How long until you start seeing a return on investment? Right now my electricity bill for my home is ~100 a month in Texas. I would need to keep the same panels without maintenance fees for 33.33 years by your price point of 40k
That is a slightly more nuanced question than you might think.
First, I work from a baseline cost of $19K, even though the list price was closer to $40K I didn't pay that for the system so I use the actual cost in my calculations.
Second there is the point where the money you've saved is equal to the money you paid, we hit that point about 10 years in. And then, depending on the life of your system (which has "positive cashflow" at that point) determines your overall rate of return. The replacment inverter (which is actually going to replace both inverters) is $2K ("upgrade" pricing from the manufacturer) And as the inverter was failing our system was under performing (so not generating as much power). The question will be how much longer am I willing to run the panels. The warranty is 25 years, so in theory another 10 years but the manufacturer (Sharp) no longer makes them and cannot replace them under warranty (they can only offer to repay you to buy a panel from some other vendor with equivalent specs and size).
So from a money perspective, had I used the $19K and put it into an S&P 500 ETF in 2003, it would have doubled by now (SPX was 1,008 in 2003, its over 2,016 today). So "bad investment" comparatively. If the panels continue for an additional 8 years and PG&E's costs stay about the same then I'll have generated about $20K in value from them so that would pencil out to a ARR of about 3.5%. Initially I funded the panels with a refinance of the house loan and that was at 6% but that has since been refinanced even lower. However had it not been, at my original purchase I'd still be running a deficit trying to both pay back the house and generate cash from the solar.
Interestingly for me, with the $7K it would cost to re-implement that system today, and 4% mortgage rates, it would have a rate of return of closer to 14% (10% if you subtract 4% as the cost of capital for a mortgage refi) and pay for itself in a bit more than 3 years and have doubled the return in 6. The challenge is additional regulatory changes which get incorporated into new installations versus the regulation regime I operate under based on my 2003 install date. I wonder sometimes what the trigger is for resetting the project's origin date.
I think you're being a little unfair with the S&P comparison: you should be comparing the returns on your actual investment with the expected returns on the S&P, not its actual returns. The stock market got a 5.4% return over that time, yes, but that's above average; we should expect its long-run returns to be close to the rate of economic growth, or more like 3%. And it could easily have been zero or even negative over a short time like 13 years.
By comparison, the risk that your solar panels will stop producing electricity, or that someone will invent Mr. Fusion and drop the price of electricity through the floor in the next decade, is quite low.
True, but its too easy to get lost in financial modeling. There were two high order bits in my decision, first was that the money was spent either way; Either I would be paying PG&E month to month, or I'd be paying off the system. And there was a good shot that the panels would generate as much or more energy for that investment. The second was that I felt it was the right thing to do, not a lot of people were in a position at the time to pay those sorts of costs and I really believe that finding better ways to power the world was a noble cause, by investing in a solar system, even if it was a 'bad' investment, it was jumpstarting the market for solar. That helped with the chicken/egg problem of people investing in new solar tech to meet a market that was (by the action of early adopters) clearly emerging.
So every time I find myself having this discussion in a group, there are folks who want to argue the financial model to "show" something (generally negative) about solar power. Either it's not a good investment, or it's just coal power used to make the stuff that now is generating not even as much power was was used to manufacture it, or it's causing more pollution by forcing utilities to turn plants on and off, etc etc.
I was fortunate that I could finance it without risking things like my kid's college fund, I live in an area where there is a lot of sun and mild weather so my house's "demand" is quite manageable, and as an engineer I get to live my belief that we can engineer solutions to the worlds problems like energy interdependence and climate change.
I am grateful that today, the systems costs have gotten so low that it's possible for more people to make that choice.
Just to be clear, I think it was a decent investment then (better than the stock market) and an excellent one now. I'm not one of the folks trying to show something negative about solar power.
