Is now a good time to invest in solar?

1. Jul 9, 2009

My state (NJ) is offering rebates of $1.75 per solar watt installed up to 10000 watts ($17,500 max) Feds are giving 30% tax credit (approximately $18,000 after state rebate is subtracted), utilities in NJ are forced to purchase SRECs to show they are complying with regulations to use green energy sources. These are at current market values of$680 per 1000 kWh solar electricity produced they will be issued for 15 years (a system can produce electricity 6.5 hours a day in my area so 10 kWh will produce about 23 SRECs a year or about $15,640 a year at current market value). Solar is a home improvement that is exempt from property taxes in my state. All the incentives add up to paying off the investment in just a few years not even counting the electricity saved. My wife and I are considering installing a grid tied system of somewhere between 6.5 and 10 kW (cost will probably be between$60,000 and $80,000). What do you think, is now a good time to go solar? 2. Jul 9, 2009 FredGarvin Just in our local news last night was a fight that is going to court because a homeowner purchased solar cells but his subdivision association won't let him put them up. He already has permission by the county but apparently homeowner associations here carry some clout. It may be something you want to look into if this could affect you. 3. Jul 9, 2009 Artman Thanks FredGarvin. I have been considering the effect on my neighbors. I am considering a ground mounted system as my roof faces the wrong way and I have a lot of land around my house. That could be an issue. 4. Jul 9, 2009 russ_watters Staff: Mentor Well you tell us Artman - what kind of payback can you expect? Anything under 5 yrs is probably worth doing. 5. Jul 9, 2009 mgb_phys Payback is still >10 years now. There are a few companies that will rent you the panels and even some deals where they install an over capacity for free, sell the power back to the grid and you just pay your existing electric bill but at todays power prices guaranteed for the next 20years. They are betting on being able to replace the panels with more efficient ones in the future or being able to sell premium 'green' power to the power companies. The trouble is that people putting in solar panels are normaly interested in being green - so they also go around adding insulation, efficient appliances and CF lamps - then having halved their power consumption they find the panels will take 50 years to pay back! Last edited: Jul 10, 2009 6. Jul 9, 2009 Artman My wife and I went to a seminar held by Home Depot on solar power. They claim that the incentives will cover 100% of the cost through the rebates, tax credit and sale of SREC's for at least$475.00 each. Above that the power saved is gravy, amounting to approximately $51,000 from a 10kWh system over 15 years (assuming price of electric to double in fifteen years). Payback should be about 5 - 6 years, I estimate because the federal tax credit will have to spread out over that long. In NJ you can only sell back to the Electric utility 5% over-production per billing cycle, so they are pretty careful to not exceed 100% design of the solar system (except for future additions such as an electric car or converting to a heat pump from oil or gas heat, etc). I guess what I am mostly wondering is, is there a paradigm shift coming in solar electric generation in the near future that I should wait for? Will my system be obsolete long before it pays back, if I buy now? Incentives are probably at their peak for my area right now, with bailout money funding many of the government programs. 7. Jul 10, 2009 gmax137 How much do you pay for a kw-hr in NJ? Is it really 68 cents?! The utility companies can buy a megawatt hour on the spot market for about$75 (or 7.5 cents per kw-hr).

I will be the first to admit ignorance on the financials of solar, but something doesn't look right in your numbers.

8. Jul 10, 2009

mgb_phys

The srecs aren't really the price of the power they are also a sort of tax - the power company only has to buy a small amount of power at these prices to make up it's 'green' requirements.
The price varies, $680 is at the top of the range for winter months - it can go down to$100 - you also don't know if the scheme will be in place next year or next president.

