Solar financial payback

[charlesj]

...



Except that at this stage in my life I am not investing. ...

Thanks. My example was just a paper exercise to show that the difference between those two example % rate was not just the math difference.
A number of years ago I listened to the Saturday radio investment program where the respected host so stated the difference.
I did the calcs and boy his was wrong. Compounding will do that.

 

[daniel]

I believe you.

 

[TMThree]

> How this can be turned into a "break-even" calculation, I am at a loss to figure. If I were to invest the saved $152/month in 3.5% investments, I have no idea how to figure how long it would take before I'd have enough to replace the whole system.

Wow. This post is crazy.

1. You spent $45k and didn't really know what you were getting for the money.
2. You expect to put your purchase against compounded interest. I guess this means you'll never buy a car or even a meal since it won't work for you financially.
3. You not only don't include investing the money for pay back period, but you also remove powerwalls from the cost too. Your power wall doesn't make you anything back (unless you have time-of-use-rates).

Currently, you'd want to have paid around $2.50 in the US per watt as thats about the going rate.

 

[daniel]

> How this can be turned into a "break-even" calculation, I am at a loss to figure. If I were to invest the saved $152/month in 3.5% investments, I have no idea how to figure how long it would take before I'd have enough to replace the whole system.

Wow. This post is crazy.

1. You spent $45k and didn't really know what you were getting for the money.
2. You expect to put your purchase against compounded interest. I guess this means you'll never buy a car or even a meal since it won't work for you financially.
3. You not only don't include investing the money for pay back period, but you also remove powerwalls from the cost too. Your power wall doesn't make you anything back (unless you have time-of-use-rates).

Currently, you'd want to have paid around $2.50 in the US per watt as thats about the going rate.

Everything in the above post is wrong, which you'd know if you actually read what I wrote.

1. I knew exactly what I was getting for my $45K. I just didn't know how much power I'd be using in my new home. I could have gotten by with a smaller system, but this system gives me enough power even on cloudy days, and that makes it worthwhile for me.

2. I have no idea what you're trying to say with #2. No. I do not "expect to put [my] purchase against compounded interest," whatever that's supposed to mean. And of course I have bought cars and meals. What a ridiculous thing to say!

3. I did not remove the Powerwalls from the cost. The $45K got me 32 solar panels, two Powerwalls, plus all the associated electronics. Read the thread if you're going to comment on it, for crying out loud! I got the Powerwalls because it is no longer possible to get net metering here. The Powerwalls run my house at night, as well as providing power during the day if I have several high-power things running at the same time. (Somebody else upthread suggested running the financial analysis without the Powerwalls. But they are a necessary and integral part of my system.)

While my system is not the most optimally cost-efficient one I could have installed, I'm still getting more money from my solar installation than I was getting from the $45K in mutual funds. It's making me money from Day One.

But I didn't get it to save money. I got it to avoid using fossil fuels to run my house and my car. I have said over and over again, but apparently you didn't bother reading it: I got the system because I hate fossil fuels. I'd have gotten it if it had cost four times as much and been twice as expensive as grid power!

I'm not sure, but I think the Powerwalls were about $10,000 each, installed cost. So my cost per watt for the panels was about $2.14. I think the panels were the latest available type, which might account for the price being a bit less than your suggested $2.50/watt

 

[TMThree]

Everything in the above post is wrong, which you'd know if you actually read what I wrote.

I read what you wrote, but I don't think you read what I wrote. As I said:

1. You don't include power walls with ROI, they don't generate any revenue (unless you are in time-of-use area), as I said above.

2. No one calculates ROI with compound interest in another asset. The time to make back what you spent is based on what you spent, not imaginary compound interest. You can however say that you lost potential revenue had you invested in the stock market. But that's got nothing to do on ROI on your panels.

I'm not sure, but I think the Powerwalls were about $10,000 each, installed cost.

That's not what 2 power walls would cost. $6,500 is the MSRP for a powerwall. The gateway is around $1100. 10k might be what a single PW costs installed, but the supporting hardware needed for the first is used by the second, you still only need to pull one permit, etc, etc, so the costs for two is going to be less than 20k.

