# Did PV solar power just become affordable?

1. Jul 29, 2005

### Pengwuino

Well my family opened up the power bill and BOOM, $.21 per kwh!!! This is just... insane!!! It was$.21 at the above 300% baseline and we were wellllllllllllll above it.

So i started calculating and based off this meter this one company has online that shows one of their residential 2.5kw generators (actually 2.5kw so it must be like 10 square meters of panels) and i added up each months generation and they produced the equivalency of $900 this year (i guessed at the missing months and compensated for july production being probably 2x as much as say january). I also checked out rebates by the state of california and they give a rebate to residential customers of$2.80/watt after completion. So what does everyone think. Is installing solar panels worth it without considering other forms of investment (because someone else pointed out its an insane proposition when you think about ways you can invest that money)?

Last edited: Jul 29, 2005
2. Jul 29, 2005

### hypatia

In the land of sunshine and ancient power supply grids, I wouldn't bat a eye at installing solar. If you plan to stay in the house for a while, the investment aspect would pay off. Plus it would add to the value and re-sale of the home.

3. Jul 29, 2005

### Pengwuino

My family needs to find out how appraisers look at solar panels. Its still, after rebate, a 13 year pay-off time deal if dumb ol california continues to be dumb ol california

4. Jul 29, 2005

How do you figure?

5. Jul 29, 2005

### loseyourname

Staff Emeritus
I think she means that you'll break even at some point if you stay long enough. Eventually, the panels will have yielded enough power to pay for themselves, right? Unless they need to be replaced or repaired regularly. Pengwuino lives in a desert, so he can use them year-round.

6. Jul 29, 2005

Pengwuino Power Station Unit 1 vs SONGS Unit 1

I don't know. There does not seem to be enough information here to form a conclusion. In an environment with non-zero interest rates, it would be possible for a power plant to not be able to pay for itself even without other operation and maintenance costs.

It is interesting that the power plant unit San Onofre Nuclear Generating Station Unit 1 was already installed and paid for when Southern California Edison decided it would be cheaper to decommission it than to continue to allow it to produce marketable electricity.

7. Jul 29, 2005

### hypatia

thank-you LYN, thats what I ment.
Some 15 years ago, my brother installed solar in his home. He has had to replace the back up batteries and a converter once. Everything in his home runs off of it, and by flipping a few switches he can convert back to consumers power.
Michigan gave him a hugh tax break back then, and with in 8 years it had paid for itself.

Michigan enjoys the highest rate per KWH in the mid-west, dispite running Fermi2.

Last edited: Jul 29, 2005
8. Jul 29, 2005

### Staff: Mentor

While that's true, its kinda a tautology (anything that pays back has a payback period). But who does an investment that has a break-even point of 20 years?

What I would consider is supplimental solar power. If you remove the goal of getting off the grid and just use it to suppliment your air conditioning, it may reduce that payback period.

Last edited: Jul 29, 2005
9. Jul 29, 2005

Loseyourname's response did not address the question.

Yet the world's leading homepower evangelism site says that it is impossible to make money with homepower.
http://www.homepower.com

Can you show us some numbers, Hypatia?

Last edited: Jul 29, 2005
10. Jul 29, 2005

### hypatia

If you use home equity loans, the interest is deductable And there are federal/state programs that will help out too.

11. Jul 29, 2005

Can you show us some numbers, Hypatia?

12. Jul 29, 2005

### Staff: Mentor

Perhaps it is time for another is-solar-power-feasible thread in the engineering section. If Penguino is willing, we can make a real case-study using his numbers...

13. Jul 29, 2005

### loseyourname

Staff Emeritus
People can install solar panels without having in mind its value as an investment. There are other reasons to do it, even if you never save a cent vs. what you would have paid to the power company.

You'd have to never pay off the loan to never break even. As Russ says, it's a tautology that anything that gives any monetary return will eventually pay for itself.

14. Jul 29, 2005

### hypatia

Sorry, its my brothers system, and I'm getting ready to open my shop. I'm sure there are many web sites with that kind of info.
I do recall at first he was paying much more per K hour to offset the cost of the system. And that he has a 2 KW system, that depends of at least 5 hours of sun a day. And that there was no maintenance on it for 14 years{battery and new inverter panel last year}.

Yes a new thread would be great. I have heard the new solar cells are much more productive then even ones 2 or 3 years ago.

