Author Topic: Help me decide on solar  (Read 10793 times)

andyInCT

  • 5 O'Clock Shadow
  • *
  • Posts: 6
Help me decide on solar
« on: August 29, 2014, 09:20:27 AM »
Hi everyone.  I'm trying to determine the overall wisdom of installing rooftop PV solar. 

The quote i'm considering is a system rated at 6.5kw, for a net price of $11k after all incentives and tax credits.  The installer estimates just over 8200 kwh/year on my roof, accounting for pitch/orientation/weather/latitude/shading.  This should cover 100% of our current usage.

My rate for electricity is about .18/kwh.  It's also pretty volatile... went up about 22% at the beginning of the year!  Sometimes it goes down, but i believe the trend is clearly up.  So Solar has some additional value as a hedge. 

So, if a 11k investment "yields" $125/mo tax free in savings on the power bill, I think that sounds decent.  Anyone care to weigh in?

Edit:
some additional info:
- i could arguably use some more conservative income-type investments.  the purchase won't require a loan...it's just an alternative investment
- i believe i've already taken care of the cheap and easy energy savings elsewhere in my house-
- i personally put a lot of value on renewable energy, and would "feel good" about the PV panels. 
« Last Edit: August 29, 2014, 09:30:36 AM by andyInCT »

MasterStache

  • Handlebar Stache
  • *****
  • Posts: 2174
Re: Help me decide on solar
« Reply #1 on: August 29, 2014, 09:33:48 AM »
I am a bit new here but having installed my own solar array in 2012 I may be able to offer some advice. I have some questions.

1. Does your state have an SREC program? In Ohio, where I live, you can sell your Solar Renewable Energy Credits (SRECs) on a market or by simply signing a contract with a utility company to sell a stipulated price. Depending on SREC prices, it can contribute greatly to your return.

2. Are you financing the system or buying outright?

3. I assume you are hiring a company?

Your figures look good and I calculated it will take roughly 7.5 years to reach a break even point. Someone else can probably do future math better than myself. I am finding out if there are ways to reduce the cost and/or increase your return. 

sol

  • Walrus Stache
  • *******
  • Posts: 8492
  • Age: 42
  • Location: Pacific Northwest
Re: Help me decide on solar
« Reply #2 on: August 29, 2014, 09:49:30 AM »
We recently installed 7500 W of rooftop PV in Washington state.  Here, our power is so cheap that it's only the tax incentives that make it profitable.

You mentioned a net system cost of $11k after incentives, but keep in mind it will still cost you more than that.  If you have to outlay $20k and then get $9k back in a year, your cost isn't $11k it's $11k plus the cost of tying up $9k for a year.  MS Excell has an xirr function that lets you list an irregular income stream over time and then calculates the effective return on your investment.  I suggest you look it up and figure out how to use it, so you can have a better idea of what your actual cost/profit is.

Like you, we also reduced our bond allocation after putting up solar panels.  In our case, the system cost about $30k up front but the federal tax credit will return $9k next April and the state will pay us $4k/year for six years in incentive payments.  It's roughly equivalent to buying a 3% bond for six years and then getting free power after that.  So we sold some bonds in our taxable account to cover the up front cost, and I now consider that $4k/year in payments as part of our early retirement income.
« Last Edit: August 29, 2014, 11:30:28 AM by sol »

MasterStache

  • Handlebar Stache
  • *****
  • Posts: 2174
Re: Help me decide on solar
« Reply #3 on: August 29, 2014, 09:59:11 AM »
sol,

Did you consider the DIY route for installation? Typically labor adds roughly 40-50% to the total system cost. I don't recommend anyone play with high voltage wiring, but you can outsource that to a qualified electrician and still save a lot of money.  I did everything myself and my brother-in-law (a roofer) helped me with roof penetrations and mounting for the mere price of a case of beer.

andyInCT

  • 5 O'Clock Shadow
  • *
  • Posts: 6
Re: Help me decide on solar
« Reply #4 on: August 29, 2014, 10:13:30 AM »
BeginnerStache,

Curious what your experience has been overall with maintenance, and how the system has performed relative to expectations.  Was it difficult to get approved by the electric utility for your DIY system (assuming it's grid tied)? 

To answer your questions: this is a cash purchase, not a lease.  And yes it's a pro install, I don't think a DIY project of this magnitude is feasible for me right now, though i wish it were.  It appears I yield all SRECs to the state as part of its rebate program...still looking into that.