My coworker recently got 2 power walls installed. They were $17,500 before the 26% discount, so $12,950 installed cost post-tax.

So my cost per watt for the panels was about $2.14. I think the panels were the latest available type, which might account for the price being a bit less than your suggested $2.50/watt

When people talk about $2.50/watt, that cost is pre-tax.

That got me curious, so lets do the math:

Looks like you paid roughly around $35,000 for your panels after tax incentives, without the powerwall cost.

For comparison, I paid $29,500 after tax incentives for 51 Panasonic N330 panels with Enphase microinverters. This is one of the best systems available on the market today (Tesla used to also sell Panasonic before they switched to Chinese panels to decrease cost). I'm not bragging about what I paid, I'm only mentioning it for reference. What I paid is about the going rate, so nothing exceptional about it.


So again, using my costs as the example, I paid $2.39/watt pre-tax, $1.75/watt post tax. My system is almost 17 kW, so about 30% larger than yours, which can help decrease cost per watt to some degree.

Looks like your panels pay for themselves in 9.8 years, which despite your crazy high install costs, isn't too bad. My payback period is about 8 years. I use a lot of power but my rate is ~13.5 cents.

Without calculating it, I would guess you could have easily had a payback period under 5 years if you had paid closer to market rates for the panels. But overall you're close to the payback time most people seem to have. Your installer made out like a bandit though.

 

[daniel]

I read what you wrote, but I don't think you read what I wrote. As I said:

1. You don't include power walls with ROI, they don't generate any revenue (unless you are in time-of-use area), as I said above.

My system would be worthless without the Powerwalls because I'd be paying for electricity from the grid all night long and any time I was running the A/C and the car charger at the same time. So they are an essential part of the system and must be included. Note that I cannot get net metering or even give my excess production to the utility. As it is, with the Powerwalls, I pay the utility only the minimum monthly charge.

2. No one calculates ROI with compound interest in another asset. The time to make back what you spent is based on what you spent, not imaginary compound interest. You can however say that you lost potential revenue had you invested in the stock market. But that's got nothing to do on ROI on your panels.

In my original post I said nothing about compound interest. Someone else brought that up. Argue with him. What I said and still say is that my disposable income went up when I installed my system. I have more money to spend every month. That's all that matters to me.

That's not what 2 power walls would cost. $6,500 is the MSRP for a powerwall. The gateway is around $1100. 10k might be what a single PW costs installed, but the supporting hardware needed for the first is used by the second, you still only need to pull one permit, etc, etc, so the costs for two is going to be less than 20k.

My coworker recently got 2 power walls installed. They were $17,500 before the 26% discount, so $12,950 installed cost post-tax.

When people talk about $2.50/watt, that cost is pre-tax.

That got me curious, so lets do the math:

Looks like you paid roughly around $35,000 for your panels after tax incentives, without the powerwall cost.

For comparison, I paid $29,500 after tax incentives for 51 Panasonic N330 panels with Enphase microinverters. This is one of the best systems available on the market today (Tesla used to also sell Panasonic before they switched to Chinese panels to decrease cost). I'm not bragging about what I paid, I'm only mentioning it for reference. What I paid is about the going rate, so nothing exceptional about it.

So again, using my costs as the example, I paid $2.39/watt pre-tax, $1.75/watt post tax. My system is almost 17 kW, so about 30% larger than yours, which can help decrease cost per watt to some degree.

Looks like your panels pay for themselves in 9.8 years, which despite your crazy high install costs, isn't too bad. My payback period is about 8 years. I use a lot of power but my rate is ~13.5 cents.

Without calculating it, I would guess you could have easily had a payback period under 5 years if you had paid closer to market rates for the panels. But overall you're close to the payback time most people seem to have. Your installer made out like a bandit though.

