Investing in solar & the economics of installing solar - one man's opinion

[Ron]

Interesting read about the economics of installing solar on a home and his opinion on investing in the related solar industry.

 

The author chides solar "experts" that don't know the difference between an ohm and a volt but it appears that he himself is a bit confused about the difference between a kW and a kWh.

 

http://www.talkmarkets.com/content/energy/how-to-buy-a-solar-system?post=95451

[rbertalotto]

Pretty good article. I installed a 10.5kW Solar City leased system up here in Massachusetts three years ago. To say I am thrilled would be an understatement . For three years my total electrical cost, including lease payments and utility credits has averaged under $300. It was averaging $2400 a year!

[Kirk W]

For three years my total electrical cost, including lease payments and utility credits has averaged under $300. It was averaging $2400 a year!

Wow! Are you saying that you pay only $300/year and had no upfront cost for installation? That would be impressive anywhere.

[rbertalotto]

Yes! Not one cent up front. And dealing with Solar City was easily the best experience dealing with a contractor I ever had. Zero issues and amazing communications along the way. My lease is $73 a month and all utility back feed credits go to me. The only month I pay an electric bill is January or February is snow covers the panels. All other months I'm getting credits. I love it!

As a bonus, the solar panels covering the south roof with a 1" air gap underneath has greatly decreased the use of air conditioning . My attic temperature stays much cooler.

[RV_]

Excellent article Ron. I am not that keen on investing in SCTY (Solar City) despite a short buy and sell at a profit two years ago. And that simply because the Chinese sell panels for 10 cents on the dollar that we sell them for here, because of price props and import tariffs on Chinese cells. To me that is a sword of Damacles hanging over the head of any solar cell suppliers manufacturing their own PV hardware here in the US. But as an installer as they started out I will have a system installed by them as soon as my backward state allows them in here. I like the leasing program as we already have one 6 kWh system in the family and IT does a good job but was a bit early for the technology here in the US.

 

Folks who call solar folks greenies miss out on the fact that many of us are greedies and like saving every buck we can. When there is added value from self sufficiency and that with a Tesla model 3 we need never buy gasoline again. We are now using a whole house natural gas auto switching backup generator, 25kW, with a water cooled 4cylinder vehicle engine. We wanted no more hard starts when the A/C is running.

 

Solar is becoming more mainstream and the anti "anything that even remotely looks like progress" folks are just now catching up on what we've been showing, not just telling them about, for years. The engineers have followed it all along but the dividing line between what folks will even read has become polarized which is sad to me.

 

The nice thing here is that RVrs are very on track with aux. rooftop solar on their rigs. Lots more actual knowledge here than in many other groups.

 

Ron thanks again for the catch up on the solar math today. I'd drifted away from that news for the last couple of years other than the major renewable power generation news at larger city scales. That article is a keeper.

[TheDuke]

Keep in mind this.

The Arizona utility company asked for a rate hike of $65 a month for all homes with solar. This was after pushing solor for many years. It seems they were losing revenue. As far as I know, it wasn't granted, but I suspect it will appear again.

[Smitty77_7]

We are in the San Diego area, with pretty high rates, and rates that will only go higher.

 

I elected to pay out of pocket for our 7560W of solar panels (24 x 315W). I suspect I could have saved about $4-5K by purchasing all of my own components and being owner builder as far as the install and final hook up. But, we were on a time crunch due to the at that time ending 30% return (it had not been extended), so I elected to work with a gent that had proven track record of fast tracking the permit process so we could get things done by the end of the calendar year. Yep, we did get the 30% refund.

 

Without increases in electricity costs, which of course will happen, our pay back is in the 6 year mark. With suspected cost increases, should be closer to 5 years.

 

I at this time did not install batteries for off grid capability. But I did have a few other components added and inspected at final to allow the addition of a battery bank in the future. (Figured want to see what happens when the Tesla Mega Factory kicks in...

 

And finally, having been in and out of Solar City stock about 5 times over the last few years - in away, my returns from Solar City also helped pay for almost all of the costs to us for the system. (About $32K - 30%...)

 

We came legally online at the end of January, after final inspection, so here are the numbers so far. (Note the today is as of 7:30AM PST) We are in an area where we have AM clouds from the bay and ocean many days until 10-11:00AM, so we're not in ideal solar, but still pretty dang good. And finally, I did leaver room to add 6 more panels, and each panel has it's own micro inverter, so I can add the bigger 330W (looks like a 350W is coming soon) LG panel at that time. Though frankly, we don't need it:)!