May I ask where you got your 3% because that number is very low compared to any number I have ever read? This Wikipedia chart shows annualized returns to be 10.47%. That is >3x your 3%.
https://en.wikipedia.org/wiki/S%26P_500_Index#Annual_returns
It's true that stocks in the US in the 20th century dramatically outperformed that 3%. This is for three reasons: first, up to about 1975, the world's economic growth rate was higher than 3%, due to the Second Industrial Revolution; second, up to about 1975, the US's economic growth rate was even higher than the world's, because it was taking over the markets previously supplied by the bombed-out economies of Europe (especially the UK) and Japan. Third, since about 1970, the share of economic output that went to owners of capital (rather than labor) increased dramatically.
Now, the third of those things probably can't happen again, because capital's share of output is already super high. (It's not that it can't get higher, but it can't go past 100%.) The second could happen again, but if it does, the US will be in the position of the UK, Japan, or Germany — it's now the Single Superpower (not even a mere Great Power) who could lose market share, probably to China or to a non-nation-state power. Investors in Japan's and Germany's stock markets in 1925 or 1935 didn't do so well.
The first, well, that's anyone's guess. It's a total wildcard.
It's certainly reasonable to posit a Third Industrial Revolution, made out of some of free software, nanobots, biotech, abundant solar energy, AI, and automated fabrication. I sure hope we get one. But if we do, it's not at all obvious who the returns will flow to. (Everyone, I hope, not just shareholders.) Accumulating capital goods, as we've been doing for three million years, is less important when your capital stock can double every 24 hours through self-replication. Breweries do not account for the quantity of yeast they have on hand as a durable capital asset.
And it seems equally plausible that we'll instead experience a new Bronze Age Collapse or Decline and Fall, as inexpensive DIY drones, very affordable precision projectiles, anonymous markets in assassination, and ubiquitous retail surveillance provide a decisive advantage for attackers over defenders in the physical world, just as their software counterparts have on the internet.
Returns to the S&P should beat GDP growth even in the long run, steady-state.
GDP growth flows to both debt and equity. The debt market is actually much larger than the equity market and since its returns are lower than equities, and they both share GDP as a source of returns in the long run, equities should beat GDP growth in the long run. This argument isn't iron clad, but hopefully you can see the general picture.
The Gordon growth formula is taught in intro to finance classes to estimate returns to equity. The theory is that stock market returns equal the dividend yield plus growth in stock prices. Stock prices alone are in the long run expected to grow at the same rate as GDP, but the actual return should be higher by the rate of the dividend yield.
These are the most basic arguments against what you're saying, but I would also caution against assuming that any particular macroeconomic trend will end, especially that it will end in a timeframe relevant to decisions related to solar panel installations. Sometimes they just keep going. There is no mathematical reason that equity prices can't go to infinity, as required rates of return can decrease to zero. If the world becomes more predictable and stable, equities can keep becoming more and more valuable with no damage to finance theory.
To summarize the article, the long-run correlation between stock prices and economic growth rates is positive at 0.51, and in the short run the correlation is actually negative (no number given), because investors bid up stock prices in fast-growing economies, because they expect the growth to continue.
If the growth did continue, then they would make money, but often it doesn't, so they overpaid, so they get below-average (and often below-break-even) returns.
Also, per-capita GDP growth is irrelevant; what correlates positively with equity returns is total GDP growth, including the change in population.
So, on the contrary, this article provides a great deal of reason and even empirical evidence to believe that returns on US stocks should follow US economic growth rates.
I understand the rate of GDP growth, the person you replied to specifically stated that they would have made more money on the SPX. Granted the S&P 500 is not guaranteed to go up, but historically it does.
"...first, up to about 1975, the world's economic growth rate was higher than 3%, due to the Second Industrial Revolution; second, up to about 1975, the US's economic growth rate was higher than the world's, because it was taking over the markets previously supplied by the bombed-out economies of Europe (especially the UK) and Japan."