Everything is way more expensive here. A comparison with costs on the mainland is meaningless. Everything has to be shipped 2,500 miles on a boat and because of the high cost of living you pay more for labor. My solar installer might have charged a little more than the bigger companies, be he has a reputation (justified!) for quality work and excellent service after the sale. Buying the cheapest thing is a guarantee of low quality. I pay my gardener and my house cleaners more than their regular charges because they have to get by, too, and as noted, the cost of living is high here. And on the very rare occasions when I eat in restaurants (I actually prefer my own cooking) I tip the servers double. I want everybody who works for me to get a living wage so I have no problem hiring people who charge that.

 

[TMThree]

It doesn't sound like you want to learn anything in this thread. You are talking at me, not to me. I gave you actual numbers but you managed to ignore it and argue with me instead.

If you want to add powerwalls to your roi, now it will take about 13 years. That's not very good and if you sell the home early, you will likely find you a significant loss on the investment.

Solar doesn't work for everyone. I wouldn't bother with anything that took over 10 years to pay back.

 

[mspohr]

It doesn't sound like you want to learn anything in this thread. You are talking at me, not to me. I gave you actual numbers but you managed to ignore it and argue with me instead.

If you want to add powerwalls to your roi, now it will take about 13 years. That's not very good and if you sell the home early, you will likely find you a significant loss on the investment.

Solar doesn't work for everyone. I wouldn't bother with anything that took over 10 years to pay back.

I think we need to tone it down a bit here.
Daniel clearly explained that he needed the Powerwalls because he's not eligible for net metering. Without the Powerwalls, he wouldn't be able to take advantage of his system generation. Therefore, it's entirely appropriate to include the Powerwalls in his ROI. He also explained that he doesn't really care about ROI so 13 years is fine with him.
In addition, if he moves, the installed system will add to the value of his house (as has been confirmed by numerous studies) so it will not be a loss.

 

[TMThree]

In addition, if he moves, the installed system will add to the value of his house (as has been confirmed by numerous studies) so it will not be a loss.

I'd like to see the study that shows a 100% return on the solar investment at sale of the house. It will depend on your region, obviously, but there is no reason for anyone to pay the purchase price of an older solar system on a home.

 

[mspohr]

I'd like to see the study that shows a 100% return on the solar investment at sale of the house. It will depend on your region, obviously, but there is no reason for anyone to pay the purchase price of an older solar system on a home.

You know, you could have Googled this:
Do Solar Panels Increase Property Value? | EnergySage
$4 /W

Here's How Much Adding Solar Panels Will Boost Your Home's Value
+4.1%

How Much Value Do Solar Panels Add to a Home? | Green Mountain Energy
$3 /W

 

[daniel]

I'd like to see the study that shows a 100% return on the solar investment at sale of the house. It will depend on your region, obviously, but there is no reason for anyone to pay the purchase price of an older solar system on a home.

First off, I don't care whether or not my system adds 100% of its cost to the resale value of the house. I care about the environment and reducing the amount of diesel fuel that gets burned. (Our utility uses diesel-fired generators.) I ran the numbers because I like to play with numbers and I started this thread because I thought others might be interested in my numbers. Particularly in the fact that even with an oversized system, installing it increased my income by well over a thousand dollars a year (by nearly eliminating my utility bill) while at the same time reducing my income tax by a tiny amount.

Second, I spent nearly five months (with the help of a realtor) searching for just the right house, and it was obvious that installed solar increased the value of the property. I would not expect it to increase it by the full installation price because everything (including houses and cars and factories and farm tractors and, yes, solar panels and Powerwalls) depreciates with age.

I bought 10-year unsecured non-transferrable 5% solar bonds that cannot be redeemed before maturity at a time when I could have gotten a slightly higher rate on better-rated and negotiable bonds because I wanted to support solar. For me, putting solar on my home has been a decades-long dream. The fact that it was a better investment than my overall portfolio was an unexpected bonus. Some of us don't make every single purchase decision on the basis of ROI. What's the ROI of a family vacation or a visit to a nice restaurant?

