Solar Panels?

[wynr]

To invest in Solar Panels, or not?

Our electricity bill averages $60 per month, and the cost of the install is about $7,350 after federal rebate.  The install will theoretically provide 102% of our power.  With anticipated rate increases, the payback time is 11 years, and the ROI is 5%.  25 year warrentee, 35 year expected lifetime.

We pay tier one rates of 18c per kwh.  There may be a $6-8 'connection fee' for using PG&E as a battery.

Our 'frig is 20 years old, so may be due for replacement with a more effiecent model.  Not yet using any LED lighting.  Gas heat and burners, electric oven.  No air conditioner (that SF bay area living).  --  So our usage may go down over time.

Tax credits may go away if I wait too long.

So is it worth it or not?

Thanks,
wynr

[ohsnap]

As you've already said you need to do, I'd spend far less $ on a new fridge and upgraded LED lighting.  Have you used a kill-a-watt meter to check your fridge?  I think new models are much more efficient.

We have decided the payback period on solar is too long/risky for us.  We're not sure how long we'll be in our house, and I've read a couple of articles that say whether the solar system is leased or owned, it can be a liability when you sell a house.

[MoonShadow]

I'd say you could justify a ROI of such a system of about 5%, if that is an accurate projection.  You could treat it as part of your bond portfolio, as long as you don't have to borrow money to complete the install.  However, you are likely to find that a total energy audit, and acting upon the recommendations (including high efficiency lighting & appliances) is at least as likely to work out for you purely on an economic basis.  Of course, once the solar array is paid for, you have an asset that will continue to provide value for a long time; and that is the kind of asset that doesn't get double taxed.  i.e. The income that you must use to pay your electric bill will get taxed as regular income when you earn it, and may be taxed again if there are current or future carbon taxes imposed upon the power company.

I am in process of installing a much smaller system, just to run my refrigerator during the daytime, without much battery storage at all, but I have other reasons for doing this besides economic or environmental concerns.  http://solar-trap.com/

[frugaliknowit]

Financially speaking (not accounting for the environment), I wouldn't do it.  Too small of a (possible) return for too large of a committment.

[tonysemail]

I'm in a similar situation and I don't think it financially makes sense to go solar.
Your bill is too low to make solar worthwhile.
I'm still taking the plunge, but for environmental rather than financial reason.

If you haven't, then I would recommend shopping around.
I talked to a few companies and for my trouble, I'm getting a free EVSE included with my system.

does the lifetime of your roof match the expected lifetime of the solar panels?
If your roof is nearing end of life, you should probably delay solar panel investment until after re-roofing.

[TheLazyMan]

Upgrade your fridge and switch light bulbs to LED where possible,  the payback will be much faster than solar.

The present value of your avoided electricity payments would make sense if you plan on staying in the house for ~13 years, assuming the panels will be worthless at that point.

[MoonShadow]

Upgrade your fridge and switch light bulbs to LED where possible,  the payback will be much faster than solar.

The present value of your avoided electricity payments would make sense if you plan on staying in the house for ~13 years, assuming the panels will be worthless at that point.

That's where the purely financial ROI analysis breaks down, they won't be worthless.  The difficulty is in predicting their actual value.  In my own area, a working solar array of any size, already mounted to the house with electronics installed, increases the resale value of the home by at least 50% of the present market value of the system.  That's not great, but it's a depreciation rate lower than a typical car.

[TheLazyMan]

Upgrade your fridge and switch light bulbs to LED where possible,  the payback will be much faster than solar.

The present value of your avoided electricity payments would make sense if you plan on staying in the house for ~13 years, assuming the panels will be worthless at that point.

That's where the purely financial ROI analysis breaks down, they won't be worthless.  The difficulty is in predicting their actual value.  In my own area, a working solar array of any size, already mounted to the house with electronics installed, increases the resale value of the home by at least 50% of the present market value of the system.  That's not great, but it's a depreciation rate lower than a typical car.

Of course using a future value of 0 is making a very conservative estimate.  So 13 years is on the far edge of how long the OP might have to stay in the house in order for the purchase to make sense financially.  It could well be several years sooner if solar panels maintain their value well, but it's unlikely to be much later than 13 years.

[tonysemail]

FWIW - amazon is running a sale on LED bulbs today.
http://smile.amazon.com/b/?node=14068504011

It's a little less than I paid in Jan.
But still not as cheap as costco's Jan sale.
http://forum.mrmoneymustache.com/welcome-to-the-forum/led-light-bulbs-on-sale-at-costco/

[notactiveanymore]

Keep in mind that not everything on your bill is for energy usage. Looking at PG&E's terminology, you also have "Electric Minimum Charges" just for keeping the transmission system going. That charge might be $10/month according to their example page.

So at least while these rates are in place, at most you'd be saving $50/month plus whatever they buy back.

How big of a system are you thinking of putting up?

