Solar as an investment

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ppnewbie
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Solar as an investment

Post by ppnewbie » Thu Dec 31, 2020 3:51 pm

A solar roof will cost me about 14k and I will save about 150 / month on energy cost (1800 / year). That’s about 12 percent return a year. And that return should go up if utilities go up with inflation. Seems like a no brainer.

Any thoughts or comments. Interested to see if I am looking at this correctly.
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ochotona
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Re: Solar as an investment

Post by ochotona » Thu Dec 31, 2020 4:27 pm

Are you buying or leasing? Leases are often heads we win, tails you lose.

If leasing, and the scheme doesn't generate net cash flow (because the estimates were wrong), and you have to make lease payments, but you refuse to or can't, is a lien placed on your house which prevents you from selling it? Could they foreclose or sue you?

Who came up with your estimate of the amount of money saved per month? You yourself or the salesperson? By what methodology?

How much do neighbors with similar installs save per month in reality?

What happens when you have to replace your roofing tiles? You remove all of that hardware, replace the tiles, then re-install it? That's expensive.

Is it covered by your homeowner's insurance policy? For hail damage? Windstorm damage?

Who pays for wiring and inverter repairs if it's struck by lightning? You don't need a direct hit; even a nearby strike will induce a mean current in a solar array.

When are you going to sell the house? What if the buyer don't want no panels? Who pays for removal?

Do you have any shadows from trees covering the panels at all at any time? Even a little bit or darkness really hits the array efficiency (the darkened cells become resistors).

Is your neighborhood association on board? Do you have written approval of the architectural exception?

You sure you can push the excess power into the grid? That's all signed, sealed, delivered?
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vnatale
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Re: Solar as an investment

Post by vnatale » Thu Dec 31, 2020 5:15 pm

You got tons of excellent questions from Ochotnoa that I'd never prior thought of!

The proposals that you get from solar companies can border on fraud with all they do not include.

I created my own analysis with more realistic amounts.

Let me open it and see if you can adapt it for your own analysis.

I have detailed records of my electric bills starting in 1998 to present. What is your variable cost per kWh?

I live in New England and I think we are the highest in the country? The average cost per kWh started at 9.4 cents in 1998 and averaged 21.4 cents this year. Therefore if a solar system saved me 200 kWh per month it'd be saving me $514 per year.

Going from 9.4 cents to 21.4 cents over that time period represented an average annual increase of 3.8%. General inflation was at 1.4% during the same time period.

So it is true when the solar companies showing you increasing savings every year with increasing costs of electricity. But you need to take away from that rate of increase an assumed general inflation rate so that you can bring everything down to its present value today.

Roofs do need to be replaced. When that happens the whole system is going to have to be removed and then put back on again. I can guarantee you that not one solar proposal will EVER include those costs you have to pay in the future in the nifty payback analyses.

The most I could get out of anyone was that that cost could be about 15% the cost of the system.

Therefore, if true, in your case if you needed a roof replaced two years after the solar installation you'd be soon looking at an additional cost of possibly $3,000 for which there will be no kinds of credits for Pure expense to you.

Will you have to pay for any tree work to optimize your system? Another cost they will conveniently leave out of their analyses / payback. This expense, though, could possibly be considered part of the cost that would be eligible for tax credits.

Another item they leave out of their analysis is if you get a state tax credit you will lose part of your state tax deduction on your federal return.

Does their analyses show your system giving the same electricity production every year? I used an estimate that the system was going to degrade at the rate of 0.4% per year.

Their analyses do not cover the increased insurance premiums you pay to cover the value of the system.

Your numbers don't seem right. You are saying your cost would be $14,000 and you'd save $1,800 per year.

I was going to save less $900 to start while the system cost would be nearly $25,000. After Federal and state credits my cost would have been close to $17,000, which is closer to your $14,000 cost but you'd still have twice the savings as me? How? If you are getting that much savings and your rates are not as high as mine then you'd have to have a much larger and much more costly system than mine.