Do you read the posts you reply to? Because the chart I linked starts in 1970. And you are discussing GDP when the post you were replying to specifically was talking about investing in the market.
I'm not an expert here, but doesn't it make sense for stocks to return higher than growth because of earnings?
For example imagine I own stocks making up 1% of in a company w/ earnings of $X, and market cap of 10 * $X. If the companies growth over a year is 3%, at the beginning of the year my stocks should be worth 0.01 * $X and at the end of the year 1.03 * 0.01 * $X due to the growth, BUT shouldn't i also have received 0.01 * $X (my share of earnings) in dividends that I am free to reinvest, giving me a 4% return overall?
If the company's value increases by 4% over the year, and it pays out one of those four percentage points as a dividend and reinvests the other three, you get the scenario you're talking about. (And it doesn't matter how much of that 4% is revenue minus cost of sales and how much is, say, increase in value of its holdings in another company or real estate.) But if the economy grew by 3% and the company's value increased by 4%, your company is doing better than the economy as a whole, and it's because someone else is doing worse. In the US over the last 40 years, a very significant "someone else" here has been the employees — as they have lost bargaining power, they have gotten worse bargains.
It seems like maybe you're saying that the revenues, and therefore the profits, don't count here because they're not part of economic growth, but just part of the ongoing economic activity. But what determines the P/E ratio, which is to say the return on capital (as a reciprocal), across the market? What keeps investors from bidding the market cap of the company up from ten times earnings to a hundred, a thousand, or ten thousand times earnings? It's the availability of other investments that they expect to grow in value at a higher (risk-adjusted) rate. If you can get a 16% annual return on your investment by buying solar panels instead of stocks, then the guy who does that will have 16% more money to invest in more solar panels every year, until either he bids the price of solar panels up (due to limited manufacturing capacity) or he bids the price of electricity down (due to limited transmission grids or electrical demand). The first of those is already happening; the second one should start happening in about 2024, earlier in some areas.
Now, you could argue that there's a difference between this solar panel maniac guy spending 16% of his capital base in solar panels every year, accumulating more and more solar panels and selling the electricity from them to buy more, and GDP growth, because the solar panel maniac is accumulating a stock, while what the GDP measures is a flow.
But note that by the hypothesis that the maniac is investing to get some relatively inflexible percentage return on his investment, he receives a flow of earnings that is proportional to that investment. And that flow is part of the GDP.
GDP growth has no strict correlation to stock market returns. Why not? Because corporate profits (eg the S&P 500) can grow far faster than GDP, as they did from 2002-2014.
You should not expect stock market returns to mirror GDP growth. The S&P 500 is not strictly representative of US economic performance, which is precisely why the huge corporations did so well with the cheap dollar and significant global economic expansion while domestic locked companies didn't fair nearly so well.
Your point that the S&P 500 represents large US companies, rather than all US companies, is well taken. Still, the process of centralization you describe (where most gains go to past winners) can't continue indefinitely; the S&P 500 companies (at least the ones in the US) can't account for more than 100% of US production.
Additionally, you'd have to subtract the monthly power bill from those returns. I.e. you can't say "I would have doubled my $20k return by investing it for 10 years", because you can't defer your monthly power bill for 10 years and pay it in a lump sum after you doubled your money in the S&P. Paying $100+/month for power would substantially impede the interest compounding effect.
No, that would amount to double-counting the returns. Yes, you need to time-discount future returns, and you may need to risk-adjust, but that's already taken into account.
The rate of economic growth has little relation to the stock market yield. For one you have forgotten about the dividends, currently around 2%. Now lets assume the company grows by 3%, so your shares will now be worth 3% more. But the total return will actually be 5%.
However here I assumed that there was no drop in optimism, or pessimism over the one year period. For if you were to bought in when expectations were high, your actual return would be lower.