And of course it would be difficult to put a cash value on having power during an outage. Sure, I could have bought a generator, which would require me to deal with smelly gasoline (which I hate on principle) and maintenance, and would have made my neighbors hate me because of the noise. My solar installation is worth double what it cost, to me. Some people buy a brand-new Lexus when a five-year-old Honda Civic would provide them perfectly adequate transportation. I bought a bigger solar installation than the most economical, and had it installed by the guy who I got the best recommendations of, rather than the cheapest large-scale installer.

Solar became more expensive here when the utility quit offering net metering because that meant that batteries (Powerwall in my case) became necessary. I thought folks might be interested to see that even with that higher cost, it's still a net positive investment.

 

[Matsayz]

So reading this until it went to crap on this 3rd page... The OP didn't understand 5yr return equation and who knows how they calculated that but you agreed to it which is fine. Overall, it seems the OP doesn't give a damn about the cost as long as it's not fossil fuel, cool and awesome that you can do that in your situation.

People can calculate the crap out of this until you find the right number you want but it's usually a money and clean energy that make it work in the end. Sounds like you're in a very comfortable financial situation which is very lucky these days, I think you got some ideas from this thread but I also think it's only going to degrade into madness.

 

[daniel]

So reading this until it went to crap on this 3rd page... The OP didn't understand 5yr return equation and who knows how they calculated that but you agreed to it which is fine. Overall, it seems the OP doesn't give a damn about the cost as long as it's not fossil fuel, cool and awesome that you can do that in your situation.

People can calculate the crap out of this until you find the right number you want but it's usually a money and clean energy that make it work in the end. Sounds like you're in a very comfortable financial situation which is very lucky these days, I think you got some ideas from this thread but I also think it's only going to degrade into madness.

I would have gotten solar even if it cost more than grid power. But in fact, I came out ahead, compared to where that $45K was. My system won't pay itself off in 5 years, but conservative investments in mutual funds don't pay themselves off in five years either.

I increased my disposable income and made the world a slightly better place all at once.

Have you never bought something because you wanted it rather than because it would pay itself off in five years or less?

 

[Matsayz]

I would have gotten solar even if it cost more than grid power. But in fact, I came out ahead, compared to where that $45K was. My system won't pay itself off in 5 years, but conservative investments in mutual funds don't pay themselves off in five years either.

I increased my disposable income and made the world a slightly better place all at once.

Have you never bought something because you wanted it rather than because it would pay itself off in five years or less?

Hey, bud, we get it...you’ve got money and apparently you like to continually tell the internet about it.

This really could’ve been a good thread about solar and costs associated with it but you got defense when people questioned why you went certain routes instead of others. Really, I enjoyed reading this stuff to learn peoples thoughts but you continually just want to say you had the money to do it but “why isn’t the math working” but also I have so much money and just wanted to do stuff.

We get it. Please enjoy your setup and have a nice day. I’ll be recommending the mods just close this thread because it’s done

 

[wwu123]

That all sounds reasonable and is why I got all bollixed up over the whole concept of payback period or break-even point, and decided instead to just look at the net increase in my disposable income.

Again, I got solar because I wanted solar, not in order to save money. The financial calculation is academic, and because if I can show it saves money even without net metering which is not available here any more then it could encourage others to go solar, and that benefits the planet. (I also bought solar bonds when Solar City was issuing them, as those financed the installation of solar. Being unsecured and illiquid a purely financial calculation would have argued against them, but I wanted to support solar at a time when I lived in a place where I could not install solar on my own home.)

BTW, I had my solar installed almost eleven months ago. The investments I sold to pay for it are now down about ten percent from when I sold them. It gives me a warm fuzzy feeling to know that I sold them when they were close to their all-time high.

Yes, if you use rate of return rather than payback period, you can look at it getting a higher return (increased income than alternative investment, even from month 1.

FWIW, I have solar and just passed my original, projected pay-back period of 7 years a few months ago. But I'm one of those obsessive nuts that likes to re-calculate payback period every so often just for fun, based on actual increases in electricity rates, which I've regularly downloaded from my utility. In fact the cost per kwh for off-peak Tier 1 has increased over 100% from about $0.10 to $0.21 (so 14% per year). Now they've also played with TOU periods, baselines and Tiers, but net-net. one kwh that used to be worth $0.20-0.30 at peak rates is still worth $0.21 at off-peak rates. So my actual payback period ended up around 6 years, a full year shorter than projected, due to rate increases.