In then next response I'll just throw down all I was taking into consideration and the numbers therein for what I thought would be a far better analysis than what the vendors presented to you. I put each vendor's proposal through my analysis.

Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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vnatale
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Re: Solar as an investment

Post by vnatale » Thu Dec 31, 2020 5:24 pm

The two main sections of my worksheet to analyze each vendor's proposal.

Note that in this particular case the IRR on a present value basis did not finally turn positive and stay that way until after 11 years. Far cry from what they present wherein they will show a $1,500 savings in year 6 as having equal dollar value to spending that $1,500 today. All those future savings needs to be discounted to today's present value.

Vinny

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Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
ppnewbie
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Re: Solar as an investment

Post by ppnewbie » Thu Dec 31, 2020 5:49 pm

ochotona wrote:
Thu Dec 31, 2020 4:27 pm
Are you buying or leasing? Leases are often heads we win, tails you lose.
- Buy

If leasing, and the scheme doesn't generate net cash flow (because the estimates were wrong), and you have to make lease payments, but you refuse to or can't, is a lien placed on your house which prevents you from selling it? Could they foreclose or sue you?
- For me N/A

Who came up with your estimate of the amount of money saved per month? You yourself or the salesperson? By what methodology?
- I looked at break down of multiple years of bills. So me in this case

How much do neighbors with similar installs save per month in reality?
- Good question. My perspective was that I would be paying zero monthly vs. average $150.

What happens when you have to replace your roofing tiles? You remove all of that hardware, replace the tiles, then re-install it? That's expensive.
- I hear it is about 2000 ish to remove panels reconnect them.

Is it covered by your homeowner's insurance policy? For hail damage? Windstorm damage?
- Great question, Need some clarity on this.

Who pays for wiring and inverter repairs if it's struck by lightning? You don't need a direct hit; even a nearby strike will induce a mean current in a solar array.
- Good question! I this case it would probably be me or insurance based on the answer from your previous question.

When are you going to sell the house? What if the buyer don't want no panels? Who pays for removal?
- People pay a million dollars for a shack where I live no contingencies so I likely don't have to worry about that but good question.

Do you have any shadows from trees covering the panels at all at any time? Even a little bit or darkness really hits the array efficiency (the darkened cells become resistors).
- Good question. Some folks did some surveys but it seemed very half assed. Need to pay more attention to that.
- https://www.google.com/get/sunroof - seems to show good results for my house.

Is your neighborhood association on board? Do you have written approval of the architectural exception?
- Where I live people fall all over themselves for green energy. But again good question. I will call my city building folks and ask.

You sure you can push the excess power into the grid? That's all signed, sealed, delivered?
- You can push to the grid. But agreed need to be sure.
ppnewbie
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Re: Solar as an investment

Post by ppnewbie » Thu Dec 31, 2020 5:59 pm

vnatale wrote:
Thu Dec 31, 2020 5:15 pm

I live in New England and I think we are the highest in the country? The average cost per kWh started at 9.4 cents in 1998 and averaged 21.4 cents this year. Therefore if a solar system saved me 200 kWh per month it'd be saving me $514 per year.

- I think I am paying around the 21 cent / kWh number

Roofs do need to be replaced. When that happens the whole system is going to have to be removed and then put back on again. I can guarantee you that not one solar proposal will EVER include those costs you have to pay in the future in the nifty payback analyses.

- This is one reason I have been slow to move. Need to decide if I want to replace my roof first. Which is 20k - ish. Then all the numbers blow up.

The most I could get out of anyone was that that cost could be about 15% the cost of the system.

- Good to know.

Will you have to pay for any tree work to optimize your system? Another cost they will conveniently leave out of their analyses / payback. This expense, though, could possibly be considered part of the cost that would be eligible for tax credits.

- No tree work that I know of but again - this would be something to know before making the leap.

Another item they leave out of their analysis is if you get a state tax credit you will lose part of your state tax deduction on your federal return.

- Thanks! Did not know this.

Does their analyses show your system giving the same electricity production every year? I used an estimate that the system was going to degrade at the rate of 0.4% per year.