Last edited: Jul 29, 2005
15. Jul 29, 2005

Sorry, I meant inflation rates. If inflation is 4% and you are making 2%, you are not making money. Your capital invested in the power plant is continuously being taxed away from you by the invisible hand of inflation.

16. Jul 29, 2005

### Moonbear

Staff Emeritus
I'm confused by what point you're trying to make here. We're not talking about someone selling power to make a profit, just setting up something to generate enough power for their own home so they stop having to pay for a power company to provide it for them (at least that's what I think we're talking about here). The thing that would be hard to predict is whether the cost of service from the power company will continue to rise, or if at some point new technology or changes in the economy will allow costs to decrease in time.

Anyway...
I think the objective isn't to make money, but to cap expenses so you stop losing money to ever-increasing costs of buying your electricity from a supplier. That's going to depend on the initial investment, the interest rate of the loan, the term of the loan, maintenance costs, your individual energy usage, whether you still need to pay fees to remain connected to the grid or if you can be entirely independent of outside power, how much the costs of outside power supplies fluctuate, how much of a tax break you get for the loan interest, etc.

Basically, with the solar panels, you will have a fixed cost over time that is the amount of your loan plus the interest over the term of your loan. If you get a low, fixed interest rate, you can look at how your monthly payments will compare to your monthly electric bill, factor in a 3-4% inflation rate, factor in a modest interest rate of return on what you could make on the money you're paying in excess in the early years when your loan payment is higher than your current electric bill (if the loan payment is not much higher than the electric bill, then solar is an easier choice), and find out if you'd come out better generating your own or paying someone else to produce for you since you're still paying someone for the equipment to produce your own.

It seems to me that if it takes 20 years to pay off, there are just too many variables that are difficult to predict. Economists can try to predict what will happen, but it's imprecise.

Here's another long-term investment example that might help clarify the problem: buying a home vs renting an apartment (buying your power supply vs paying a service provider for it). Most people don't buy a home if they can rent for much less. It's when the cost of rent and the monthly mortgage+interest payments become very close to one another that you can be more certain you'll pay less over time to buy than to rent. If you had to not only pay off your mortgage, but also wait several years beyond that to even reach a break-even point, it wouldn't seem like a wise investment. How many people can guarantee they'll live in a house 20 or 30 years? Same thing with solar...if it takes 20 years just to break even, can you even guarantee you'll live there 20 years? Now, if it only took 5 years to break even (that's the typical break-even point between renting and buying a home, though of course that can vary with the growth of the housing market), then it would seem worthwhile. So, I would wait until the point where my projection of monthly energy bills over a 5 year term came out equal to or greater than the monthly payments for conversion to solar. Someone else might set the threshold for themselves to be a shorter term or longer term. And some might choose solar for other reasons, such as environmental reasons, and don't care if it costs more over time.

17. Jul 29, 2005

Actually, we are. Check the first two posts in this thread: "Is installing solar panels worth it..."; "If you plan to stay in the house for a while, the investment aspect would pay off."

If you set up your own breadmaking assmebly line to make your own bread for yourself so you can avoid the cost of buying bread from the store, you are selling yourself bread in order to reap a profit. Ditto for homepower in the above context of "is it worth it."

Last edited: Jul 29, 2005
18. Jul 29, 2005

Homepower vs the big boys - economies of scale in power production

When you install a homepower system you are installing a system that incorporates fuel-mining, power production, power conditioning, power storage, waste dispensation, and decommissioning.

You are competing against a commercial power generator that incorporates into his system fuel-mining, power production, power conditioning, power storage, waste dispensation, and decommissioning.

With your little operation you are competing against a party with a big operation. In the power industry, there are massive well-known economies of scale. You never hear a power company official say, "Well, we made a big mistake by investing in such a large power plant. Next time we will build power plants just large enough to power single houses since, of course, those are enormously cheaper per nameplate watt and per kilowatt-hour." They always talk about how cheap their power production is thanks to the largeness of the plants they built. How could your little operation be cheaper?

19. Jul 29, 2005

### Staff: Mentor

Certainly, but how many people actually do? It has been my experience that people will not pay much for a strictly environmental benefit - especially not front-end money.

Regardless, I was talking about Penguino's situation and he clearly is interested in the financial feasibility.

20. Jul 29, 2005