Solar ROI:

If you are looking for a "good return on investment" on your solar investments, you should quit before you start. Even with the rebates, you're talking 20 years to recover your investment.

Most of us do it for fun - I've designed, fabricated and installed 3 large solar sytems. I did all the electrical and mechanical designs and fabrication. I consume all that I produce - hot water and electrical.

To do solar correctly, you need to have some money, the correct skills and the time to do the work - otherwise you're not going to be happy with the performance of your system.

If you don't add engineering content to you system - you only get a system that produces peak power for only 20 minutes a day (measured) and marginal results for the remaining daylight hours.

You need to be a rich person or a company or the government to own a fixed or adjustable solar system!

Richard

Richard , this is a good topic all by itself , so I split it off and moved it to here

Solar ROI is actually not that bad if your lucky to live in places like Ca or MA.

In Ca you have 50% rebate , then the 15% state tax credit. The Federal 2K tax credit look like it might become law this year so if you run the numbers it is pretty attractive

On My first system , I built a VERY nice ground based racking system , spent close to 5 months building it .. and the racking materials alone were about 2K

On My current system , I spent 6 days and ALL BOS (balance of system) was under 300 dollars. I use Home Depot gutter clips to mount the panels to the roof , and I had a civil engineer sign off on it. Cost , about 6 bucks a panel

The Cost of my current system is almost 1/2 of the First , got the panels for 2.50 watt and skipped the complex mounting. I've got 14,500 into it for a 5800 watt system

Another ROI booster is Green Tags ... I'm waiting on a quote right ow , but This might be a 400-500/year boost , for ROI

http://www.dsireusa.org/

list of incentives state by state
NJ will give you a check for $55,000 ($5.5wt up to 10kw
NY incentive between $60,000-$75,000 for 15kw system
Md $2,000 tax credit (better than zero, eh Henry)

wait till electricity goes way up. Natural gas has gone from $3 to $6.25/1000 cuft in last 2 yrs. wait for pass thru costs.

DC area GUARANTEED to go up between 16% (residential) to as much as 40-50% 7/1/04 when rates upcapped example

main variable on payback is cents per kwh

ROI will quickly change.

IMHO , the tide has turned on PV ...

To bad for us in th USA , the rest of the world places the proper value for PV and is comsuming all of the world production

If you think your going to do PV within the next year or two , better get your panels now .. the lead times are already out into oct 2004 and quickly getting longer every day.

I was watching the BBC report on PBS ... they were mocking the US consumers on our reaction to no more cheap gas ... ditto will happen when we huff and puff about the price of PV

PV might not seem like a great payback today , but we are on the edge of the end of cheap energy , the rest of the world is rapidly increasing it's energy needs placing a premimum on all sources

The California rebates and state tax credits are not what you think they are.

CA rebate is $/watt up to 50% of the system cost - the way it's setup you can never get 50% of the system cost. If the overhead of installation is high - you can get a lot less than 50%.

CA Solar Tax Credit - if you take the Solar Rebate you can not take the Tax Credit. Also, the tax credit is limited to about 1/3 of the rebate. So, you always take only the rebate.

Both the rebate and credit can only be taken once per property location - so if you add to a claimed system or build a new one on the same property - you get nothing!

I would think that the other state's rebates/credits have same limits.

For a small system with 24 KC125 panels with one ST2500 inverter that you pay someone to install = 10,680 + 1,250 + 5,000 = $16,930

Rebate = 24x125x.94x3.75= $10,570 but limites to 50% = $8,465.

Cost = 16,930 - 8,465 = $8,465

At $0.12/kw: System must generate 70,541 kw/hr to pay off cost

How long will it take a fixed 3000 panel watt system to generate 70,541 kw/hr?

I bet a long time - Richard

Well , in rough terms a 3kW system will generate between 4-5 Mwhrs/year , so a swag would say 15 year , with panels that will last 50 years

Your assumptions on electric rate seem low ... I thought TOU can pay 25 cents in PGE territory ? , this cuts in down to 7 years

The Key to all of this is the kWhr rate .. this is only heading UP ..