MasterStache

  • Handlebar Stache
  • *****
  • Posts: 2174
Re: Help me decide on solar
« Reply #5 on: August 29, 2014, 10:28:39 AM »
BeginnerStache,

Curious what your experience has been overall with maintenance, and how the system has performed relative to expectations.  Was it difficult to get approved by the electric utility for your DIY system (assuming it's grid tied)? 

To answer your questions: this is a cash purchase, not a lease.  And yes it's a pro install, I don't think a DIY project of this magnitude is feasible for me right now, though i wish it were.  It appears I yield all SRECs to the state as part of its rebate program...still looking into that.

Maintenance has been very minimal. I clean the panels a couple times per year, that's about it. This past winter was pretty brutal and I found myself routinely scaling the ladder and roof to scrape off several inches of snow and sometimes ice. I don't recommend this on steep pitched roofs without a harness or really at all. I just didn't like when the sun came out and my panels were buried.

Permits vary widely depending on where you live. For instance a solar buddy of mine who lives in the next town over a mere 5 minutes from me only had to deal with his local municipality. No building or electrical permits required. However, I had to get  a local zoning permit (piece of cake), building permit, and electrical permit. And the building permit required a structural engineer to determine the structural integrity of my roof. Completely unnecessary if you ask me. The total weight added from the system was about equivalent to a couple inches of wet snow on the roof. Permits weren't bad, just more a pain in the ass and added cost.

Oh and really installation truly isn't nearly as daunting as it might appear. Of course that depends on a lot of factors. Installation for me was possibly the least time consuming part.   

Overall I spent $15,000 total on a 5.74kW system with 28 panels BEFORE any rebates. That was in 2011-2012. Would be about 15-20% cheaper these days. 

justajane

  • Handlebar Stache
  • *****
  • Posts: 2147
  • Location: Midwest
Re: Help me decide on solar
« Reply #6 on: August 29, 2014, 10:29:14 AM »
We had installed 12 PV panels, maximum 3 kwh, this past spring. Out of pocket we spent $5,000 (after federal and electric company rebates). The guesstimate of the installers was that it would take 9 years to pay it back, but they have not performed as expected. We are currently disappointed, and they are looking into why the performance is not optimal.

I'm still on the fence about our decision. It was a gamble of sorts, but we made the decision with our eyes open and a desire to use clean(er) energy. In essence, don't think of it as a guaranteed investment.

One positive benefit is that the upstairs of our bungalow is noticeably cooler, since the panels reflect light. In the summer, it when from hot as Hades up there to just hot :). 

andyInCT

  • 5 O'Clock Shadow
  • *
  • Posts: 6
Re: Help me decide on solar
« Reply #7 on: August 29, 2014, 11:08:08 AM »
Sol,

That's what i'm talkin' about.  Looking at the alternatives, I think i'm good relative to something like investment grade bonds, considering the tax-free nature of savings.  Probably not the same as just dropping the money in the S&P, but I'm already overweight there.  I also like the hedge against future rate hikes.  I suppose it's not quite like a paper investment in that it could fail to perform or have maintenance problems.  Good point on the opportunity costs.  I suppose it's best to install at the end of the year, or right before peak generation time in the summer.  It might improve home value in my neighborhood, but that's pretty speculative and not something i'm considering.

MillenialMustache

  • Bristles
  • ***
  • Posts: 265
Re: Help me decide on solar
« Reply #8 on: August 29, 2014, 11:25:55 AM »
Do you have a solar hot water heater? Those are less expensive to install and take less time to make back their money.

MasterStache

  • Handlebar Stache
  • *****
  • Posts: 2174
Re: Help me decide on solar
« Reply #9 on: August 29, 2014, 11:41:54 AM »
Do you have a solar hot water heater? Those are less expensive to install and take less time to make back their money.

+1

Depending on your location, solar hot water is typically the better investment with a shorter payback. I've considered it, but never took the plunge. 

andyInCT

  • 5 O'Clock Shadow
  • *
  • Posts: 6
Re: Help me decide on solar
« Reply #10 on: August 29, 2014, 11:54:54 AM »
MillenialMustache,

Nope, i just have an oil-fired boiler for heat that also supplies domestic hot water on demand.  Not sure how it would work to add a tank to the hydronic system.  Oil is brutal but i'm hoping for natural gas expansion one of these years. 