9. Jul 11, 2009

Anyway, the SREC number is the critical number here. If it really is that high (and does that get bought every year at that year's market rate?), this is a rediculously good mid-term investment. Including the energy produced, you get your $44,500 investment back in 2.5 years and have it doubled after 5...$125k profit after 10 years, and $210 k after 15. That's an average of a 32% profit per year over 15 years. Note that since the return is constant dollars per year and not constant percentage per year, it doesn't compound like interest and so loses ground to an interest based investment - but over 15 years, that's extremely good. If you're financing it with a home equity loan, of course, you'll need to subtract that from the return. If the SREC is half what you think, the payback is about 5 years. 12. Jul 11, 2009 Artman Thanks Russ, You're right, my SREC's number was too high. The 6.5 is the approximate number of hours that a fixed South facing solar panel will produce a high percentage of output at my latitude. This number is available on several websites, I think it is pretty accurate and even a little conservative. I have a large open field where the panels are planned to be, but they are still talking about removing some trees to get better unobstructed light. I tallied my electric bills yesterday for the year and we used around 11,000 kWh, that would be 11 SREC's, now at 680 apiece that that would be more than 600 per month, which should cover the payments on the loan, then we pocket the electric bill money saved (or more likely kick it back into paying off the investment as soon as possible. The sales people have been saying things like "a conservative return of$50,000 profit over 15 years," "make $3 for every$1 spent over the life of the system," "pocket $90 per month after all incentives." Thanks everyone for your responses. I appreciate the thoughts. It is a very large investment. 13. Aug 10, 2009 Artman Well, we're signed up. We will be installing an 8.8 Kw ground mounted panel grid system made of 40 panels rated at 220 watts per panel. Payback is estimated at 5-10 years (there are a lot of variables, hours of direct sunlight, SREC prices, rising cost of electricity, availability of taxable income to take as credit). It should be online by November 30th. I'll let you know more later. 14. Aug 10, 2009 russ_watters Staff: Mentor Congrats. That's a neat project. Keep us informed about how it works out. Does the system include any type of monitoring that will tell you total kWh generated and differentiate it from kWh from the grid for consumption in your house? If so, by June 21st of next year (after 6 full months of generation, covering every conceivable sun angle), you'll be able to pin down your payback almost exactly. 15. Aug 10, 2009 mheslep Wow, double? That's aleady 50% above the national average at 15. Any idea about the main reasons for such an increase in NJ? EIA shows NJ is half old nuclear (that is, bought and paid for). Oyster creek is old but small. Then there's 16% coal, 31% gas, and there's a large gas glut now. http://www.eia.doe.gov/cneaf/nuclear/page/at_a_glance/states/statesnj.html [Broken] This must be due to some governmental regulation or tax interference if true. Last edited by a moderator: May 4, 2017 16. Aug 10, 2009 Topher925 Make sure you check with your electric company to see if they support sharing. The way it works out here is that for every kwh you put in, you can take a kwh out free of charge. Unless of course you have a surplus of power for a month, then the power company will only give you something like 2 cents per kwh you supply. My university has solar powered apartments that were built almost 10 years ago I guess and from what I hear they have almost paid for themselves. 17. Aug 11, 2009 russ_watters Staff: Mentor It is often said in the media that the removal of rate caps will cause the rate to double, but what might double is just the generation portion of the rate, which accounts for perhaps 30% of the total. So it is more likely that rates for states where rate caps are about to come off would go up by 30%.... ....but no one really knows just what's going to happen.  Wait, have rate caps already come off in NJ? This link implies they have: http://www.mwn.com/files/FileContro...9aa917d8cf/Presentation/File/RATE CAP FAQ.pdf If they have and the increase has already been seen (which would explain why they are already so high), and future rate increases won't be as dramatic. 18. Aug 13, 2009 ktech311 Artman--- You are correct inn that your SREC numbers are way too high. Look to the OCE's website on the 8 year legislated schedule of SREC values based upon the Solar Alternative Compliance Penalty. Currently SREC ceiling are set to go down 3%/year---There is currently a shortfall in the RPS standard which should be made up for in the next few years. When we quote customers we use 500-511 for the next 8 years which is the weighted average. There are also a number of securitization efforts going on and we have been pushing our LSE's to commit to long term contracts at halfway decent numbers. For SREC gen you can use a multiplier of 1.1-1.2 on the total KW of your system. For reporting your inverter should have reporting capability but there are also aftermarket services that provide web based reporting for additional cost. As the first company to be approved by the OCE back in 98' we have provided design and installation for 5-10% of all systems in NJ. This is a great time to go solar. On a side note I'm pretty confident that HDs numbers are pretty high. I hope you got a couple quotes. They also 100% subcontract. Any questions let me know. 19. Aug 13, 2009 ktech311 Energy Year SACP (SREC ceiling price) 2009$711
2010 $693 2011$675
2012 $658 2013$641
2014 $625 2015$609
2016 $594 20. Aug 14, 2009 Artman mheslep, The reason for doubling in five years is that the electric utilities facilities in NJ are nearing their capacity for production of electricity, unless they expand by building new generating plants they will have to purchase electricity from other sources, either scenario could raise prices quite a bit. Russ, our system is supposed to have a real time meter on the solar to tell us our production and a connection to the installer to let them know if there is a drop in production so they can check it. ktech311, thanks for checking in. Yes, they have all used a figure of$475 for calculating the SRECs value. I think the price is a little high because we are a ground mount system, about a hundred feet of trenching is required, and we need five large trees taken down. They are going to use Schott Solar 220 watt panels, which seem pretty nice from what I read. They told us we could expect higher than rated production that is part of the reason for the meter, we can give exact numbers for SRECs based on actual production. Our installer suggested we find a decent long term price for the SRECs and lock in. I like that idea as well. I suspect as more people go solar this value will drop.

Thanks for replies all.

21. Aug 17, 2009

Artman

I asked our contractor about this. He said in NJ there are laws protecting our right to use solar energy, but he said they will check with the local officials as well.

Topher925, it is my understanding that in NJ, because of the SRECs, the utilities are only required to purchase 1 kwh to 1 kwh plus about 5% overproduction at regular rates. Beyond that they pay nothing for any overproduction. So the idea is to size the systems as close as possible or slightly below the annual electric load. Ours was sized slightly below (about \$11 a month worth at current electric rates), with hope we can conserve the difference or the system will produce better than expected.

22. Dec 16, 2009

Artman

The project is almost finished. Construction is complete and the system is functional, but we're now waiting for Local then State inspections.

It's been a long time coming (August till now). The array is huge, 56 feet long 12 feet high diagonally, 4 rows of 10 columns for a total of 40 panels at 220 watts each. We had to have about twenty trees removed because our local codes require 30 feet of setback from property lines, which moved us up into shade from several of our large trees. Rain put us back about two weeks because our tree removal service kept getting their equipment stuck.

23. Dec 16, 2009

mheslep

24. Dec 16, 2009

dlgoff

Thanks for the update. Let us know when you start generating to give us an idea of how well it's doing.

25. Dec 16, 2009

Brian_C

I wouldn't invest in anything right now.

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