 

Best to all,

Smitty

 

 

Today

352 Wh

Peak Power: 589 W at 7:25 AM

Latest Power: 589 W at 7:25 AM

Past 7 Days

202 kWh

Month To Date

1.04 MWh

Lifetime

5.18 MWh

[RV_]

I wish I had your experience Smitty in deciding when to get in and when out with a volatile stock like SCTY. I did make money but it was a small play. My main and only play is Tesla and I made quite a bit more than even I expected at 1400% or so now.Remember I only bought Tesla in 2010 when they IPO'd, I am just not suited to taking those kind of in and out chances. Tesla was different as I was totally familiar with what they had already accomplished two years earlier with the release and full production run of the Roadster in 2008. Musk will get it done.

 

Back to topic BMW South Africa is doing a Solar carport for EV charging and use with home systems: http://cleantechnica.com/2016/05/26/bmw-south-africa-unveils-solar-carport-charging-evs/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+IM-cleantechnica+%28CleanTechnica%29

 

“Hourglass” Coal-Killing Steampunk Energy Storage System Could Pump More Wind, Solar Into Grid: http://cleantechnica.com/2016/05/26/hourglass-energy-storage-system-pump-wind-solar-grid/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+IM-cleantechnica+%28CleanTechnica%29

 

"More Than 8.1 Million Working For Global Renewable Energy Industry" http://cleantechnica.com/2016/05/26/8-1-million-working-global-renewable-energy-industry/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+IM-cleantechnica+%28CleanTechnica%29

(Shows world breakdown map that is troubling. The US misinformed are slowing us down at the behest of the oil and energy barons today. Yes free energy threatens their monopoly, but choice is here, their regulatory attempts prove their fear. The old saw that the creation of renewable energy and cars creates as much pollution makes no sense at all. If that were so, then why are the oil and coal energy companies fighting solar and EVs? If they create the same amount of pollution, using the same amount of dirty coal and oil manufacturing them, then the energy companies should be all for them, right? The current energy companies need to get on board. They are holding our country back and insuring decades of avoidable pollution.)

 

"5% Growth in Renewable Jobs During 2015" ( One of the surprises is the extent to which renewables are replacing fossil fuels. In China, for example, there are 3.5 million working in the renewable sector as opposed to only 2.6 million in gas and oil. Similarly, there are now more Americans employed in the solar industry (209,000) than oil and gas extraction (187,200) or coal mining (67,929).

The world’s largest renewable energy employers are the solar PV (2.8 million jobs), liquid biofuels (1.7), and wind power (1.1 million) sectors.

More than a third of the people working in renewables are Chinese, while Brazil and the United States trail far behind, in second and third place respectively.) http://cleantechnica.com/2016/05/26/5-growth-renewable-jobs-2015/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+IM-cleantechnica+%28CleanTechnica%29 Great graphs.

 

"Renewables Become New Baseload For Power In South Australia" ( Only a week after South Australia closed its last coal-fired generator, renewables are stepping up to act as the state’s power baseload.

 

The imaginatively named southern Australian state of South Australia recently closed its last coal-fired generator earlier this month, with Alinta Energy’s Port Augusta brown coal power generator switched off on the morning of May 9th. RenewEconomy‘s Live Generation figures show coal’s absence, leaving gas, wind, and solar to pick up the slack.

 

However, the Melbourne Energy Institute believes that, “already a new pattern is emerging that points the way to a new energy system” in South Australia “built around wind and solar and other renewables,” rather than coal, gas, or nuclear. RenewEconomy‘s live figures show things as they are at the time I’m writing, but a graph provided by Dylan McConnel from the Melbourne Energy Institute shows the first week of electricity production in South Australia after the Port Augusta coal plant was switched off.) http://cleantechnica.com/2016/05/26/renewables-become-new-baseload-power-south-australia/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+IM-cleantechnica+%28CleanTechnica%29

 

There are still a lot of people here who are shocked when they finally break down and read what is already done and proven, and how successful they are. Some, thinking that it must be false (CONSPIRACY!) because everything they read from a narrow group of sources that say it isn't so may become rebels and actually go see what is being built in the Mojave by energy companies with a future proofing plan. Then they can go see and read here what is going on, on top of homes and businesses. And read articles like those above.

