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> if you use a 5 percent discount rate, 20 years of $2,677 of annual electricity bill savings yields a net present value of $33,361. Yes, but with an 8% discou
by gnicholas 4y ago
> if you use a 5 percent discount rate, 20 years of $2,677 of annual electricity bill savings yields a net present value of $33,361.
Yes, but with an 8% discount rate, the PV is $26,283. It's true that the cost of electricity will probably rise over time, as he notes. But current interest rates make this a much less attractive proposition from a financial perspective (that is, assuming you don't care about solar generation for environmental reasons). The homeowner takes on significant risk, and the gain is not all that great. Your panels can be destroyed by hurricane, earthquake, or falling trees, rendering them worthless, for example.
I'm not saying this isn't worth doing, just that the financial calculations seem a bit flawed in today's economic environment.
- ceejayoz 4y ago> Your panels can be destroyed by hurricane, earthquake, or falling trees, rendering them worthless, for example. That’s what homeowners insurance is for.
- gnicholas 4y agoGood point! I guess I view panels as being especially vulnerable because of their fragility and exterior location. I've also heard that one way to get booted from your homeowner's insurance is to ever file a claim. I know several people who lost coverage after their first claim (decades after becoming a customer).
- ceejayoz 4y agoAnecdotally, I know plenty of people who've filed claims without repercussions. Rates might go up a bit, though. Your friends might consider contacting their state's insurance regulator.