Regarding the conventional wisdom that solar water is better than PV, that may not hold for me.  It does not qualify for the same state subsidies, and labor to install is very expensive in my area.   My electricity is quite pricey at 18 cents.  Also, see this questioning the whole assumption: http://cleantechnica.com/2013/09/30/pv-better-thermal-solar-water-heating/ ,

Joshua

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Help me decide on solar
« Reply #11 on: August 29, 2014, 12:08:34 PM »
So some simple math. Assuming the life expectancy of a solar setup is 20 years, at the end of 20 years you will have saved $30,000 in electricity costs (assuming cost stay the same, HA!) Further lets assume that you take the extra savings and invest it in stocks at 8% compounded. At the end of the 20 years you have $68,642. That is a 9.59% compounded annual ROI.

If you invest the $11,000 in stocks now at 8% you end up with $51,270.

Assuming you are willing to invest the savings and do a little maintenance work it seems that you will be roughly $17,000 ahead at the end of 20 years going with the solar setup. And that doesn't account for the increasing price of electricity.

usmarine1975

  • Guest
Re: Help me decide on solar
« Reply #12 on: August 29, 2014, 12:16:25 PM »
I did the math for us a few years ago and found break even to be around 20 years which is the expected life of a system.  I want to go solar but haven't found it to be a savings for me.  I may have to re figure and quote as it sounds like cost may have dropped over the last few years.

Joshua

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Help me decide on solar
« Reply #13 on: August 29, 2014, 12:20:22 PM »
Here is another resource. Go here and find your zone. Then look to the chart on the left and see how many hours of sunlight per day your area gets. Multiply that by your system rating, so 6.5 kw. Multiply by 365 and get your annual system output.

http://www.wholesalesolar.com/Information-SolarFolder/SunHoursUSMap.html

MasterStache

  • Handlebar Stache
  • *****
  • Posts: 2174
Re: Help me decide on solar
« Reply #14 on: August 29, 2014, 12:42:11 PM »
Here is another resource. Go here and find your zone. Then look to the chart on the left and see how many hours of sunlight per day your area gets. Multiply that by your system rating, so 6.5 kw. Multiply by 365 and get your annual system output.

http://www.wholesalesolar.com/Information-SolarFolder/SunHoursUSMap.html

You need to factor in efficiency also. A typically safe estimate is around 80%.

Thegoblinchief

  • Guest
Re: Help me decide on solar
« Reply #15 on: August 29, 2014, 12:45:13 PM »
Not to threadjack, but is it even worth exploring solar with a western exposure instead of southern?

Roof does have a relatively shallow exterior pitch, maybe 6:12 tops.

MasterStache

  • Handlebar Stache
  • *****
  • Posts: 2174
Re: Help me decide on solar
« Reply #16 on: August 29, 2014, 01:25:00 PM »
Not to threadjack, but is it even worth exploring solar with a western exposure instead of southern?

Roof does have a relatively shallow exterior pitch, maybe 6:12 tops.

I conducted a solar analysis on a friend's roof once and found roughly a 20% drop in total output with a East or West facing exposure. That's pretty significant over the long haul. Do you have room for pole mount? How about a car port or something like a solar Pergola?

Thegoblinchief

  • Guest
Re: Help me decide on solar
« Reply #17 on: August 29, 2014, 03:32:53 PM »
Nope, nope, and nope. Small lot, and house immediately south of us is a story taller.

Glad to see a number on it, though. I've always heard you needed southern exposure, but now I know what the mathematical difference is!

I probably wouldn't do it for this house anyways, since we'll not be here past FI, which is 10 years out. But it's a good reminder to buy/build a final house that's got a southern roof slope.

DarinC

  • Bristles
  • ***
  • Posts: 308
Re: Help me decide on solar
« Reply #18 on: August 29, 2014, 11:13:37 PM »
$3/W installed is a pretty good price, but you might be able to DIY for ~$2/W if you're inclined. You can confirm the energy output estimate via something like PVWatts.

http://pvwatts.nrel.gov/

Keep in mind that the "lifespan" estimates are for some percentage of power output at 20 years, usually something like 80%. The panels will continue to make power for decades after that point, just at a reduced rate.

Inverters are a little more fragile, so I would budget for a replacement at the end of their warranty period, although odds are they'll last longer than that.

Nords

  • Magnum Stache
  • ******
  • Posts: 3199
  • Age: 59
  • Location: Oahu
    • Military Retirement & Financial Independence blog
Re: Help me decide on solar
« Reply #19 on: August 30, 2014, 12:28:55 AM »
... around 20 years which is the expected life of a system. 
Um, no.

I have PV panels on my roof that are already over 20 years old, and they're doing just fine.  Today's designs make my old panels look ugly (because that was state of the art over 20 years ago) but they still put out rated voltage.