 

I will invest in a personal SCTY home system as soon as they are serving the NW Louisiana area if by then we decide to stay here. We are thinking Colorado again. I also want to see what is available from Tesla in Powerwall systems for SCTY systems in a couple of years.

 

Thanks for the opportunity for some real discussion here with a good topic Ron.

[Ron]

Keep in mind this.

The Arizona utility company asked for a rate hike of $65 a month for all homes with solar. This was after pushing solar for many years. It seems they were losing revenue. As far as I know, it wasn't granted, but I suspect it will appear again.

 

 

This alludes to some of the issues that makes it difficult to map an investment strategy in the whole energy sector:

 

Net metering laws and the associated effects on the economic viability of alternative energy vary widely among states and seems subject to change.

 

The utility industry is very highly regulated by the government - for a long time they have been controlled in such a way that they can't "gouge" consumers, given their pseudo-monopoly status, while still providing an acceptable return on investment for the owners (holders of their common stock). The new and evolving distributed sources of electric power (solar, wind, etc.) necessitates a redesign of their business model. If they are to stay in business, as they must at some level for the foreseeable future, the companies and the government will negotiate and implement new and different rate plans, fee plans, and perhaps even subsidies to ensure they maintain operations at a profit.

 

We recently vacationed in Kauai, Hawaii where electric rates are EXTREMELY high. There is some hydro generation and more recently some solar, but the bulk of the electricity comes from diesel powered generators and all the diesel fuel needs to be shipped in. There are almost no homes there that have either a heating or air conditioning system, but just lighting, cooking, water heating, and the usual home appliances result in very high electric bills. You won't see an incandescent light bulb there and most of the fluorescents are rapidly being converted to LED. I saw several fairly large solar installations that have been installed in just the past year or two. Given the situation there it seems like a no-brainer to instal solar and indeed they are starting to do so. But, all the issues about how to let solar owners get reimbursed for excess energy fed into the grid, how to keep the power company viable, state subsidies etc. are hot topics of conversation there and are still being sorted out.

 

This series of articles on Seeking Alpha takes a look at some of these issues.

http://seekingalpha.com/article/3815536-will-solar-home-batteries-disrupt-electric-utility-business-model

http://seekingalpha.com/article/3836386-electric-utility-distribution-solar-home-batteries-risk-bad-ratemaking

http://seekingalpha.com/article/3941286-customer-choice-solar-3rd-party-operators-utility-ratemaking-future-electric-distribution

 

---ron

[Vladimir]

I am still a skeptic about solar roof systems for grid connected homes being a good investment. We have owned a off-grid solar vacation home for just under 20 years. Over that time we have spent about $30,000 dollars in costs for solar generated electricity. In all those years, we have had ONE service call so they are reliable.

 

Electricity is special. There are things that you can do ONLY with electricity. No alternatives.

 

So this is what we run off our solar electric system: 1) light bulbs 2) stereo 3) TV 4) CD player 5) washing machine 6) vacuum cleaner 7) well pump 8) microwave. 9) chargers for small devices. For most people on the grid they probably do not have a well....it is our largest power draw.

 

EVERYTHING else is much cheaper and efficient to run off propane. Fridge, stove, oven, furnace, BBQ, clothes dryer, water heater. With the exception of the well pump those are our biggest power draws and that is also why they are run by propane instead of electricity.

 

In most parts of the country electricity is much, much more expensive than propane or natural gas for equivalent use.

 

So instead of adding power with solar panels, doesn't it make more sense to convert your fridge, stove, oven, furnace, clothes dryer, and water heater to propane or natural gas?? That is much cheaper than adding solar panels!! Once your only running those 8-9 items that require electricity your electric bill will drop considerably!!

 

The wild card is air conditioning in summer. That draws enough electricity that a solar panel set-up to help off-set that use might make sense. There is no way you can run a air-conditioning unit on solar. But you probably should still switch out those large appliances.

 

We did replace our 25 year old heat pump with a brand new unit this spring. It will be interesting to see how much less electricity we will use in our all electric house in town home. Not that it will save us money. The old unit was 25 years old, but even with that our summer electric bill was about $40/month. I can't get excited about seeing our summer electric bill drop by $10/month!! Roll on Columbia River....and those low electric rates.

 

The wild card coming down the line is the "grid connection charge" that some utilities are imposing instead of just charging for electricity used. I have seen some charges heading up to $100/month just for the connection charge. At those charges it might make sense to totally disconnect from the grid. Can you do that with a leased system??

