Should I go Solar or not?

[Imp]

Breakeven is way too long for my liking and it's one more thing to go wrong. I'd want a Tesla battery for some actual storage too but there's a backlog of orders, IIRC.

Anyway, 1000 kWh / 30 = 33.33 kWh/day. If you divide that evenly, it's 1.39 kWh / hour. So, every hour something is burning 1390 watts non-stop. It's even higher if you remove sleeping and away at work hours.

Do you run 2 GPUs mining Bitcoins or Folding at Home 24/7...

 

[Darwin333]

I'm not in the market but I was curious.

you can check out your address here: https://www.google.com/get/sunroof#p=0

at my address it was $15k up front, 11 years till payback, 20 years savings was $11k

I'm assuming the $11k savings means $15k paid back plus $11k in savings, resulting in the original $15k growing to $26k in 20 years.

Then comparing that to putting $15k in S&P 500 and assuming 8% average return for 11 years was $34,974.58, and 20 years was $69,914.36.

If assuming an average return rate of 3% instead, 11 years was $20,763.51, and 20 years was $27,091.67
If assuming an average return rate of 1% instead, 11 years was $16,735.03, and 20 years was $18,302.85
http://www.moneychimp.com/calculator/compound_interest_calculator.htm

It seems like the return rate for solar in this case comes out to around 3% a year average after 20 years, not included tax deductions and not including maintenance and repair costs. US inflation http://inflationdata.com/Inflation/Inflation_Rate/Long_Term_Inflation.asp is around 3%.

I'd say if your goal is strictly financial gain then its probably not worth it. But you have to run all the numbers for your situation to see. There are other gains then just financial though like lowering your environmental footprint.

New Jersey has an SREC (Solar Renewable Energy Certificate) trading system and a typical residential 5KW system creates about 6 per year. Currently trading at $280ish each that is roughly $1,700 a year (assuming relatively stable price) above and beyond what you save on your power bill. When you add that into your above equation it starts looking a lot better.

 

[Fanatical Meat]

Breakeven is way too long for my liking and it's one more thing to go wrong. I'd want a Tesla battery for some actual storage too but there's a backlog of orders, IIRC.

Anyway, 1000 kWh / 30 = 33.33 kWh/day. If you divide that evenly, it's 1.39 kWh / hour. So, every hour something is burning 1390 watts non-stop. It's even higher if you remove sleeping and away at work hours.

Do you run 2 GPUs mining Bitcoins or Folding at Home 24/7...

I'd like a Tesla battery too but you are correct the back log is too long and as of now the back log is so great its only for Solar City customers. Big reason not to forget is you can essentially be off the grid so if power fails your system can be redirected to the batteries and you still have power. Currently if power fails your system goes off to prevent line workers from being electrocuted by you power going into the line.

 

[Net]

New Jersey has an SREC (Solar Renewable Energy Certificate) trading system and a typical residential 5KW system creates about 6 per year. Currently trading at $280ish each that is roughly $1,700 a year (assuming relatively stable price) above and beyond what you save on your power bill. When you add that into your above equation it starts looking a lot better.

Apparently https://www.google.com/get/sunroof/about/ that I used for the savings already takes tax incentives into account. So I'll update that those numbers are with tax savings included.

 

[Darwin333]

Indeed. We are at the bell curve where solar panels are going to plummet shortly. It's sheer stupidity to buy one at this point, especially because IIRC the tax breaks/benefits just ended for buying them as well.

Link?

I'm in the industry and solar panels have already severely plummeted over the last 5 years or so. I don't realistically see how they can "plummet" again. Current costs are roughly $1/watt for glass, even dropping by another 25% on a 5KW system that would only save you a total of $1,250 on the total cost of your system.

If we have some sort of major breakthrough in efficiency that reaches mass production and doesn't cost anymore to manufacture then maybe we can see a huge drop in price per watt but barring that I just don't see the price of glass substantially dropping to the point that it makes a huge difference in your total installed system price.

Personally I am looking more at falling prices/greater efficiency in inverters and balance of system costs. Specifically racking systems haven't really gotten much cheaper but are FAR faster and easier to install today then 5 years ago. 3-4 guys can easily install 3-4 5KW systems a day these days. You can even do a ton of work you used to only be able to do on site at your shop now, which is just more efficient in general but FAR better when "on site" means on a 6/12 roof. Micro-inverters, which I absolutely love, have started getting price competitive on their own with central inverters whereas you used to need to incorporate efficiency gains or have shading issues to justify their use.

