Benefits of solar panels/Powerwall in areas with low electric rates

[bob_p]

We started researching installing Tesla solar panels and Powerwalls to provide whole home power, get us off the grid, and be able to provide us backup power (during a hurricane).

Even with the 30% tax credit, we were disappointed to find the break-even point for the investment would be 18 to 20 years, because our electric rates are pretty low - around $.11 per KWh.

And because the economics don't appear to work out - there are few homes with solar panels in our area. According to our realtor, they've found it can be more difficult to sell a home with solar panels because new buyers don't like how they look on the roof and aren't interested in having the additional complexity. [On the other hand, installing a natural gas generator is attractive to new owners, and does result in some increase in resale price.]

Plus, with the warranties for the major components, it's likely there would be some additional investment required (such as losing Powerwall storage capacity).

We've asked Tesla to verify our analysis - and they haven't been able to find the flaw in our analysis.

So we're going to table the investment in solar for now, and will reconsider if the prices ever drop enough to make it more financially attractive (though that will be harder without the 30% tax credit).

Has anyone else come up with a strategy for financially justifying an investment in solar panels/Powerwalls when electricity is relatively cheap.

 

[BigD0g]

We started researching installing Tesla solar panels and Powerwalls to provide whole home power, get us off the grid, and be able to provide us backup power (during a hurricane).

Even with the 30% tax credit, we were disappointed to find the break-even point for the investment would be 18 to 20 years, because our electric rates are pretty low - around $.11 per KWh.

And because the economics don't appear to work out - there are few homes with solar panels in our area. According to our realtor, they've found it can be more difficult to sell a home with solar panels because new buyers don't like how they look on the roof and aren't interested in having the additional complexity. [On the other hand, installing a natural gas generator is attractive to new owners, and does result in some increase in resale price.]

Plus, with the warranties for the major components, it's likely there would be some additional investment required (such as losing Powerwall storage capacity).

We've asked Tesla to verify our analysis - and they haven't been able to find the flaw in our analysis.

So we're going to table the investment in solar for now, and will reconsider if the prices ever drop enough to make it more financially attractive (though that will be harder without the 30% tax credit).

Has anyone else come up with a strategy for financially justifying an investment in solar panels/Powerwalls when electricity is relatively cheap.

If you remove the power walls from the equation, the economics work out in ~8 - 10 years depending on your usage. If you want to truly go off grid, reach out to @wk057 at HSRMotors who sells tesla battery modules that can do the same thing effectively as the powerwalls for significantly less $$$. Also, I highly recommend you shop around, Tesla seem's way overpriced for there panels and your basically buying the name,

 

[jkcheng122]

I'm in the same boat regarding solar. It'd take too long to break even, and I just don't want to do it w/o Powerwall. I'm around $0.11 per kWh also.

One thing I wonder about is whether Powerwall can be had w/o solar, and just charge via grid to have it function as a UPS for the house.

OP, what price were you quoted for the setup?

 

[ggies07]

I'm in the same boat regarding solar. It'd take too long to break even, and I just don't want to do it w/o Powerwall. I'm around $0.11 per kWh also.

One thing I wonder about is whether Powerwall can be had w/o solar, and just charge via grid to have it function as a UPS for the house.

OP, what price were you quoted for the setup?

Sure you can!

From the page:
Tesla Powerwall

Seamless backup power. With or without solar.
Powerwall detects grid outages and automatically becomes your home's main energy source. Protect your home from the next power outage and keep your lights on, phones charged, and no puddles under the fridge.

 

[eml2]

Sure you can!

From the page:
Tesla Powerwall

But you won't be able to claim 30% ITC without solar.

 

[Rockster]

Yes, OP, definitely shop around. And decide if you really need whole house backup. I shopped around and got $0.20/watt and decided against Powerwalls. Our electricity is very stable (longest outage in 20 years was about an hour, maybe 90 minutes and that was only once; the rest have been for just a few moments, maybe one minute, and those are rare). My breakeven is in the 8 to 10 year range and my electricity rate is $0.10 kWh.

 

[markb1]

Even with the sky-high rates we have here in San Diego, I can't make an economic case for Powerwall. The solar system I purchased 6 years ago has paid off nicely, though. If Powerwall could be used for rate arbitrage, maybe it would make more sense, here, in lieu of solar. (I currently pay $0.09/kWh in the middle of the night, at up to $0.52/kWh in the evening, depending on the season.)

 

[bob_p]

You can't be off-the-grid without storage, so if you install panels only, you're only generating power during the day and only when there is usuable daylight.

Let's assume we install 10 KW of solar panels - Tesla is quoting $20.9K (after the 30% rebate). [A 5KW system would cost $11.2K.]

