risky investment with a 10% rate of return idefinately. Given that we can barely go 10 years from crisis to crisis (2008 and covid) this assumption cannot possibly be justified.