Our local PV supplier has panels dating back to the 70s that are also putting out rated voltage (and power).  The quoted lifetime of a system is based on the number of years that most companies are willing to engage in a power-producing agreement (PPA).  But the physical lifetime of a PV panel is at least 40 years, and today's tech may last even longer.

I can understand scraping snow or leaves off the surface of the panels.  But I don't even bother to clean off the bird poop (or bee poop) and the rain does a fine job of keeping everything squeaky clean.

usmarine1975

  • Guest
Re: Help me decide on solar
« Reply #20 on: August 30, 2014, 05:23:28 AM »
Will have to look into that more now. Thanks

Simple Abundant Living

  • Pencil Stache
  • ****
  • Posts: 580
    • Simple Abundant Living
Re: Help me decide on solar
« Reply #21 on: August 30, 2014, 07:41:34 AM »
Not to threadjack, but is it even worth exploring solar with a western exposure instead of southern?

Roof does have a relatively shallow exterior pitch, maybe 6:12 tops.

I conducted a solar analysis on a friend's roof once and found roughly a 20% drop in total output with a East or West facing exposure. That's pretty significant over the long haul. Do you have room for pole mount? How about a car port or something like a solar Pergola?

A solar pergola is probably our only option due to the high, steep south-side of our roof and that being the front of our house. Has any one here done a solar install off the main house?  What was the Cost increase?

Boz86

  • Stubble
  • **
  • Posts: 118
Re: Help me decide on solar
« Reply #22 on: August 30, 2014, 07:45:24 AM »
A couple of resources (no affiliation with me):

lots' of different solar info here, with an emphasis on DIY
www.builditsolar.com

Repurposing things:
http://ecorenovator.org/forum/

monarda

  • Pencil Stache
  • ****
  • Posts: 514
Re: Help me decide on solar
« Reply #23 on: August 30, 2014, 09:23:15 AM »
Thanks for this thread. It's good to reassess solar costs every couple of years. We installed 1.92 kW (8 panels) on a rental in Dec 2011 for $6800 after incentives.  We intend to install 9 more panels on that house at some point. The installation cost should be less per watt since the metering and wiring is all set up already. We just need to add the racks and the panels/microinverters.  Has anyone else here installed a system, then added on to it later?

Calvawt

  • Bristles
  • ***
  • Posts: 334
  • Location: Central CA
Re: Help me decide on solar
« Reply #24 on: August 30, 2014, 09:54:27 AM »
I just installed a 6.5kWh system in California for a net price of $15k.  I came up with a less than 6 year payback and NPV of $21.5k.  With prices steadily increasing, owning was the right move for me.

Nords

  • Magnum Stache
  • ******
  • Posts: 3199
  • Age: 59
  • Location: Oahu
    • Military Retirement & Financial Independence blog
Re: Help me decide on solar
« Reply #25 on: August 30, 2014, 12:27:06 PM »
Thanks for this thread. It's good to reassess solar costs every couple of years. We installed 1.92 kW (8 panels) on a rental in Dec 2011 for $6800 after incentives.  We intend to install 9 more panels on that house at some point. The installation cost should be less per watt since the metering and wiring is all set up already. We just need to add the racks and the panels/microinverters.  Has anyone else here installed a system, then added on to it later?
Yep, it's common in areas where the tax credits have annual caps.  We bought our system and started installing it in 2004, then did more expansion work in 2005, 2006, and 2007.

You can either pay an installer to do the addition for you, or you can figure out what the last installer did and buy the parts from a local supplier (or online).  It takes some courage to drill holes in a perfectly good roof, but connecting the wiring (especially with microinverters) is a lot safer than it used to be.

Most PV wiring is maxed out at 600 volts DC, and there's going to be a power limit on the AC side too.  I don't know what the AC limits are, but if you can't find the data for your system then you should seek professional help.

StashDaddy

  • Stubble
  • **
  • Posts: 129
  • Age: 40
  • Location: Sugar Land, TX
Re: Help me decide on solar
« Reply #26 on: September 02, 2014, 12:14:46 PM »
I bought a 5 kw system in houston for $2.75/watt.  The ROI depends on what kind of credit you can get from your local retail electricity provider.  With standard net metering, solar panels are probably a good deal (pay for themselves in <10 years, and then you get 20+ years of production from them). 

But, in some areas of the country, utilities are pushing back against net metering, as it is unfair to them.  Roughly 1/3 of the price you pay for electricity is electrical generation, 1/3 is grid maintenance, and 1/3 is billing/customer support.  Net metering doesn't compensate the utility for the latter two things.  That is why utilites have succeeded in adding a fixed monthly charge to some solar customers in some states (AZ).  I see this spreading to other states as solar becomes more popular.