 

[Darwin333]

Apparently https://www.google.com/get/sunroof/about/ that I used for the savings already takes tax incentives into account. So I'll update that those numbers are with tax savings included.

An SREC is not a tax saving or incentive. It's something that, in states that have markets, your renewable energy actually produces. It's much easier to think of it as a stock that you get one free every time you create 1,000kw of renewable electricity. You then sell them on a market where private companies buy them to offset their carbon production.

The only tax saving I could find after a cursory look in NJ was the Federal 30% tax credit.

 

[Net]

An SREC is not a tax saving or incentive. It's something that, in states that have markets, your renewable energy actually produces. It's much easier to think of it as a stock that you get one free every time you create 1,000kw of renewable electricity. You then sell them on a market where private companies buy them to offset their carbon production.

The only tax saving I could find after a cursory look in NJ was the Federal 30% tax credit.

That's interesting, didn't know you could sell energy on the market like that.

What type of tax rate gets applied when you sell that?

You should do a breakdown on the average energy used for the household of a given state that does that and what's left to sell. Then what's left after taxes are paid on what you sell. It would be interesting to see.

We are assuming here that you will be able to continue to sell energy like this for the next 20 years. I'd imagine as solar becomes more wide spread the amount that you'll be paid will go down and might even go away as the market becomes saturated or if there's a policy change.

 

[Darwin333]

That's interesting, didn't know you could sell energy on the market like that.

What type of tax rate gets applied when you sell that?

I still don't see it being worth it but its interesting to know that.

No clue but I'd assume, unless the Feds and state have excluded them which could be possible, that they would be taxed the same as if you sold any other stock for a profit. We don't have an SREC market down here so I'm not the a complete expert with them but they are talked about at every conference and trade show that I've been to. Should be rather easy to find out though, if I get a chance I'll try and look it up.

And you aren't selling actual energy. What they are doing is trying to offset carbon emissions. If a company emits more carbon dioxide then they are allowed (they get a base amount set by the state) then you need to buy these SRECs as a way to offset your emissions. The best way to think about it is for every 1,000kw you generate via renewable energy, regardless of who uses it, you have "produced" one new "share or stock" in a "company" that you can then sell on the stock market.

 

[Fanatical Meat]

That's interesting, didn't know you could sell energy on the market like that.

What type of tax rate gets applied when you sell that?

You should do a breakdown on the average energy used for the household of a given state that does that and what's left to sell. Then what's left after taxes are paid on what you sell. It would be interesting to see.

We are assuming here that you will be able to continue to sell energy like this for the next 20 years. I'd imagine as solar becomes more wide spread the amount that you'll be paid will go down and might even go away as the market becomes saturated or if there's a policy change.

I'm 90% sure they are not taxed at this time. I'll ask the accountant fiancee (or as I call her The Minister of Finance) tonight. SREC's are the reason why my system should pay for itself in 5 years.

 

[DrPizza]

Link?

It was only a month or so ago that one of the local news stations was talking about a new huge solar panel manufacturing facility that was about to break ground somewhere in Western NY - it was over 1000 acres for the site. Allegedly through some "proprietary process" they were going to cut costs in half. At that point, I stopped looking at the different rack systems and put thoughts of installing solar on hold.

I would install the system in my pasture behind my house, rather than on my roof. I have far more room for panels than most people, and am somewhat indifferent to how much of that room I use.

 

[Net]

I'm 90% sure they are not taxed at this time. I'll ask the accountant fiancee (or as I call her The Minister of Finance) tonight. SREC's are the reason why my system should pay for itself in 5 years.

I found this http://www.rodmancpa.com/are-solar-renewable-energy-credits-taxable/

 

[Fanatical Meat]

I found this http://www.rodmancpa.com/are-solar-renewable-energy-credits-taxable/

I may be thinking of the State income tax, again the finance portion was not my responsibility.

 

[MegaFlop]

I live in Washington State.
We have a 7.2KW (30 panels) system installed using micro-inverters. It is great and covers ~%75 of our annual energy consumption (~9500kwh from solar).

Because of some ridiculous incentives our payback time is right at 4 years. One year to go for us before the system has paid for itself.

I would highly recommend Solar if the payback is there for you. We have only had one inverter go bad since the system was installed. (inverter was under warranty). I can monitor the system output and individual panel output online which is pretty slick.