Sometime the relation between growth and return is completely paradoxical. You would expect that in the past 100 years a portofolio invested in UK stocks to be dominated by one of US stocks. After all the first country went from being The Global Superpower to dubious second rate global player, meanwhile the US had done the same in reverse. Yet an investor in UK stocks would have been marginally better of.
Likewise you would expect China with its spectacular growth, to have brought impressive returns compared to the US. Yet that had not happened.
Actually the markets are "supposed" to double every 10 years, which is said that on average over 10 years, the markets will grow 10% per year. Since the recession 8 years ago that has been much lower, but in general, that is the rule most industry people will give you. I work as a tech guy in finance and have for the past 8.5ish years.
The U.S. markets reflect the U.S. ascending to become the dominant world power over the course of a century. Naturally, the markets grew during this period of tremendous economic growth. The investment industry likes to extrapolate from this, and declare it a rule of the markets as if it's a law of physics.
If growth slows or stalls, eventually the markets will catch up. A market that grows independently of the underlying economy doesn't make sense in the long term.
For something to double in 10 years it only has to grow by 6.9% per year. This is from a somewhat unusual application of The Rule of 69. Latter is way of determining doubling time of something that grows by x%: just divide 69 by x and that will be the doubling time in periods.
So if the DB grows by 10% weekly, then it will double in 6.9 weeks. If the interest rate is 3% then the debt will double in years, etc.
The Rule of 69 is good for a approximation, that works well with low single digit increases.
Just because the S&P has seen such returns over the last 40 years, doesn't mean you'll see those returns over the next 40 years. The US economy is aging out, has stagnant wages, etc.
Going to disagree with you here. I think it'll be impossible to raise interest rates much further without causing economic damage. See negative interest rate policies in Japan and Europe, and close to zero rates still in the US.
Incorrect, please re-read my statement. An average 10% annual return over 10 years. As the other reply to this notes, history shows in general this rule has held since 1970ish.
Don't forget about taxes. Interest on that 6% loan get's deducted from your income which is an arguable subsidy. Alternatively, you also avoid paying taxes on your S&P returns.
In many cases solar is really close to a no brainier. Which is why Florida Utility's have tried so hard to block residential adoption.
> In many cases solar is really close to a no brainier. Which is why Florida Utility's have tried so hard to block residential adoption.
This is actually turning into a hollow victory for Florida utilities. To bring people up to speed, Florida outlawed homeowner PPAs [1] (which locks out firms like Solar City, who install the panels and sell you power; no out of pocket cost for you, and you get solar immediately).
With the rapid decrease in panel costs, and the uptick in firms who are providing extremely cheap (or even zero percent loans in some programs!) financing for solar, Solar City (and other installers) are moving towards a financing model, which kills Florida's efforts to stop the spread of distributed rooftop solar.
Disclaimer: I did some volunteer work for the non-profit who attempted to fight utility legislation in this space [2].
A car is usually a much shorter lease with much better liquidity. There is a robust market for transferring a vehicle lease, the PPA is as likely to derail a sale of the house as anything else.
Usually, it's a more complicated issue, something like: "Historically, grid maintenance costs are amortized over electricity consumption, but when some people become net contributors, that breaks the model, since usage isn't high enough to pay for maintenance."
Of course, the correct solution isn't to compound one perverse incentive (out-of-sync fixed vs variable pricing) with another (ban on solar or refusal to buy); it's to change to a system of decoupled maintenance and power pricing.
The concern runs deeper than this. You can go off grid with solar for minimal additional costs, so they fear people will simply disconnect from the grid. Couple this with for profit electric company's and bribing/lobbying is the 'solution'.
but yeah, if i happen to still live in this house in 15 years, sure, no electricity bill. and, i'm sure somewhere along the line i'll end up "making all my money back".
Solar leases bring down the resale value of a home.
If the equipment is owned it raises the resale value of a home.
I've sold 2 homes this year with solar leases. Both of them were great deals for the buyers netting basically the value of the lease off the full retail value of the home.