[wynr]

I'm looking at a deal through Costco, and the minimum size is 10x of the 265W panels, which give me 102% of my usage.

Also, the buy back is only about 4c per kwh, so not much there.

I don't think that we will be in the house for more than 10 more years, so I think that will not get the solar panels.

Thanks for all the replies!

wynr

[justajane]

Our solar company said we would break even after federal and local subsidies in nine years. Two years in, it's looking more like fifteen to twenty years. We're pretty disappointed, me more so than my husband. I don't know what the problem is, but they are just not performing like we thought they would.

[wynr]

Wow!  Sorry to hear that justajane.

[MoonShadow]

Our solar company said we would break even after federal and local subsidies in nine years. Two years in, it's looking more like fifteen to twenty years. We're pretty disappointed, me more so than my husband. I don't know what the problem is, but they are just not performing like we thought they would.

In my experiences, they are salesmen like any other, and will estimate your performance at the highest possible in your own area, discounting or ignoring any local limitations.  I know they never did any shading studies on my house, for example.  That is another reason that I chose to go small; if it really did work out well in my area, I could always upgrade.  It's quite a bit harder to downsize later.

[TheLazyMan]

Our solar company said we would break even after federal and local subsidies in nine years. Two years in, it's looking more like fifteen to twenty years. We're pretty disappointed, me more so than my husband. I don't know what the problem is, but they are just not performing like we thought they would.

You should get them back to check the system is operating properly.  I had my system installed in July and so far it's producing more than estimated.

[justajane]

Our solar company said we would break even after federal and local subsidies in nine years. Two years in, it's looking more like fifteen to twenty years. We're pretty disappointed, me more so than my husband. I don't know what the problem is, but they are just not performing like we thought they would.

You should get them back to check the system is operating properly.  I had my system installed in July and so far it's producing more than estimated.

We have a monitoring system on it. It's working properly. The angle of the north-facing panels means they're not producing what they should. The disconnect is about overzealous salesmen plain and simple. For anyone looking to get them, I would add five or so years to the break-even date they give you. And then you can be pleasantly surprised if they do perform as expected or, in you case, more than is expected.

This break-even number will change if:
1) Electricity rates go up or
2) My city tears down a perfectly healthy 50+ year old white oak tree that is in the streetscape. They say it won't survive the sewer and road work that is planned for my street in the next 2-3 years. They've been threatening to tear it down for years.

Neither of these above scenarios are preferable, though. I would prefer the panels generate less and still have the oak tree that shades the brick on our brick on plaster home (i.e. uninsulated).

My other issue was with the roof and removal. The salesman told us it would cost around $500 to remove and reinstall the panels someday in the event of a new roof. Sounded reasonable, right. Well, when we had hail last year, I investigated it more. It would be closer to $200 PER PANEL. Yeah, that salesman was terrible, and it doesn't help that he's the dad of some kids at our school and I see him all the time.

[trashmanz]

Our solar company said we would break even after federal and local subsidies in nine years. Two years in, it's looking more like fifteen to twenty years. We're pretty disappointed, me more so than my husband. I don't know what the problem is, but they are just not performing like we thought they would.

You should get them back to check the system is operating properly.  I had my system installed in July and so far it's producing more than estimated.

We have a monitoring system on it. It's working properly. The angle of the north-facing panels means they're not producing what they should. The disconnect is about overzealous salesmen plain and simple. For anyone looking to get them, I would add five or so years to the break-even date they give you. And then you can be pleasantly surprised if they do perform as expected or, in you case, more than is expected.

This break-even number will change if:
1) Electricity rates go up or
2) My city tears down a perfectly healthy 50+ year old white oak tree that is in the streetscape. They say it won't survive the sewer and road work that is planned for my street in the next 2-3 years. They've been threatening to tear it down for years.

Neither of these above scenarios are preferable, though. I would prefer the panels generate less and still have the oak tree that shades the brick on our brick on plaster home (i.e. uninsulated).

My other issue was with the roof and removal. The salesman told us it would cost around $500 to remove and reinstall the panels someday in the event of a new roof. Sounded reasonable, right. Well, when we had hail last year, I investigated it more. It would be closer to $200 PER PANEL. Yeah, that salesman was terrible, and it doesn't help that he's the dad of some kids at our school and I see him all the time.

Ouch. Sorry to hear but definitely all is good food for thought. Did you get multiple bids or was he the only person you talked to?  I wonder if he is just a bad apple or if there is a more systemic issue of overestimation in the industry. The numbers I am working with are almost identical to OP. Our bill is about $60 a month and the system size is the same.

[tonysemail]

Ouch. Sorry to hear but definitely all is good food for thought. Did you get multiple bids or was he the only person you talked to?  I wonder if he is just a bad apple or if there is a more systemic issue of overestimation in the industry. The numbers I am working with are almost identical to OP. Our bill is about $60 a month and the system size is the same.