Time will tell if I'm wrong or right , but cheap energy is over .. it will takes a few years for electric rates to climb due to regulatory caps , but they WILL rise and the payback periods will decline ...

I'm looking at my current CA PG&E Bill:

$0.11589 + $0.01000 - $0.011589 (10% reduction)= $0.1143/kwh

so $0.12/kwh is a little high!

The other item that I didn't include the ROI calculation is interest expense of the solar investment.

Currently, most people (with good credit) can get money at 3.99% on a home equity line of credit. Monthly that's 0.3325%/month.

Cost of $8,465 in our example is $28.15 compounded monthly or 234 kwh per month @ $0.12 per kwh.

After 15 years, you will still owe the interest of 42,225 kwh or another 10 years of power generation at 4 Mwhrs/year.

The cost saving - assuming you either consume or sell all the power you generate is: 4,000 kwh/yr @ $0.12 = $480/yr or a saving of 57.6 kwh/yr

This reduces the interest: 42,225 - (57.6x15) to 41,361 kwh owed after 15 years or 10 years of power generation.

The true ROI for a fixed mount 3000 panel watt Solar System is 25 years after a 50% rebate at an initial system cost of $8,465.

This also assumes no maintenance - the panels will last but will the inverter? Electric rates and interest rates increases are not included but may offset each other.

Like I said, we do this for fun - Richard

Ahhh ... YOUR PGE bill ... with your massive PV system

Why aren't you on TOU for net metering ? You can be getting 25 cents kWr ?

Your grid demand I assume puts you in the lowest tier ...

My understanding is most average users are close to double your minimal rates ...

I still have some low level gas usage and they still send a monthly statement regardless of your usage/bill amount. Like I said before, I consume everything I generate on my 5 acre location - pool,spa,water well, AC, solar hot water pumps ...etc.

PG&E has just came out on bankruptcy - I'm not sure they are making any payments yet - I don't think it's $0.25/kwh - I will need to look at this again.

The $0.12/kwh is the lowest rate - most people that have solar systems that I know are at this rate.

There are at least 5 rate levels based on power useage breakpoints: 0.12, 0.14321, 0.19445, 0.23838 and 0.25826. There are also surcharge rates based on wider power useage breakpoints in-order to hit the big users: 0.01, 0.05124, 0.09517 and 0.11505. All rates are per kwh. Before I completed my system, my rates included all of these at different breakpoints - my bill was at least $450/month for 2 Mwh for an ave. rate of $0.225/kwh.

In the ROI calculation: an individual could do the analysis if the solar system moved them from one breakpoint rate to another - and it might shorten the time period 5 to 10 years.

Richard

A few thoughts on ROI...

Would anybody care to figure out the ROI on an unnecessary car purchase? People buy far more expensive cars than they need all the time, and nobody hammers them about the poor ROI. Put money into solar, and suddenly you have to justify such an extravagant purchase.

My neighbor argued that stocks were a much better investment that solar. Any stock investor can easily make 8% on their money. If I had purchased the average tech stock instead of solar (this is 2 1/2 years ago), I could easily have lost 80% of the investment. My sharp trading neighbor lost 50%, which I guess is excellent performance in a 80% down market. An ROI percentage should include a risk factor to be fair. The downside risk on solar is practically nil, and you can argue forever about the upside. Stocks can and do vary all over the place.

As for the actual ROI on my 24-KC120 / SunTie 2500 system, I've never been happy with any of the analysis. There are so many assumptions that have to be made about the future that the most rigorous mathematical analysis is still dominated by the assumptions. My feel for the ROI is breakeven in the 10 to 20 year range. On a strictly financial basis, this is entirely acceptable. As a personal values statement, spending the money on solar instead of a new gas hog is important to me. If enough people would move to renewables, maybe we wouldn't have to pay so much for military campaigns to stabilize the oil supply.

Having made the investment, arguments about ROI are now moot as far as I'm concerned. The original interest in ROI has become an interest in optimizing the installation. The first one is easy - I have a 6 KWH/day refrigerator. The ROI on replacement of that hog with an equal performance modern unit is about 2-3 years. An alternative would be to install a TOU meter. Either would probably zero out my annual electric bill, so it doesn't seem to make sense to do both.