In our area, we appear to average around 4.5 hours of usuable daylight year-round. With a 10KW system (ideally with 100% efficiency), that would produce 16.4 MWh per year.

At $.11/KWh, that electricity would be worth $1.8K. Which is an 11.5 year break even.

However, without storage, you only get this savings if you are able to immediately use all of that power - which isn't the case. Yesterday, our house used 80KWh of power (including EV charging). But during the prime daylight hours, we only used 3-5 KW per hour. Without storage (Powerwall), we would have used less half of the output of the solar panels.

It is certainly possible to purchase Powerwall without solar panels. But you will only get the 30% tax credit if you have a renewable energy source. If you are only using grid power, you won't get the 30% tax credit - and you'll actually end up using more power to recharge the Powerwall since there is some energy loss.

To be "green" and make a significant reduction in grid power usage, you need both solar panels and a way to store the excess power to use it when the panels aren't generating power. And at $.11/KWh, that doesn't make economic sense. If electric rates are above $.20/KWh, that brings the break even period down to 10 years, which makes more sense (especially since the Powerwalls have a 10 year warranty).

We also researched another scenario - installing the minimum amount of solar panels (3 KW) plus 4 to 6 Powerwalls (having the panels triggers the 30% tax credit), and then using a Free Nights electric plan (which charges $.18/KWh during the day). This configuration projects break-even in 8 to 10 years. This makes more sense economically - however we could end up using more grid power (due to Powerwall energy loss), plus it relies on having a Free Nights plan - which isn't guaranteed for 10 years.

We also did some research on the home resale market. Because of the low electric rates, there are very, very few homes with solar power in our area. Based on feedback from realtors, they haven't seen any increase in resale price due to the addition of the solar power, and have actually seen resistance from buyers because they don't like the appearance of panels on the roof.

If we wanted to make any power improvements, our realtor recommended installing a natural gas backup power generator (which would cost less than $10K), which would only provide power during emergencies (like hurricanes), would increase home resale value, and is more attractive for buyers.

If we see the price of the solar systems come down or electric rates go up enough to reduce the break-even period, we'll reconsider.

But for now, it doesn't appear to make sense when electricity is so cheap (at least here)….

 

[MorrisonHiker]

You can't be off-the-grid without storage, so if you install panels only, you're only generating power during the day and only when there is usuable daylight.

Let's assume we install 10 KW of solar panels - Tesla is quoting $20.9K (after the 30% rebate). [A 5KW system would cost $11.2K.]

In our area, we appear to average around 4.5 hours of usuable daylight year-round. With a 10KW system (ideally with 100% efficiency), that would produce 16.4 MWh per year.

At $.11/KWh, that electricity would be worth $1.8K. Which is an 11.5 year break even.

However, without storage, you only get this savings if you are able to immediately use all of that power - which isn't the case. Yesterday, our house used 80KWh of power (including EV charging). But during the prime daylight hours, we only used 3-5 KW per hour. Without storage (Powerwall), we would have used less half of the output of the solar panels.

It is certainly possible to purchase Powerwall without solar panels. But you will only get the 30% tax credit if you have a renewable energy source. If you are only using grid power, you won't get the 30% tax credit - and you'll actually end up using more power to recharge the Powerwall since there is some energy loss.

To be "green" and make a significant reduction in grid power usage, you need both solar panels and a way to store the excess power to use it when the panels aren't generating power. And at $.11/KWh, that doesn't make economic sense. If electric rates are above $.20/KWh, that brings the break even period down to 10 years, which makes more sense (especially since the Powerwalls have a 10 year warranty).

We also researched another scenario - installing the minimum amount of solar panels (3 KW) plus 4 to 6 Powerwalls (having the panels triggers the 30% tax credit), and then using a Free Nights electric plan (which charges $.18/KWh during the day). This configuration projects break-even in 8 to 10 years. This makes more sense economically - however we could end up using more grid power (due to Powerwall energy loss), plus it relies on having a Free Nights plan - which isn't guaranteed for 10 years.

We also did some research on the home resale market. Because of the low electric rates, there are very, very few homes with solar power in our area. Based on feedback from realtors, they haven't seen any increase in resale price due to the addition of the solar power, and have actually seen resistance from buyers because they don't like the appearance of panels on the roof.

If we wanted to make any power improvements, our realtor recommended installing a natural gas backup power generator (which would cost less than $10K), which would only provide power during emergencies (like hurricanes), would increase home resale value, and is more attractive for buyers.

If we see the price of the solar systems come down or electric rates go up enough to reduce the break-even period, we'll reconsider.

But for now, it doesn't appear to make sense when electricity is so cheap (at least here)….

