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I've been looking into Solar for my house and it's hard to justify. A $15,000 installation pays back only $150 a month in electricity. This is little more than

by TwoBit 14y ago

I've been looking into Solar for my house and it's hard to justify. A $15,000 installation pays back only $150 a month in electricity. This is little more than what I could get by putting that $15,000 into a mutual fund.

ghshephard 14y ago
So - what you are suggesting, is that Solar Panels (installed) are still too expensive and/or electricity is too cheap for you to invest in solar panels for your house right now? My understanding is that many people invest in solar panels because of additional government incentives.
rurounijones 14y ago
Does that pay back calculation include the fact that this increases the resale value of your house?
- yekko 14y ago
  It does not increase the resale value of the house.
  - sliverstorm 14y ago
    But what about my hottub? Surely that increases the resale value at least 10%! /s
  - danielharan 14y ago
    Citation needed.
qiqing 14y ago
The US introduced import tariffs of $0.18 to $1.60 per W for Chinese panels, which are produced for $0.63/W. Not entirely tethered to what the U.S. consumer sees...
jseliger 14y ago
AFAICT, that's why solar companies are shifting their business models to let the company pay the up-front installation cost and then pass some savings to the owner every month.
JulianK 14y ago
I know you were just making a rough comparison, but $150 is 1% of 15000. If you're saying you spend $150/month in electricity and that's barely more than you get from a mutual fund, are you saying you get on the order of 12% a year from your mutual funds, even today? I need different mutual funds.
- sliverstorm 14y ago
  Plenty of dividend stocks give more than 1%, even. Edit: I am not on the ball tonight
  - JulianK 14y ago
    Per month? Quite consistently? I'm well outside my realm of expertise here so I'm honestly curious. It seems like if this were even semi-consistent people would be borrowing very heavily from banks and dropping it into these consistent stocks with something like 2-4x the interest. I guess I'm always suspicious of free money.
    - sliverstorm 14y ago
      Per month? Oh, duh. My mistake. I can't even claim "it's late, I'm tired"
  - seanmcdirmid 14y ago
    > Plenty of dividend stocks give more than 1%, even. 1% a month, 12% a year on stock price? This is utterly impossible, the stock price would have risen. But if you can tell me where I can get 1% a month for some N$ investment, please share!
jcampbell1 14y ago
A $15,000 investment that pays $1800 a year, guaranteed? I will write you a check tomorrow for the $15k. I think your math is wrong somehow.
hijinks 14y ago
might be only $150 now but in 10-15 years when rates double then it turns into a lot more money. Most solar companies are pitching the protection of the power companies rate increases.
JumpCrisscross 14y ago
I suspect your numbers may be off. A $15 000 investment that produced $150 in nominal cash flows a month for 20 years (low end) would produce an internal rate of return of 9.1%. Yet solar panels do not produce nominal cash flows, they make energy - a real good. Energy inflation for urban consumers in the U.S. has averaged, month-to-month annualised, 6.7% over the past 10 years. This raises your IRR to 16.3%. The closest maturity-matched non-callable bond is TXU's 2034 6.55 yielding 15.2% to maturity and rated CC by Fitch. Even allowing you to capture only 1/2 of the energy inflation, your return is 12.7%. A whole point south of Venezuela. Then again, a warranty from a solar company may be worth as much as a dollar lent to Caracas...
- yessql 14y ago
  PV is coming down in cost precipitously. Energy companies are buying huge PV farms. Their cost of energy will drop. Utilities are regulated to limit their rates to guarantee minimum profitability, so their price must be correlated to their cost. Ergo, electricity costs will drop. Your rooftop PV system is never going to be much cheaper, if ever cheaper at all, than the electricity that the utility will provide from utility scale PV that has been installed much more cheaply, and much more optimized than the arbitrary orientation of your roof.
yardie 14y ago
Is that $150 a month in credit the electric company gives you to cover your bill or is that $150 straight up and no electric bill since the panels provide it? If it's the former it's still a good investment. If it is the later it's a way better than any mutual fund in existence.

by TwoBit 14y ago

ghshephard 14y ago

So - what you are suggesting, is that Solar Panels (installed) are still too expensive and/or electricity is too cheap for you to invest in solar panels for your house right now? My understanding is that many people invest in solar panels because of additional government incentives.

rurounijones 14y ago

Does that pay back calculation include the fact that this increases the resale value of your house?

yekko 14y ago
It does not increase the resale value of the house.
- sliverstorm 14y ago
  But what about my hottub? Surely that increases the resale value at least 10%! /s
- danielharan 14y ago
  Citation needed.

qiqing 14y ago

The US introduced import tariffs of $0.18 to $1.60 per W for Chinese panels, which are produced for $0.63/W. Not entirely tethered to what the U.S. consumer sees...

jseliger 14y ago

AFAICT, that's why solar companies are shifting their business models to let the company pay the up-front installation cost and then pass some savings to the owner every month.

JulianK 14y ago

I know you were just making a rough comparison, but $150 is 1% of 15000. If you're saying you spend $150/month in electricity and that's barely more than you get from a mutual fund, are you saying you get on the order of 12% a year from your mutual funds, even today? I need different mutual funds.

sliverstorm 14y ago
Plenty of dividend stocks give more than 1%, even. Edit: I am not on the ball tonight
- JulianK 14y ago
  Per month? Quite consistently? I'm well outside my realm of expertise here so I'm honestly curious. It seems like if this were even semi-consistent people would be borrowing very heavily from banks and dropping it into these consistent stocks with something like 2-4x the interest. I guess I'm always suspicious of free money.
  - sliverstorm 14y ago
    Per month? Oh, duh. My mistake. I can't even claim "it's late, I'm tired"
- seanmcdirmid 14y ago
  > Plenty of dividend stocks give more than 1%, even. 1% a month, 12% a year on stock price? This is utterly impossible, the stock price would have risen. But if you can tell me where I can get 1% a month for some N$ investment, please share!

jcampbell1 14y ago

A $15,000 investment that pays $1800 a year, guaranteed? I will write you a check tomorrow for the $15k. I think your math is wrong somehow.

hijinks 14y ago

might be only $150 now but in 10-15 years when rates double then it turns into a lot more money. Most solar companies are pitching the protection of the power companies rate increases.

JumpCrisscross 14y ago

I suspect your numbers may be off. A $15 000 investment that produced $150 in nominal cash flows a month for 20 years (low end) would produce an internal rate of return of 9.1%. Yet solar panels do not produce nominal cash flows, they make energy - a real good. Energy inflation for urban consumers in the U.S. has averaged, month-to-month annualised, 6.7% over the past 10 years. This raises your IRR to 16.3%. The closest maturity-matched non-callable bond is TXU's 2034 6.55 yielding 15.2% to maturity and rated CC by Fitch. Even allowing you to capture only 1/2 of the energy inflation, your return is 12.7%. A whole point south of Venezuela. Then again, a warranty from a solar company may be worth as much as a dollar lent to Caracas...

yessql 14y ago
PV is coming down in cost precipitously. Energy companies are buying huge PV farms. Their cost of energy will drop. Utilities are regulated to limit their rates to guarantee minimum profitability, so their price must be correlated to their cost. Ergo, electricity costs will drop. Your rooftop PV system is never going to be much cheaper, if ever cheaper at all, than the electricity that the utility will provide from utility scale PV that has been installed much more cheaply, and much more optimized than the arbitrary orientation of your roof.

yardie 14y ago

Is that $150 a month in credit the electric company gives you to cover your bill or is that $150 straight up and no electric bill since the panels provide it? If it's the former it's still a good investment. If it is the later it's a way better than any mutual fund in existence.