[RV_]

Never mind.

[Vladimir]

Never mind.

 

Aw, come on....just because I disagree with you on this issue does not mean I don't read your comments!!

[Smitty77_7]

Obviously, payback is dependent upon costs and usage. We had combined gas and electric bills of just under $700 for the month of August of 2015. A low energy bill for that house, is North of $150.

 

Note: This is not the house that we put the solar panels on, it is next to us. A main house with two people, and then my garage and RV storage plus above that my daughter and her spouse live. So two separate 'units', tow septette AC's, Heaters, washer and dryers as well as refrigerators. (We're planning on selling he house in 2017, or I would have added solar to it too.)

 

And as far as 'investment', well their is investment today to hopefully provide 20-25 years of offset electric costs via adding solar panels. And then from the 'money investment side' - solar related stocks are still relatively young. So being cautions on the mix between long term holds, vs what I call 'get in, cash out' short term purchases is prudent. These are not our long term investment funds, they're our 'bucket' of funds for exactly what this is 'short term gains'. (And of course, as I tell my wife, I usually have some opportunities during the year to help offset some gains - with 'shot term losses' too:)!).

 

Regions, and their costs, and our usages - matter on the payback calculations.

 

Best,

Smitty

[RV_]

No it was not disagreement. We have a new house as of last year on our place and where we only had a gas furnace and stove before, this time we had a natural gas water heater installed too, and the old 15kw propane generator has been replaced by a natural gas 25kw water cooled 4 cylinder auto switching unit. The old genset was only 12.5kw on Natural gas and could not start the A/C unit. So we got rid of the ugly Propane tank by just letting the gas company at their expense swap out the street low pressure regulator and meter with a high pressure, and I bought two high to low pressure regulators one for the house gas entry, and the other for the genset so that the genset would not starve the other gas appliances when running. Our solar system is on hold until we are through with caring for our remaining elderly parent when we will decide if we are staying or selling out and moving. But our bills have been more than cut in half by a newer energy efficient A/C/gas furnace system, and our biggest bang for the buck, our 2X6 super insulated walls, ceilings, attic trusses and turbine attic ventilators, as well as dual pane thermal windows. We already had it last August and instead of our 2X4 single pane windowed house $185.00 electric bill from the A/C in 100 plus weather, it was instead not higher than $85.00 last August. Amazing.

 

I believe that all that is needed to switch to all renewables on our houses on more than a 1/2 acre lot like my 5 acre place, is to have the magnetic refrigeration perfected next, with no compressors, which has been done but not pursued since the patent was sold by the Ames Laboratory.

 

My comment was going to say that my FIL used a solar water heater that worked summer and winter and was nothing but a bunch of black PVC inside a plastic box with reflectors that allowed his water pressure alone to pump it up and then down again controlled by a couple of simple valves to put the rooftop heater in and out of the circuit. I remember it worked great but the sun rotted the plastic box over ten years. Lots of good DIY projects today for that. And I have seen some great plans for passive heating of the interiors too.

 

But we are constrained until we know what we are going to do after this. We had not expected to be here this long, but are glad to have more time than expected with them. We have no problem with selling the properties at a substantial profit and reinvest where we choose to live next. We have already done fulltiming and will stay part timers for now. Or we might just stay here. Things are not set in stone past what we are finishing up with landscaping etc once it dries up enough in the summer.

 

If Solar City were already in Louisiana we'd already have solar. But that only if we can transfer it on selling the property.

 

Building new has amazed both of us as theory is fine but living in the difference is frankly surprising.

[RV_]

Smitty. yes! It is amazing how much difference a smallish investment now can make.

 

We took all of our incandescent bulbs down that came with the house fixtures down and replaced them with LEDs. For example, just our 12 kitchen and hall in ceiling 65 Watt can lights were replaced with LED equivalent soft whites that use only 12 watts each so 12 of them use 144 watts instead of the 780 watts all 12 on at 65 watts would use. All of our previously CFL bulbs have been replaced by LED soft whites. Our bathroom have two vanity light fixtures that use e bulbs each for a total of six at 40 watts for 240 watts. The 40 watt replacement bulbs, actually almost too bright at 5 watts each use only 30 watts versus 240. With a 12 to 24 year life expectancy there's lots of savings.

 

Future generations will likely find having to change a light bulb on a par with buying hard copies of movies and TV instead of streaming.

