Solar financial payback

[daniel]

@ABCDE

Nope. No buy-back from MECO where I live (north Kihei). Maybe it's neighborhood-dependent? Somebody (maybe you?) mentioned this at the time I was getting the installation and I asked my installer, who definitely knows his business, and at least at my location, there's no buy-back. I'd have given them my excess power for free just to reduce fossil fuel usage. They won't take it.

According to this web page "The Net Energy Metering (NEM) program is closed to new applicants." There may be a program allowing customers to sell power to MECO between 4:00 p.m. and 9:00 a.m, which would mean giving them some power from my batteries at night. That would increase the cycle depth on my batteries, and probably not worth it. I could probably afford to give them back 10 kWh on a typical night, which would be about $3.50 (?) a night, or something over $1,000/year. Probably not worth the decreased battery life. I'm not sure.

Pretty sure 30% was the combined federal & state tax credit. As you noted, $5,000 of that was Hawai'i.

 

[Southpasfan]

I think the concept of “payback” was skewed by people trying to sell systems.

Right now, pending the installation of the system I have on order, I’m going to be paying on average $400 a month forever. To buy an annuity for that amount of find a tax exempt 4% bond is at least $100k. Now, it’s not apples to apples because I could die, and then my heirs would still have the bond or the annuity but let’s just assume I live for 25 years.

Any solar system that relieves me of the obligation to pay $400 a month and costs less than $100k is reasonable. If I spend $50k and keep the other $50k it’s even better. With current interest rates one can finance the system and it can still cost less than the monthly bill.

Well, what about the fact that they system needs replacing at some point? True, but over 10 -25 years it’s a long time. Let’s assume the system is worth zero at 20 years. That’s $96,000 of payments not made to the utility, so apply the first $50,000 to the old system and spend $40,000 to upgrade.

The system does not “payback” because it mostly reduces or eliminates a payment instead of actually producing income.

There are different ways of looking at it, but I think the most confusing way was the way the solar salesmen sold it.

A better way, is the price per KWh, which is what I am basically doing - except that it needs to be done as a perpetual cost (in my view).

 

[daniel]

I think the concept of “payback” was skewed by people trying to sell systems.

Right now, pending the installation of the system I have on order, I’m going to be paying on average $400 a month forever. To buy an annuity for that amount of find a tax exempt 4% bond is at least $100k. Now, it’s not apples to apples because I could die, and then my heirs would still have the bond or the annuity but let’s just assume I live for 25 years.

Any solar system that relieves me of the obligation to pay $400 a month and costs less than $100k is reasonable. If I spend $50k and keep the other $50k it’s even better. With current interest rates one can finance the system and it can still cost less than the monthly bill.

Well, what about the fact that they system needs replacing at some point? True, but over 10 -25 years it’s a long time. Let’s assume the system is worth zero at 20 years. That’s $96,000 of payments not made to the utility, so apply the first $50,000 to the old system and spend $40,000 to upgrade.

The system does not “payback” because it mostly reduces or eliminates a payment instead of actually producing income.

There are different ways of looking at it, but I think the most confusing way was the way the solar salesmen sold it.

A better way, is the price per KWh, which is what I am basically doing - except that it needs to be done as a perpetual cost (in my view).

Totally agree!

In my case, I sold investments that were yielding less than the monthly bill I no longer have to pay. So I'm ahead from Day One. More disposable income for me. If the system lasts 25 years, I'll be dead when it quits. And if in, say, ten years the utility installs grid storage and offers to buy my excess to help power the grid at night, I'll have even more.

I agree that "payback" or "break-even time" are very fuzzy terms that are hard to conceptualize and harder to calculate, given all the variables.

 

[DrSmile]

Has anybody mentioned SRECs in the calculations? Here in NJ you make about the same amount selling SRECs as you'd pay per KWh, so essentially it cuts your payback time in half. My system should pay for itself in under 4 years instead of 8. I'm not calculating interest, just the cost of the system. Considering that the system should last 25 or 30 years (maybe not the inverters) I think it's a pretty good deal even as an investment since you get physical money back from the SRECs.