I talked to 4-5 companies and I assure you the strong armed sales tactics is a systemic issue.
Definitely take what they say with a grain of salt and use your own judgement about what they promise.
I ended up getting my system through sungevity and one guarantee they write into the contract is a minimum electricity generation.
I do wonder how difficult a claim would be to make.
If the system under-generates, then I guess that's something I will find out next year =/

[justajane]

We clearly didn't do our due diligence. We only talked to one guy, who we knew socially and bought from him. He's actually not even doing solar work anymore and sells insurance with Allstate. LOL. This backs up the idea that they are really just salesmen who come to your home.

I kind of regret it, but hell, I've spent money on other stupid things on our home. The basement "waterproofing" we felt we should do 7 years ago comes to mind. At least on this we will eventually break even. Plus we live in a crunchy progressive area, so if we went to buy our home, this will help it sell. I think reliably it added a few thousand dollars in equity to our home.

[Tyson]

I'm in the process of getting a solar system.  I have had 4 different companies take a look at our place and give us estimates and bids.  It's been interesting to see the differences.  Here's a few things I've learned from the process so far.

If you have a large roof with plenty of unobstructed southern exposure, then just go with the least expensive bid (would be Solar City for us).  They have less efficient panels, but it doesn't matter because you can just add a few extra panels to your roof to make up for their lower efficiency.

If you have a roof with limited space and/or shading issues (trees), then you'll want to look at SunPower as they have the most efficient panels, so you get the most electricity from the least amount of space.  Also, they use micro-inverters in each panel and wire them in parallel, instead of a single inverter with the panels all wired in series connecting to a single central inverter box (like Solar City).  That means that partial shading is much less of an issue.  You also get less loss when you have panels facing in different directions (i.e., on our roof we will have some south facing, some north facing).

The rub is that SunPower is more expensive.  So you have to crunch the numbers yourself and see how long it will take you to recoup your initial investment.  For us, it turned out to be 8 years for both Solar City and SunPower.  After 8 years it's no contest though - the SunPower will pay out at a much higher rate over the rest of the life of the panels. 

[socalteacher]

Do your homework and educate yourself on solar panels, different brands, materials, inverters, directions that are best to be placed, your shading on the roof etc. Once you learn all that stuff you will have a good idea if your roof is even a good candidate for solar, how much you need, and how complex the system has to be. The best part is that you can start to get quotes from companies and you will know when they are trying to rip you off. I had meetings with people that I honestly knew more about solar than they did. Once they realized I knew what I was talking about the entire sales process was easy. I did a lot of research on solar forums to get ideas of prices for my area. I knew what to expect for a fair price.  Solar is like buying a car in many ways. Don't trust them!! Make sure everything you agree on is in the contract. 

I would take your quotes to an online solar forum and throw them on a post to get advice from the guys who really find a passion in this stuff. They will help direct you.

I have just under a 3.6Kwh system (11 Sunpower 327 panels). All said and done, after tax credit I paid $8300. I was able to get additional $ off due to a family connection at Sunpower. I also shopped around a ton. It was easy because I knew I wanted Sunpower and didn't have to shop companies that sold other products. They produce more than I need so far and I have yet to hit the summer months when they will really produce. I can't wait to crank the AC this summer! My bill was about $1200 a year but we never used the air conditioning. We plan to be in this house for a long time so our pay off of under 7 years makes sense to me considering our increase of usage and rising rates.

One more thing that I did not expect is that I recommended a family member and got a referral of $700! I guess you could say my total cost went down to $7600!

Good luck! It took a lot of effort and time for me to get the deal I did.

[vnatale]

 

I would take your quotes to an online solar forum

Can you disclose which solar forum(s) you used?

Thanks

Vinny

[ender]

This is interesting to me.

I live in Iowa, so solar is pretty much pointless for a variety of reasons (namely that we have tons of windfarms here so the state has less incentive to jump on the solar bandwagon and we don't get as much sun).

I just think it'd be fun to have solar panels. Our roof doesn't directly face south, though, so that might be a problem...

[forummm]

I would add five or so years to the break-even date they give you. And then you can be pleasantly surprised if they do perform as expected or, in you case, more than is expected.

There are a lot of good, independent calculators that you can use to get a good estimate. NREL's PVWATTS is good. You can get precise estimates for your local area, angle of the panel, side of the sky they will face, degredation, inefficiency due to transmission losses, inverters, etc.

http://pvwatts.nrel.gov/

[MoonShadow]

This is interesting to me.

I live in Iowa, so solar is pretty much pointless for a variety of reasons (namely that we have tons of windfarms here so the state has less incentive to jump on the solar bandwagon and we don't get as much sun).

I just think it'd be fun to have solar panels. Our roof doesn't directly face south, though, so that might be a problem...

What about an east-west array?  Not as much total power output, but a much flatter production curve over the course of a solar day.