[Ronbo]

I would not want solar panels on the roof of my s&b unless I had a tile roof. I would not want to have to remove the system to replace my shingles. A ground mounted system makes it easier to clean and maintain. The panels on my RV rarely get looked at. I monitor the output and it takes about 1 hr to top my batteries every morning. After I move my front ac to the batteries I will disconnect the cord to si,update boo docking and see how it works out.

[Ron]

Government policy in Spain seems to be a good example of why investing in solar, either in companies in the business or spending money on your own installation, is fraught with uncertainty if the economic premise of that investment involves selling excess PV power back into the grid.

---ron

[Smitty77_7]

I would not want solar panels on the roof of my s&b unless I had a tile roof. I would not want to have to remove the system to replace my shingles. A ground mounted system makes it easier to clean and maintain. The panels on my RV rarely get looked at. I monitor the output and it takes about 1 hr to top my batteries every morning. After I move my front ac to the batteries I will disconnect the cord to si,update boo docking and see how it works out.

 

 

One tip on the solar panels roofs that are not tile, is to negotiate an agreement to have the panels removed for new shingles.

 

For example, our roof top has about another 10 years of useful life, they're a 50 year asphalt composition. We had written into the contract that the company would come back and remover the panels to allow a roofer to put on a new roof, then reinstall the panels. Ours was an agreement of $1000 to cover this labor, and we had up to 10 years to accomplish this. Talking with he installer, he said it was one day work to remover, and one day work to install.

 

If I could not have had this agreement, I would have pulled up and replaced the roof early before the SP's were installed. I sort of sat back as we were talking over the final numbers from the quote, and when asked what was keeping me from doing the SP's - I said the concern for the future roof top replacement. It was on the next visit after this was stated, that the gent I was working with suggested the adding of the agreement to remove and replace SP's to accommodate the future new roof. That sealed the deal for me.

 

The company has been in business for 25+ years, so I expect they'll be around when the time comes:)!

 

Just another way to reduce that concern.

 

Smitty

[RV_]

Great advice Smitty. And the rooftop solar also protects the roof under it from UV deterioration compared to not shaded.

 

Ronbo,

My last gung ho position was marketing, design, and I.T. for a Post Frame building company. We rolled our own steel for steel skinned wood framed utility buildings and stocked our own warehouses because of our then volume. Some folks used them for homes.

 

My father in law has a grid connected stand-alone 3kw solar system with no batteries. Ho put it in in 2010. It ended up costing him $5k after subsidies local and federal. He was willing to accept the loss from the long cable from the system to the house, about 200 feet. I am not an E.E. so won't do the calculations but simply point out that the further from the house the less efficient your system will be. In almost buying a system in 2010 we were told that we would lose about a third of the power with a 300 foot run and the copper would be a big added cost. I would prefer to build a post frame 30X40 building behind the house but within 15 feet or so, and mount the panels on that building. It could be made with the sides open and used as a gazebo, or enclosed as a shop with a 4" slab, either way. Then we would have either storage or outdoor leisure with no issues about roofing as we are 64 and 62 and I seriously doubt we will be here for the ceramic/paint coating 50 year paint to fade. That size Gazebo is about$15k added. $25k for a fully enclosed building with a man door and a roll up or garage door. Remember that for folks with the land, having the clear view South for the system is critical to placement too. I would have to cut down three old growth Oak trees, in addition to siting it that far back to clear the LOS for the South from the neighbor's trees. We are not in cleared lots but acreage with hundred foot tall old growth Oaks, and Sweetgums trees. Mine has had all the pine logged off it and the last big sweetgum trees with their nasty gumballs will go if we decide to stay.

 

However I have five acres and most homes are on smaller lots. I already have a 24X30 workshop with slab and a smaller 12X28 portable building set up permanently. A solar building would replace that, but we are likely moving so no more property improvements until the next year or two and we are free to move. We are caring for our only remaining parent, who is losing it fast now with Alzheimer's since his wife died, last August. Turns out he had problems then and she was covering for him so he is advancing rapidly now. Louisiana, or the deep South anywhere, is not our first choice to have stix n brix to base out of. We promised Mom to take care of him and the execution of the estate between her and her younger brother. He's fine with it, but we need all that settled before we even decide to stay or go. A lot can happen in a couple of years when you are over 64. We are both healthy as ox's today, thank goodness.