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I'm jealous of the learning and hobby project. Though, the returns are (edit: "not great") if the figures above INCLUDE net metering revenues. Heatpump =
by caminante 1y ago
I'm jealous of the learning and hobby project.
Though, the returns are (edit: "not great") if the figures above INCLUDE net metering revenues.
Heatpump = Negative IRR until y8
Solar = Negative IRR until y16
Heatpump + Solar = 0 NPV through y25 | 8% discount rate
- Reason077 1y agoLooks pretty good to me over 25 years. Not many safe/guaranteed investments that will reliably return 8% these days. And as utility rates will no doubt rise over time, savings in future years will be greater.
- glxxyz 1y agoYes the people selling solar systems all factor in aggressive future electricity increases, it's best to also see how it looks with more conservative rate increases. By my calculation in a reply above with the interest free solar loan it's an 8% return over 14.3 years.
- Ekaros 1y agoWhich to me is funny, when the electricity prices will clearly not rise when there is solar energy production from said panels. But might in other times.
- glxxyz 1y agoI think the argument is that on average people are buying heat pumps and EVs faster they are installing solar panels but it’s not completely convincing though, power stations can be added. Further north where I am solar can only ever be a small component of total electricity generation due to the dark snowy cloudy winter months with close to zero solar generation for weeks on end.
- adrianN 1y agoBatteries for load shifting a few hours mitigate that quite a bit and are getting cheaper fast.
- glxxyz 1y agoThe issue for me with batteries is that in the summer I can produce in a day much more than I can use, and in winter I consume a lot and barely produce anything. This is where net metering steps in- I can ‘store’ all of my excess summer consumption in the grid in summer and get credit for it in winter. A cheaper smaller system right sized for summer consumption with a battery would have my second best option, but for me never showed any potential payback due to the fixed costs of installation and the extra battery costs.
- adrianN 1y agoNet metering is of course nice for consumers but it’s not sustainable for the grid operators.
- glxxyz 1y agoIt is for a fraction of consumers- power companies and governments are well aware of that.
- Reason077 1y agoExactly. Not a sustainable/scalable policy.
- glxxyz 1y agoThe point of my original post was that I’ve seen a much greater ROI on my own heatpump than solar, even though I don’t regret the solar installation. I wasn’t making any claims about sustainability/scalability of solar, just showing how it worked for me.
- conradev 1y agoI got solar for my parents in 2021 and the price increases were pretty aggressive recently: https://fred.stlouisfed.org/series/APU000072610 https://fred.stlouisfed.org/series/APU000072610
- thelastgallon 1y agoResidential electricity rates have risen fast across the US—more than 30 percent on average since 2020 and almost double the rate of inflation: https://www.wired.com/story/power-bills-in-the-us-are-soaring-and-will-rise-further-still/ https://www.wired.com/story/power-bills-in-the-us-are-soarin...
- bluGill 1y agoVery regional though - my rates have not gone up.
- thelastgallon 1y agoElectricity prices are going up nearly everywhere. Bitcoin and AI are a wealth transfer from everyone to the crypto/AI folks. Wholesale electricity costs as much as 267% more than it did five years ago in areas near data centers. That's being passed on to customers: https://www.bloomberg.com/graphics/2025-ai-data-centers-electricity-prices/ https://www.bloomberg.com/graphics/2025-ai-data-centers-elec...
- geysersam 1y agoThat doesn't make any sense. Bitcoin miners get wealth from people buying Bitcoin, not from electricity customers. Same for AI. It's a wealth transfer from electricity customers to electricity producers if anything. Most likely most of the increase is just temporary though. Electricity supply will increase to meet the sudden and unpredictable increase in demand.
- Spivak 1y agoIt will be interesting to see if this will make natural gas a more attractive source of residential heating as the price has remained relatively stable over the past 20 years. The push for electrification seems like it relies on us metaphorically drowning in excess cheap electricity and want somewhere for it to go but right now the opposite it happening.
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- glxxyz 1y agoYes the figures are my approximate bills so include net metering revenues. You're right about the 8 year negative IRR for the heatpump, although I'm being very conservative about propane costs, it's likely much shorter. I was pretty conservative about the solar savings too, I generally go for the worst case in these estimates. Your overall NPV calculation seems a bit off. It's ~21 years to zero NPV at 8% discount rate, spending $80 up front to save $8/year. Factoring in the 10 year interest free government solar loan makes it more like 14 years. My working: =nper(8%, -8, 80) 20.9 =nper(8%, -8, pv(8%, 10, -4)+40) 14.3 The solar system is fun to tinker with and should pay off 'eventually', it's not a no brainer of a decision like the heatpump though.
- caminante 1y ago> Your overall NPV calculation seems a bit off. Correct. It's 21y. I missed $500 from a reading error and was assuming $7.5k/y (not $8k/y). edit: I see your mention of the grant, too. Combined, that's cutting the NPV=0 point in half from 21y to ~12y. Good job.
- thelastgallon 1y agoI'm jealous of your financial learnings. However, your model is not accurate as it doesn't factor in the 4 degree improvement in comfort and indoor pollution from propane furnaces: Propane furnaces can cause indoor pollution through the release of pollutants like carbon monoxide (CO), nitrogen dioxide (\(NO_{2}\)), and benzene, which are byproducts of combustion. It also doesn't include the negative externalities because of tragedy of commons. Sadly, these kind of flawed 'financial' calculations are widespread. What is inspiring from the OPs comment is that this is doable in harsh Canadian winters with negligible solar and it breaks even. Most of the world is living in significantly more sunshine, so it should work out a lot better financially for >99% of the population.
- caminante 1y agoI agree it's important to watch for these things. For externalities or immediate health benefits, heatpumps are pretty defensible. However, solar isn't a saint. Rare earth/mineral mining is hazardous plus only a fraction of solar panels are getting recycled properly. > this is doable in harsh Canadian winters with negligible solar and it breaks even It's doable alright. OP got subsidies (See comment re: risk free loan and grants). Talk about externalities, this is definitely wealth transfer.
- thelastgallon 1y agoYes, lets talk about subsidies. Fossil fuels have had and continue to have the most subsidies. Fossil Fuel Subsidies Surged to Record $7 Trillion/year: https://www.imf.org/en/Blogs/Articles/2023/08/24/fossil-fuel-subsidies-surged-to-record-7-trillion https://www.imf.org/en/Blogs/Articles/2023/08/24/fossil-fuel... The wealth transfer you are alluding to, it is from the poor (everyone) to the rich (fossil fuel billionaires), isn't it?
- caminante 1y agoPlease avoid unwarranted "whataboutism."