 

[MXLRplus]

85 MWh in 2.5 years at a cost of $25k in hardware.
Self-designed, self-installed. Southwest facing to reshape output curve. Optimized for summer.

 

[daniel]

Hey, bud, we get it...you’ve got money and apparently you like to continually tell the internet about it.

This really could’ve been a good thread about solar and costs associated with it but you got defense when people questioned why you went certain routes instead of others. Really, I enjoyed reading this stuff to learn peoples thoughts but you continually just want to say you had the money to do it but “why isn’t the math working” but also I have so much money and just wanted to do stuff.

We get it. Please enjoy your setup and have a nice day. I’ll be recommending the mods just close this thread because it’s done

If you're driving a Tesla, you've got a lot more money than the average Joe, and you're enormously rich compared to the population of the world. The Tesla family is a privileged financial elite and if you own a Tesla you're part of that elite. Deal with it. If you find my thoughts uninteresting you don't need to read them. Skip over my posts and read what other people have to say. All my best to you.

 

[mjptech]

If you're driving a Tesla, you've got a lot more money than the average Joe, and you're enormously rich compared to the population of the world. The Tesla family is a privileged financial elite and if you own a Tesla you're part of that elite.

This was sarcasm, right? Owning (or driving) a Tesla does not make you part of any special elite club... There are plenty of average "Joe" cars that cost more than the Model 3 (like a Kia)... And the Model 3 is the primary Tesla vehicle of them all..

 

[ABCDE]

Daniel,

WTF ( where ) did you get the pricing from? I have a friend that's a solar broker and even getting 24 panels ( LG ) and 1 battery with no commissions is at 42k, and rising sun has raised their prices from last year. I even have a bid for 24 LG and 1 battery from rising at 40,000 at last years pricing... I mean heck now I'm feeling horrible with pricing I'm getting

-wondering where you're pricing is from as that's pretty insane! again I have a friend and he cant even touch that pricing even with 0 commission

EDIT.. oh I just read your system is net 45,000 after credits.. so I'm assuming around maybe 65,000 before credits?

-not sure why you aren't on any program, there was program last year open to sell back at half rate!!! so not sure why you didn't get on that and I believe it's at 1/4 sell back now, so not sure who or why someone isn't telling you MECO still has open for customer grid supply or did when you got install??? this makes no sense to me, as program isn't closed down yet? they are closing it down but it's still open, once this 1/4 rate is done then there is no more program for foreseeable future though.. Im at a loss on this

-not sure if we know each other, I have a white Tesla in Kihei as well, but there's a lot here now

-I'm not sure if anyone saw or Dan said, we have Hawaii rebate as well ( capped at 5k though ) and he got 30% federal. so his payback would be a lot quicker then a different state or this year federal.


a back of napkin calculation formula.. that was in my head is about 6.5 year payback with credits, rate hikes, and if a proper sized 100% utilized system.. guys we have some pretty high electric here in Hawaii as well, which makes our payback less, the problem as Dan said is everything is more expensive living on an island, try $9 organic strawberries... and that's sometimes on sale. second would be lower credits next year only making the time to buy better then ever.. if anyone thinks there payback is bad just wait for the people getting no federal in low electric cost states....

 

[ABCDE]

This was sarcasm, right? Owning (or driving) a Tesla does not make you part of any special elite club... There are plenty of average "Joe" cars that cost more than the Model 3 (like a Kia)... And the Model 3 is the primary Tesla vehicle of them all..

this would apply when I sent to sell a Louis Vuitton item to a nurse in a brand new Mercedes

I would actually think to be more expensive cars are driven by owners who live paycheck to paycheck..

you are right as well, model 3 isn't really high end..

second where we live, most people drive Toyota trucks that costs 40-45k so.... yeah they could have bought a Tesla if they wanted.. its the cool thing to drive a truck around here if you want to be a local boy