- Great point.

Their analyses do not cover the increased insurance premiums you pay to cover the value of the system.

- Another great point

Your numbers don't seem right. You are saying your cost would be $14,000 and you'd save $1,800 per year.

I was going to save less $900 to start while the system cost would be nearly $25,000. After Federal and state credits my cost would have been close to $17,000, which is closer to your $14,000 cost but you'd still have twice the savings as me? How? If you are getting that much savings and your rates are not as high as mine then you'd have to have a much larger and much more costly system than mine.

- Two things - I could be way off or is possible that you got these proposals a few years ago? I have heard the cost has dropped significantly.

In then next response I'll just throw down all I was taking into consideration and the numbers therein for what I thought would be a far better analysis than what the vendors presented to you. I put each vendor's proposal through my analysis.
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ochotona
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Re: Solar as an investment

Post by ochotona » Thu Dec 31, 2020 7:36 pm

A high SEER AC system and very through weatherization of the house probably would pay back faster than your solar project.
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vnatale
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Re: Solar as an investment

Post by vnatale » Fri Jan 01, 2021 11:11 am

ochotona wrote:
Thu Dec 31, 2020 7:36 pm

A high SEER AC system and very through weatherization of the house probably would pay back faster than your solar project.


I know I could look it up and self-educate myself....but I think you might be easily able to educate me on what SEER means and how to apply it across various energy devices, mini-splits, heat pumps, and so on. It's a term I only first saw a few weeks ago and now you are using it again.

Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
ppnewbie
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Re: Solar as an investment

Post by ppnewbie » Fri Jan 01, 2021 12:02 pm

ochotona wrote:
Thu Dec 31, 2020 7:36 pm
A high SEER AC system and very through weatherization of the house probably would pay back faster than your solar project.
Great point. I think this is the path I’ll follow first.
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ochotona
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Re: Solar as an investment

Post by ochotona » Fri Jan 01, 2021 7:51 pm

All I know about SEER is a bigger number is more expensive and physically larger! But way more efficient, when going from the original 10 to the 15 range years ago my bills dropped like a stone. The payback was 3 years. Of course... Texas not New England.
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Hal
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Re: Solar as an investment

Post by Hal » Sat Jan 02, 2021 7:35 am

ppnewbie wrote:
Fri Jan 01, 2021 12:02 pm
ochotona wrote:
Thu Dec 31, 2020 7:36 pm
A high SEER AC system and very through weatherization of the house probably would pay back faster than your solar project.
Great point. I think this is the path I’ll follow first.
+1.
Also in Aus, they dropped the rate the electricity suppliers pay you for excess power fed back into the grid..... once they convinced many people to install solar panels. Also make sure you get a reputable installer. Friend had a "licensed" installer completely screw up the wiring (and put the panels on the wrong side of the roof :o ). Since the inspector signed it off (ha ha) it cost our friend thousands to get the installation repaired. Plus you don't want rock apes walking around on your roof tiles.... ::)

ps:https://en.wikipedia.org/wiki/Seasonal_ ... ency_ratio
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ochotona
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Re: Solar as an investment

Post by ochotona » Sat Jan 02, 2021 9:46 am

Also, if your motivation is #SJW #politicalcorrectness #greennewdeal ;) you may be able to buy 100% renewable contracts in your State. Here in Texas, we've had a 100% wind contract for what, 17 years? A small premium over the standard contract. And now, Texas leads the nation in the wind install base. We add more incremental generation capacity which is wind or solar than which is fossil. And my kid is an electrical engineer in alt energy for a major engineering firm. And her peeps who graduated at the same time in 2019 from college in petroleum engineering are unable to find work. So yes, how you invest makes a difference in society, over a long period of time. This energy transition thing is easy to overstate or over hype (TSLA), but it's real. I think it's unstoppable. Remember who is saying this... I'm a 34+ year veteran of oil & gas. Just roll with it. Resisting change in an ever-changing world is a stupid hill to die on. You don't want this tag applied to you #YATA
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