Does your electric company offer a Time of Use plan? At night, our rate drops to 8 cents per kWh vs. 12 cents per kWh in part-peak and 18 cents per kWh in peak. With our Powerwalls, we never pay peak electricity rates and rarely pay part-peak. We actually started on the TOU plan before we got solar and saw our bills drop 30% since we were able to move all car charging to off-peak, as well as some laundry, dishwashing, etc.

Another benefit that I don't think others have mentioned is that you can feel better knowing you've lowered your carbon footprint. It's not always about the financial return.

Also, in a real emergency, there's no guarantee that natural gas will still be flowing. The sun will still be there! We have installed enough Powerwalls and solar panels that we could live off the grid indefinitely if there was a major catastrophe.

 

[YellyYeti]

Does your utility not provide net metering? I have a 14.7kW system with no battery backup, and I also pay $0.11 per kWh. The system cost $30K before incentives. Florida Power and Light offers one-to-one net metering, so I use them as my "battery" for day-to-day usage, but of course there is no battery backup during outages. But even with the hurricanes last few years we've lost power for only 3 days at a time, once every 3 years or so. Our payback period is about 10 years on the panels, and offsets about 60% of our usage. Yes our house is too big

It is my understanding that utilities provide net metering because they want your excess power during the day, to sell to businesses at a premium. Most likely any electricity I send back to the grid, is redistributed to my neighbors at the transformer, minimizing losses. So I don't necessarily think it is not green having solar panels without battery backup. This may change if and when the majority of houses have solar, but that is definitely not the case around here, I estimate 1 in 30 maybe.

One possibility I am intrigued about is Nissan's promised Vehicle-to-Home technology with their Leaf. If I could spend ~$15K on an used Leaf as a second EV, and have it serve as a battery backup during our rare power outages, I would so jump at that.

So maybe if you get the cost per watt ($2.04 per watt before incentives in my case) low enough, it may become a more attractive option? I went with a local installer as opposed to Tesla by the way, Tesla was going to be easily 50% more.

 

[Thp3]

I’m always taken aback when people say that payback with solar power is too long. It’s important to plan for the future one expects to be alive in. People accept 30 year mortgages, but often seem unwilling to plan for solar energy payback on the 10-15 year time period. I’m pretty sure that in year 16 they are NOT expecting to stop using electricity.

I have a 5 kWh set of 20 solar panels for the last six years. I expect the installation cost to be covered in another five years. The life span of the solar system will be an additional 10-15 years. I expect to get about a 50% return on investment over the full time period.

After installation cost payback (~5 more years) I plan to add 10 new technology solar panels, likely doubling my generation capability. I’ll also add a Tesla powerwall system at that time. New solar panels are much improved and cheaper than my original system.

Where I live, electricity charges have a distribution charge, state fees and a electricity per watt charge. So complete electricity costs should include all those costs. It complicates the cost of electricity.

 

[Merrill]

Honestly the pay back is secondary to me, if you were with Pacific Graft and Extortion you would understand. I would do almost anything to not have to pay them a penny.

 

[Maximapolak]

My quoted 10.395 kW system with a powerwall, will cost approximately $43,000 before incentives (plus $25,000 in interest over 20 years). My electricity rates are about 11¢ per kW. I won't be breaking even for a while, but I will get money back selling power to the electric company, have a backup in case of power outage, and be using clean energy.

I didn't sign the contract thinking my goal was to save money. I signed thinking solar with powerwall is better in the long run.

 

[bob_p]

Net metering is not required in our area, though there are a few companies offering buy back plans.

A panel only configuration, generating 100% of our annual power will have about a 12-13 year buy back, which is getting better.

I didn't look at reduced rate night plans, focusing only on Free Nights plans, using the grid to recharge Powerwalls overnight to provide power during the day - and that is an 8-10 year break even (with 3KW panels). But we don't have confidence a utility would actually let us get away with almost free electricity.

We have several goals for this investment - long term savings on electricity (off grid if possible), emergency power (during hurricanes) and not making our home more difficult to re-sell, since prospective owners may not like the appearance of the panels on our red tile roof, or in having to manage the extra complexity.

A panel only solution only meets the first goal (after 12-13 years), it doesn't provide emergency power, and risks making it more difficult to sell our house.

To meet the second goal with panels, we'd either need enough Powerwalls to meet daily power needs (in an emergency, we could focus only on essential items) or we could add a natural gas generator - both would increase the cost, however having backup power also increases resale price in our area. We'd still meet some resistance in re-sale due to the appearance of the panels, though that might be reduced if we are providing emergency power.

If Tesla had the solar roof when the house was built a few years ago - we could have achieved all 3 goals. But now that the house is built, it's harder to justify the investment.