In Houston, Reliant used to have a plan that compensated me $0.17/kwhr for production, and only charged me $0.10/kwhr for consumption.  Obviously, I took this plan straight to the bank and have ended the year with a $300 credit that I will get in cash back.  Now, however, they have adjusted the plan to pay only $0.07/kwhr for production, and charge $0.14/kwhr for consumption.  Not nearly as good!  I am switching to Green Mountain Energy that offers a more standard net metering plan of $0.12/kwhr for both production and consumption.

I like my system so far, but potential problems I can see in the future are:
1.  Further changes in net metering plans to become less generous
2.  Additional costs to uninstall and reinstall panels when it is time to get a new roof
3.  Microinverter failure and replacement
4.  Will it scare people from buying my house when it comes time to sell?  (or conversely, it could make it more attractive to some buyers...we'll see!)

Nords

  • Magnum Stache
  • ******
  • Posts: 3199
  • Age: 59
  • Location: Oahu
    • Military Retirement & Financial Independence blog
Re: Help me decide on solar
« Reply #27 on: September 02, 2014, 02:01:07 PM »
3.  Microinverter failure and replacement
Have you actually had one fail?  I haven't heard of that happening yet.

StashDaddy

  • Stubble
  • **
  • Posts: 129
  • Age: 40
  • Location: Sugar Land, TX
Re: Help me decide on solar
« Reply #28 on: September 02, 2014, 02:04:49 PM »
No, no failures yet.  But its only been 1 year.

Nords

  • Magnum Stache
  • ******
  • Posts: 3199
  • Age: 59
  • Location: Oahu
    • Military Retirement & Financial Independence blog
Re: Help me decide on solar
« Reply #29 on: September 02, 2014, 02:17:45 PM »
No, no failures yet.  But its only been 1 year.
I haven't heard of a microinverter failing ever, although it would seem that it has to happen somewhere.  I guess the manufacturer's warranty duration would give an indication of how long they expect them to last.

I'm not sure that we're ever going to need to replace the roof under our PV panels, but it's only been three years since we re-roofed.  Nobody walks on that part of the roof, the wind can't peel away the shingles, and of course not much UV gets past the panels. 

I think homebuyers are willing to buy a home with a PV system-- but they're not willing to pay what it's worth.


Christof

  • Pencil Stache
  • ****
  • Posts: 607
  • Age: 43
  • Location: Germany
Re: Help me decide on solar
« Reply #30 on: September 02, 2014, 02:21:20 PM »
I don't know how much of this applies to the US, so please read with a grain of salt. In Germany selling electricity can be seen as a small business subject to taxes and regulations. Solar installations are also often not covered by home owner and liability insurances, requiring another insurance (or risking to pay).

Finally savings should not be calculated on your current usage, but on an optimized usage. Heating and cooling are often the most expensive parts. Financially it might be better to change the way you are doing either, instead of merely changing the way of producing electricity.

electriceagle

  • Bristles
  • ***
  • Posts: 480
Re: Help me decide on solar
« Reply #31 on: September 02, 2014, 03:41:45 PM »
A straight kWh analysis may not do the panels justice.

Many areas have an optional time-of-day billing system. Under this system, you pay more to use electricity during the daytime and less at night (may be a factor of 3!). Since your panels produce during the day, you get paid at the high daytime rate. You spend at the lower nighttime rate. The time-of-day arbitrage generates profit.

Reddleman

  • Stubble
  • **
  • Posts: 103
Re: Help me decide on solar
« Reply #32 on: September 02, 2014, 03:45:24 PM »
While people always consider things like ROI, there are other factors. 

One that rarely gets mentioned is how it may change property value.  In an area where pople are fond of "green" technologies, the addition could easily increase the value of your home to prospective buyers.  We just signed for a 4.5kw system with cost after incentive being about $5k.  Where we live it will probably be a selling point for the house, should we decide to move.  Essentially we'd be getting the electricity between now and then for free.

StashDaddy

  • Stubble
  • **
  • Posts: 129
  • Age: 40
  • Location: Sugar Land, TX
Re: Help me decide on solar
« Reply #33 on: September 02, 2014, 05:23:29 PM »
Wow, Reddleman, that is a great deal (for you)--there must be some great solar incentives in your area!  What area of the country do you live in?  In Houston, we just had the 30% federal credit.