But what happens when you no longer get free power under net zero agreements (which is going to happen), and the cost of the system drops, reducing the value further of the already depreciating asset?
They will continue to save money on his monthly power bill, to a lesser extent. They will still have the warm fuzzy feeling that their existence is putting less of a drain on the planet's resources than they otherwise would have. And they may have captured a great deal of surplus value, possibly even enough to pay for the system before these changes are implemented.
In the past 25 years, electricity rates in CA have seen a 3-4x increase. If this continues, then even as some of the advantages drop away, the comparison function (monthly electric bill) will also increase, likely offsetting a lot of lost value.
Depends. Solar doesnt necessarily add value. Depends on the appraisal. I only know because I tried to buy a home with solar panels. The homeowner had raised the price of the home to include his investment in the panels but the appraiser wouldnt include the panels in the appraisal.
This is true, because the job of the appraiser is to estimate market value. If buyers will not pay a premium, they have no resale value. But in my experience buying a home in SFBA with solar, and getting it appraised for refi, it counted both times. (In the cost approach it was valued at $20k in 2013 and $10k this year)
Appraisals are not strictly tied to price of homes. Only the value for the loan. That's not to say you're not going to associate the two together (if you're buying a house with a loan), but the $30k one way or the other isn't a huge percentage of a 30 year loan.
Depends on where you buy. A 200K home in the midwest, 30K is a big percentage. The assumption being made here is that investing in solar automatically raises the value of the home. I am saying not necessarily. The example above was an appraisal in Madison WI, which, though in the midwest, definitely has plenty of solar installs.
Appraisals are supposed to be strictly tied to the price of homes. The appraisal shows how much the property would probably sell for on the open market today. The loan amount doesn't even show up on the report.
Excellent example of why solar panels (in the right locations) and LEDs are a better investment than the S&P500 right now. You spend dollars now to eliminate the need for future dollars.
If everybody buys solar, electricity prices will only rise faster than inflation in periods without much sun.
It might even be profitable to play a 'buy when it is free or cheaper, use when it costs money' strategy. You can get there by buying large batteries, charging them from your neighbor's solar panels when there is lots and lots of sun (they may even sell at prices below zero), and discharging them, selling to you neighbors, when there is little sun and wind.
I'm already investigating buying 50+ MW at a time of Tesla Powerpacks in certain markets exactly for this purpose, as an independent generator. Buy power when people are paying you to take it, releasing it back to the grid at the most expensive times.
Unlikely. Solar Panels don't replace all of your electricity costs. Naturally, you'll still run your refrigerator at night, right?
And during the day, when you have peak-solar energy, you'll be at work and won't be taking advantage of it. You'll recoup some of the costs through net-metering, but you usually buy back at wholesale prices and not at retail prices.
Finally, I'd expect utility companies to change their pricing scheme in the near future to account for solar. They service your electrical wires for example, and you'll likely have to pay a certain amount of money for that. So while you're not buying "power" (or at least, as much power) as before, you'll still have the service cost of being hooked up to the grid.
Chuck's sibling reply is spot on, but something else you must realize is that both renewables and energy storage are only going to get cheaper.
This means if utilities attempt to squeeze people with solar on their roof, they will simply move to batteries eventually. This already makes sense, today, in Hawaii (where the local utility was stalling on additional grid tie capacity, and with their per kwh rates so high, is was cheaper to go off grid). The more people who move off grid, the less people the utility can spread its costs across, increasing the rates for those remaining (which then rapidly incentives those people to move off grid).
This is called "the utility death spiral". Its a very real possible outcome, and utilities are aware of it. [+]
But what's to stop utilities from purchasing or creating cheaper large-scale projects?
I know you've seen my previous comments on Reddit with regards to Redox Flow batteries, CAES, and Pumped Hydro storage technologies. Utilities simply have access to battery-technology that the common people do NOT have access to. Some energy storage technologies only make sense in larger-scale 50MW applications or more.
