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The money saved would reduce substantially if you consider the economic cost of investing the $12500 over 30 years. My guess is the best approach would be to in

The money saved would reduce substantially if you consider the economic cost of investing the $12500 over 30 years. My guess is the best approach would be to invest the money until the price of solar stops dropping so quickly. Edit: I'd love to put solar in my house. We have a rebate in my country as well, but I'm sure I can use the money better in the short term, and likely end up with a more efficient setup for less money if I wait. Until then, geyser blanket, install LED's in the most-used light fittings, install a small geyser under the kitchen sink so it doesn't draw the full pipe's water just to wash dishes.

roel_v 15y ago
What kind of rebate do you have? According to my calculations one needs very little subsidies to make installing solar panels attractive financially, even when discounting for opportunity cost (of course if you take a yield of 7% on your money then it's different, but who has made 7% on small amounts (10-20k) over the last few years and is willing to use that yield as an assumption for the next 2 decades?)
- richardw 15y ago
  IIRC approximately 15%, which is a lower than it was a year ago. Prices range up to 3x the lowest price, with a suggested 2x to be sure of a good quality setup and 10 year guarantee (which seems short). However, if you buy a system now and it's 10% cheaper in a year and you would have made say 3.5% on the investment [1] you'll be out 13.5% minus your electricity savings, and that's in 1 year. What about 4-5 years? Won't it be much cheaper then? [1] I've made about 37% this year as a fairly active trader, so every cent means a margin of safety. No solar for me because I need the cash!
  - roel_v 15y ago
    I've made the numbers match (i.e., same cost for PV installation or using power from grid, assuming defensive increases in cost of electricity for the next 15 years - only going up as much as inflation) with a slightly higher subsidy (1000€ subsidy on an installation cost of a little under 12k€, which would only buy an installation that doesn't produce 100% of an average consumption). But when the costs converge this closely then small assumptions can tip the scale one way or the other - one % extra opportunity cost, a converter that needs replacing 5 years earlier, 10% less sunshine in one of the earlier years of the installation's lifespan, ... That said though, when you extrapolate costs of grid electricity of the last 10 years, and base your energy price scenario on that (instead of keeping up with inflation like I did), PV comes out ahead even when taking worst-case scenarios of all other variables. Many people argue that because prices are falling so fast, it doesn't make sense to buy now. But IMO it's much more nuanced than that: - As prices fall, so will subsidies. Already most subsidies are being phased out or decreased. - There is a floor on the prices - in the short term that floor is just below grid parity, in the medium and longer term it will be production limits. I don't think it's rational to assume that prices will keep falling so fast. Many words have been shed on this - I guess only time will tell. That said, like I posted elsewhere here, my parents are getting an ROI of 11% on their panels. That's mighty good for money that can be borrowed under mortgage, and 'green' == cheap mortgages for that matter. (that yield is only because of subsidies though, so it's not really a fair general case comparison).
    - recampbell 15y ago
      Why is grid parity the floor? Won't pv suppliers still have to compete with each other?
      - roel_v 15y ago
        In the short term it is - when grid parity is reached, there will be more demand than suppliers will be able to fulfill, and there will be no reason to go lower than just below the cost of traditional electricity. Additionally, it's quite likely that for the first couple of years only a limited number of players will have the tech to produce/deploy at the lowest prices, and as such will effectively (for a while) have a monopoly with no incentives to compete on price. Of course after a few years these situations will change and as more players enter the market (lured in by the high profits of the existing ones...), the downward trend will continue, without the anchoring to 'grid parity' that exists today.
ljf 15y ago
This isn't an addition $12500 to invest, this is instead of spending this (or more) on your next 25 years electricity bill. So you might have $12500 in year one, but each year you would be eating away a good chunk of that to pay your electricity bill - and let's face it, bill aren't going to get cheaper. I'd say that pot of money would last you about 10 years max, then you have to find more cash to fund your next 15 years worth of bills.
- richardw 15y ago
  The idea isn't to hold out forever, just long enough to let the innovation curve flatten somewhat. Remember, "from $4.00 a watt to $1.25 in three years". Buying now means you're locking yourself into a given year's technology and pricing for the next 30 years, exactly when the price per watt is dropping insanely.
  - gritzko 15y ago
    That reminds the "rifle nightmare" of the Russian Defense Ministry (1860s-1870s). Every new rifle system accepted was entirely obsolete the next year. By the time of Russo-Turkish war, the army had 10-20 completely different rifle systems in use. That was over in 1891 when Mosin-Nagant was introduced. That one was in use for 60 years, including both World Wars. (Germans had highly similar Mauser rifles.) When the paradigm is changing, investing is risky.

