Did PV solar power just become affordable?

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Pengwuino

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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)?
 
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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.
 

Pengwuino

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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
 
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hypatia said:
If you plan to stay in the house for a while, the investment aspect would pay off.
How do you figure?
 

loseyourname

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hitssquad said:
How do you figure?
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.
 
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Pengwuino Power Station Unit 1 vs SONGS Unit 1

loseyourname said:
Eventually, the panels will have yielded enough power to pay for themselves, right?
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.
 
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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.
 
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russ_watters

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loseyourname said:
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.
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.
 
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hypatia said:
thank-you LYN, thats what I ment.
Loseyourname's response did not address the question.



Michigan gave him a hugh tax break back then, and with in 8 years it had paid for itself.
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?
 
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If you use home equity loans, the interest is deductable And there are federal/state programs that will help out too.
 
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Can you show us some numbers, Hypatia?
 

russ_watters

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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...
 

loseyourname

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russ_watters said:
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?
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.

hitssquad said:
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.
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.
 
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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.
 
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loseyourname said:
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.
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.
 

Moonbear

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hitssquad said:
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.
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.
 
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Moonbear said:
We're not talking about someone selling power to make a profit
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."
 
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Homepower vs the big boys - economies of scale in power production

Moonbear said:
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.
[...]
Basically, with the solar panels, you will have a fixed cost over time
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?
 

russ_watters

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loseyourname said:
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.
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.
 
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russ_watters said:
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.
Honda is popular with females partly because their cars get slightly better fuel mileage than other cars do. Females are generally willing to pay the extra cost that this incurs and justify it as a way of being "nice."

So, yes, lots of people are willing to pay at least a little bit extra strictly for (a perceived, at least) environmental benefit.
 
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russ_watters

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hitssquad said:
Honda is popular with females partly because their cars get slightly better fuel mileage than other cars do. Females are generally willing to pay the extra cost that this incurs and justify it as a way of being "nice."

So, yes, lots of people are willing to pay at least a little bit extra strictly for (a perceived, at least) environmental benefit.
People pay more for Hondas than what? Hondas are not very expensive cars. Anyway, with cars, cheaper almost always means more fuel efficient for standard cars (ie, not including hybrids), especially when comparing cars in the same class/product line because bigger engines are both more expensive and less efficient (in an mpg sense). My car is a Mazda 6 and it came in 2 flavors: a V6 that gets ~22mpg and a 4 that gets ~28mpg. The 4 cylinder is also about $3,000 cheaper. Throw the same engine in a Mazda 3 and you save another ~$3,000 and gain another 2-4mpg. Or go with a smaller 4 and save more and gain more...
 
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There are no hybrids that make financial sense to own, yet
http://www.roadandtravel.com/newsworthy/Newsworthy2001/nw_hybridstudy.htm [Broken]

[...] women tend to be substantially more interested in hybrids than men [...]
Females are generally willing to pay more for perceived environmental benefits.
 
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Moonbear

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hitssquad said:
How could your little operation be cheaper?
I don't know if it could be cheaper (I don't even know what converting a home to self-contained solar power would cost), especially not in the short-term range, and I expect the answer is that it wouldn't be cheaper. In the long term, there are just too many variables to predict. Are you going to get it paid off in 20 years and then need to upgrade the unit, or replace it because it's reached its maximum operational lifetime? Will increasing demand from consumers allow power companies to charge them more at a higher profit to the power company (they pay less per kWh for the scale of production, but will you pay less, or will they just earn more profits?) Will large amounts of land remain available for the power companies to continue to expand with demand, will the political climate allow them to build new plants, will they be able to supply enough power if they take a plant out of commission to convert it to newer and more efficient technology, and what will happen to costs in the interim?

It seems like quite a gamble. If you buy at the right time, and have a fixed cost at a time when prices spike because power companies are needing to invest in new plants to meet high demand, and you might do okay, but if prices are kept more stable, then you may never get your money's worth out of it. On the other hand, if a large enough consumer market developed that the cost of mass production of solar panels and "conversion kits" lowered the prices for the individual consumer, it might turn out to be a good investment, but that's not the current situation...some people are going to have to pay "too much" for it first before there's enough of a market and enough of a profit for the consumer market to change that much.

hitssquad said:
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."
I was going by the statement in the original post that stated:
Pengwuino said:
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)?
To me, that meant he was looking for advice on just breaking even or maybe saving a little over time, not making a profit, otherwise you'd want to consider other forms of investment with the money you're initially spending and are unable to invest in something more profitable.

I just look at it that you're paying for electricity one way or another. You can cut costs by trying to use less, but you're always going to pay for what you use. Now, if you generate your own power, you're paying a flat fee, whether you use all the power generated or not, and whether you operate at maximum production capacity or not. So, you can't even just look at the cost over time for the amount generated, you need to look at the cost per unit you're actually using. Will the cost per unit from a power company ever become so high that you can substantially save even during months when usage is low? For example, during the one month a year that I run the air-conditioner, of course my electric usage goes up, and of course I'm paying a lot for electric that month, but the rest of the year, I just don't use much at all, so averaged out over the year, my monthly payments are pretty low. Same thing with natural gas prices that of course peak during months of peak consumption when people are heating homes in the winter, but when you average those 3 months of high consumption with the other 9 months when it's being used primarily to heat hot water for showers and laundry, the overall cost isn't that bad. So, you don't want to look at the month or two of peak consumption and compare to that, but to an average over the entire year, or over several years since you also don't want to base your decision on an unusually warm summer or unusually cold winter where your usage is higher than in more typical years.
 

Pengwuino

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Well ill clear up a few things with my situation. Although we love the idea of less pollution and all that, its not going to have any bearing on the situation. We're looking at a $500/month electricity bill and we're looking at enough panels simply to supplement, not to eliminate (or else we're talking about upwards of $100,000).

I guess since where i live, we're still in the middle of this housing and economic boom, itd be much better to invest in something like real estate.

What no one mentioned as far as i can tell is how real estate appraisers view solar panels. I mean ive heard of people putting $10,000 into their house and getting back $40,000 more in the sale. If that's the case here, itd probably be a good idea.
 
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Pengwuino said:
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 feet 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)?
It's absolutely worth it. But some of your assumptions are a little off --

We got our 2.5 kW system installed in February. It's much more than 10 square feet - I think more like 50 but I'd have to measure it and its outside.

THe generation hasn't varied seasonally, much. We get about 13 kwh per day in the winter (February) and about 15 now. Weird, I know.

Our bills are *almost* zero now. We pay off the panels in five years, they last for 20 years.

You can also go to the california energy commission website and look at their solar calculator. If you take a home equity loan to pay for the panels, the money you save on electricity puts you over the cost of the loan, by a tiny bit. In other words YES it is economical NOW.
 

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