 

[Net]

I may be thinking of the State income tax, again the finance portion was not my responsibility.

This one seems more clear from a CPA in NJ, he's speaking to NJ residents but includes federal http://www.paddencooper.com/blog.php?id=18

It's good to know because I know people who have solar panels so I'll have to bring it up in case they don't know about it.

 

[PowerEngineer]

I still don't understand how i'm using 1000 kwh in elec usage when no AC is running and only lights, one PC and a furnace is running (winter time so I need no AC). I can't imagine what happens this summer when I run my 3-ton/13 SEER central AC.

My fridge is new so it's Energy Star rated. All TV's are LED's are are energy star as well. PC is turned off every day. Have a few fans that run for 3-6 hours a day. All lights in my house is LED or CFL. No electric heaters that are running. And if they are, it's like less than 24 hours a month, if that.

My washer/dryer combo was a demo on Home Depot's floor, but once I checked, my Samsung washer is Energy Star rated. I did research and found out a lot of front load washers were not ES rated, but mine was, which is cool because it's a great washer.

You may be underestimating the electricity consumption of your electric(?) furnace. A 1500 square foot house in your climate zone will likely be using a 50,000+ BTU furnace, which equates to about 15 kWs. Even if the furnace runs for just 24 hours, it will consume 360 kWhrs all by itself.

If you also have an electric water heater, then that is also likely consuming another 300-400 kWhrs each month.

 

[Linux23]

I'm not in the market but I was curious.

you can check out your address here: https://www.google.com/get/sunroof#p=0

at my address it was $15k up front, 11 years till payback, 20 years savings was $11k

I'm assuming the $11k savings means $15k paid back plus $11k in savings, resulting in the original $15k growing to $26k in 20 years.

Then comparing that to putting $15k in S&P 500 and assuming 8% average return for 11 years was $34,974.58, and 20 years was $69,914.36.

If assuming an average return rate of 3% instead, 11 years was $20,763.51, and 20 years was $27,091.67
If assuming an average return rate of 1% instead, 11 years was $16,735.03, and 20 years was $18,302.85
http://www.moneychimp.com/calculator/compound_interest_calculator.htm

It seems like the return rate for solar in this case comes out to around 3% a year average after 20 years, not included tax deductions and not including maintenance and repair costs. US inflation http://inflationdata.com/Inflation/Inflation_Rate/Long_Term_Inflation.asp is around 3%.

I'd say if your goal is strictly financial gain then its probably not worth it. But you have to run all the numbers for your situation to see. There are other gains then just financial though like lowering your environmental footprint.

EDIT: The website I used https://www.google.com/get/sunroof/about/ already takes into account tax incentives. So the savings I put here for my address do include tax incentives. It doesn't look like it takes into account maintenance or repairs costs.

holy crap. per that site, if i buy upfront, it's $36,380

Up-front cost of installation
Based on a 10.75kW installation.
$36,830
Total payments over 20 years
$0: Modern solar arrays use micro-inverters and should require no maintenance during their first 20 years.
$3,943: Remaining utility bills assuming 2.2% annual price increases.
$3,943
State and Federal Incentives
$11,048: Federal Investment Tax Credit (ITC)
$0: State tax credit
-$11,048
Solar Renewable Energy Credits (SRECs)
Varies based on market price. Available for 10 years.
-$20,326
Total 20-year cost with solar
Includes above costs and incentives.
$9,399
Total 20-year cost without solar
Assumes 2.2% annual increase in electricity prices.
$59,944
Total 20-year savings
Net present value at 4% discount rate: $27,771.
$50,545

 

[Linux23]

NJ used to be #1 in the country for solar production, and still stand at #4.

everywhere you drive, you'll see a solar panel on every freaking utility pole. i mean, we should be good at something.

 

[Linux23]

Well your state incentives kind of suck BUT yall do have an SREC program. A typical 5kw solar electric system will generate 6 SRECs a year which currently sell for $280/ea in New Jersey's market so that should be considered in your financial calculations. They are traded kind of like stock so the price can and will vary so keep that in mind, they could be worth far more or far less in a few years.

I am an expert in the field but unfortunately every state has different financial incentives, loan programs, etc... So it's very tough for me to give you a financial breakdown without doing a ton of homework but I can definitely help you with any design, power production and look over any quote that you get.