roel_v 15y ago

What kind of rebate do you have? According to my calculations one needs very little subsidies to make installing solar panels attractive financially, even when discounting for opportunity cost (of course if you take a yield of 7% on your money then it's different, but who has made 7% on small amounts (10-20k) over the last few years and is willing to use that yield as an assumption for the next 2 decades?)

richardw 15y ago
IIRC approximately 15%, which is a lower than it was a year ago. Prices range up to 3x the lowest price, with a suggested 2x to be sure of a good quality setup and 10 year guarantee (which seems short). However, if you buy a system now and it's 10% cheaper in a year and you would have made say 3.5% on the investment [1] you'll be out 13.5% minus your electricity savings, and that's in 1 year. What about 4-5 years? Won't it be much cheaper then? [1] I've made about 37% this year as a fairly active trader, so every cent means a margin of safety. No solar for me because I need the cash!
- roel_v 15y ago
  I've made the numbers match (i.e., same cost for PV installation or using power from grid, assuming defensive increases in cost of electricity for the next 15 years - only going up as much as inflation) with a slightly higher subsidy (1000€ subsidy on an installation cost of a little under 12k€, which would only buy an installation that doesn't produce 100% of an average consumption). But when the costs converge this closely then small assumptions can tip the scale one way or the other - one % extra opportunity cost, a converter that needs replacing 5 years earlier, 10% less sunshine in one of the earlier years of the installation's lifespan, ... That said though, when you extrapolate costs of grid electricity of the last 10 years, and base your energy price scenario on that (instead of keeping up with inflation like I did), PV comes out ahead even when taking worst-case scenarios of all other variables. Many people argue that because prices are falling so fast, it doesn't make sense to buy now. But IMO it's much more nuanced than that: - As prices fall, so will subsidies. Already most subsidies are being phased out or decreased. - There is a floor on the prices - in the short term that floor is just below grid parity, in the medium and longer term it will be production limits. I don't think it's rational to assume that prices will keep falling so fast. Many words have been shed on this - I guess only time will tell. That said, like I posted elsewhere here, my parents are getting an ROI of 11% on their panels. That's mighty good for money that can be borrowed under mortgage, and 'green' == cheap mortgages for that matter. (that yield is only because of subsidies though, so it's not really a fair general case comparison).
  - recampbell 15y ago
    Why is grid parity the floor? Won't pv suppliers still have to compete with each other?
    - roel_v 15y ago
      In the short term it is - when grid parity is reached, there will be more demand than suppliers will be able to fulfill, and there will be no reason to go lower than just below the cost of traditional electricity. Additionally, it's quite likely that for the first couple of years only a limited number of players will have the tech to produce/deploy at the lowest prices, and as such will effectively (for a while) have a monopoly with no incentives to compete on price. Of course after a few years these situations will change and as more players enter the market (lured in by the high profits of the existing ones...), the downward trend will continue, without the anchoring to 'grid parity' that exists today.

ljf 15y ago

This isn't an addition $12500 to invest, this is instead of spending this (or more) on your next 25 years electricity bill. So you might have $12500 in year one, but each year you would be eating away a good chunk of that to pay your electricity bill - and let's face it, bill aren't going to get cheaper. I'd say that pot of money would last you about 10 years max, then you have to find more cash to fund your next 15 years worth of bills.

richardw 15y ago
The idea isn't to hold out forever, just long enough to let the innovation curve flatten somewhat. Remember, "from $4.00 a watt to $1.25 in three years". Buying now means you're locking yourself into a given year's technology and pricing for the next 30 years, exactly when the price per watt is dropping insanely.
- gritzko 15y ago
  That reminds the "rifle nightmare" of the Russian Defense Ministry (1860s-1870s). Every new rifle system accepted was entirely obsolete the next year. By the time of Russo-Turkish war, the army had 10-20 completely different rifle systems in use. That was over in 1891 when Mosin-Nagant was introduced. That one was in use for 60 years, including both World Wars. (Germans had highly similar Mauser rifles.) When the paradigm is changing, investing is risky.