You will get a 30% federal credit for the entire cost of the installation but whoever quotes you will explain all of that to you. It's not difficult to install at all but a lot of states require licensed installers to get any benefits.

Quick question, do you have a large southward facing roof surface that isn't shaded by trees, power lines, neighboring house, etc..?

Hi Darwin, thank you for replying. I have a large, flat roof with approx 1100 sq ft. no trees, power lines, other big houses. it's completely exposed, which is why my 1920's brick house gets heated so fast and for so long in the summer. it's also why I had my 3-ton AC installed onto.

Any info and advise would be appreciated, especially with these SREC's. Thanks to all for telling me about that. I had no idea.

 

[Linux23]

Breakeven is way too long for my liking and it's one more thing to go wrong. I'd want a Tesla battery for some actual storage too but there's a backlog of orders, IIRC.

Anyway, 1000 kWh / 30 = 33.33 kWh/day. If you divide that evenly, it's 1.39 kWh / hour. So, every hour something is burning 1390 watts non-stop. It's even higher if you remove sleeping and away at work hours.

Do you run 2 GPUs mining Bitcoins or Folding at Home 24/7...

Hi Imp, no I don't (2 GPU's with bitcoin mining or F@H). Once I saw my actual bill for a few months when they snuck in and installed that digital meter, I started shutting everything down. all of the non essentials go off at night (and most of the day when i'm at work), except the furnace (which is gas for heating).

 

[Linux23]

I'd like a Tesla battery too but you are correct the back log is too long and as of now the back log is so great its only for Solar City customers. Big reason not to forget is you can essentially be off the grid so if power fails your system can be redirected to the batteries and you still have power. Currently if power fails your system goes off to prevent line workers from being electrocuted by you power going into the line.

yes, i read about how the system is wired for cutting power completely when a power failure occurs. wish i could push a switch and disconnect from the mains and just run on solar.

 

[Linux23]

I live in Washington State.
We have a 7.2KW (30 panels) system installed using micro-inverters. It is great and covers ~%75 of our annual energy consumption (~9500kwh from solar).

Because of some ridiculous incentives our payback time is right at 4 years. One year to go for us before the system has paid for itself.

I would highly recommend Solar if the payback is there for you. We have only had one inverter go bad since the system was installed. (inverter was under warranty). I can monitor the system output and individual panel output online which is pretty slick.

oh that's so cool. who did you wind up going with to install, and maintain your system.

 

[Linux23]

This one seems more clear from a CPA in NJ, he's speaking to NJ residents but includes federal http://www.paddencooper.com/blog.php?id=18

It's good to know because I know people who have solar panels so I'll have to bring it up in case they don't know about it.

oh nice.

 

[Linux23]

You may be underestimating the electricity consumption of your electric(?) furnace. A 1500 square foot house in your climate zone will likely be using a 50,000+ BTU furnace, which equates to about 15 kWs. Even if the furnace runs for just 24 hours, it will consume 360 kWhrs all by itself.

If you also have an electric water heater, then that is also likely consuming another 300-400 kWhrs each month.

nope, gas on the heat side, elec on the a/c side. also gas water heater.

if fans use a lot of elec then i'm screwed. lol

 

[Fanatical Meat]

holy crap. per that site, if i buy upfront, it's $36,380

Up-front cost of installation
Based on a 10.75kW installation.
$36,830
Total payments over 20 years
$0: Modern solar arrays use micro-inverters and should require no maintenance during their first 20 years.
$3,943: Remaining utility bills assuming 2.2% annual price increases.
$3,943
State and Federal Incentives
$11,048: Federal Investment Tax Credit (ITC)
$0: State tax credit
-$11,048
Solar Renewable Energy Credits (SRECs)
Varies based on market price. Available for 10 years.
-$20,326
Total 20-year cost with solar
Includes above costs and incentives.
$9,399
Total 20-year cost without solar
Assumes 2.2% annual increase in electricity prices.
$59,944
Total 20-year savings
Net present value at 4% discount rate: $27,771.
$50,545

I have a feeling that site is designed to capture your data to forward to solar companies. They're giving you the highest price possible to price condition you that its an investment, then a nice solar guy will email or call or show up at your door to say they can do that system for 26k.

 

[MegaFlop]

oh that's so cool. who did you wind up going with to install, and maintain your system.

A contractor fairly local to us.
http://solorasolar.com/

http://solorasolar.com/projects/
My roof on their website...