If utilities serve a cooperative role in energy service, they will switch to the most cost-effective technology BEFORE the typical homeowner can switch.
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Basically, solar pricing is moving FASTER than rooftop solar. Rooftop solar will always require insurance and roof-workers, while solar utility companies can just buy out a field in the middle of no where and install solar on the ground.
Cheaper and safer for utilities to work with. And then everyone in the town benefits, instead of just a few rich people who can afford panels (and the insurance of the rooftop workers)
At some point the price for the panels will drop below the price (and losses) of the transmission lines to transmit the energy from the large-scale project to your house. This happened long ago if you live in certain parts of the Rocky Mountains, and it will happen in areas of progressively greater population density.
Rooftop solar only needs roof-workers and their insurance until you have a cherry-picker-style robot arm to stick the panels up there with.
Utilities have a lot of capital tied in their existing fossil fuel plants, and their economics are probably tied into running these at capacity for their remaining lives.
So from their perspective it makes sense to lobby politicians to stall residential solar as long as possible, the environment be damned.
You need to consider the economics of "grid tie" you generate excess power into the grid and "buy it back" when you aren't generating in excess. So if you generate as much power as your going to use for the entire day from your panels, you pay nothing for that day. Even though you are drawing power at night.
In the Bay Area, there are other things that screw up the numbers but the program "trues up" once a year (rather than monthly) so some months (usually late spring through early fall) I'm generating more power than I use for the month, and fall/winter I consume more power than I generate in a month. The target is to hit it at exactly 0 which was easier to do when PG&E would exchange kilowatts for kilowatts but it is harder now with their system of charging extra kilowatts over baseline. Its screwed up and not fair but I get that they are hurting, if I could get Elon to sell me the battery pack out of a Model S and the inverter infrastructure to go with it, I could leave the grid entirely and that would be easier.
> You need to consider the economics of "grid tie" you generate excess power into the grid and "buy it back" when you aren't generating in excess.
Depends on the state.
Sometimes, you buy at retail prices and sell at wholesale prices. Which honestly, is far more fair. You're basically using the utility's batteries / energy storage at no charge right now (if you're in a state with pure net metering laws)
And yes, purchasing a PowerWall is more "fair". Instead of relying on the service and tax-incentives to give you a free battery pack, its definitely more fair if you got your own.
"Fair" in the context of a heavily regulated utility should have some relation to social benefit.
It's not fair for utilities to force costs onto consumers just because of a differential of political influence. It's not fair that solar reduces grid load at their peaks and saves them money on building out grid capacity and expensive and inefficient CO2 producing gas peaker plants and that benefit is not returned to the provider of that service.
Overall the many benefits of rooftop solar can be calculated and a value assigned. Most seem to come out at net or above, so talk of average wholesale prices is misdirection.
Consumers should pay a fair price for the service.
If consumers are using the utility's batteries and the utility's network, then the consumer should pay for the use of those services.
Peaker-plants can have a very simple solution: carbon taxes. Simple enough, and I support this measure to handle the externality.
Rooftop solar currently is probably a net benefit as long as the storage issue isn't a problem. (IE: the rest of the neighborhood doesn't have solar). But once solar adoption is widespread, someone needs to solve the storage issue (or "energy waste", if there is no more storage)
I'm glad you support a carbon price, because that's another great example of where "fair" becomes a political discussion.
I could say that if a coal producer wants to dump sulphur, radiation, C02 etc. into the air then it's "fair" that they recompense the people who live in the countries they pollute and the people they help to kill. Why should those who don't do this (people who generate their own electricity or pay to have non-coal energy) have to shoulder these costs?
Simple argument right? But no, it's a decades long political fight with no end in sight, because some groups have dispersed interests, while other groups have very direct incentives.
The same is true here, lots more rooftop solar would be of small benefit to most people. But it directly threatens some concentrated interests. And they will happily tell you that solar will destroy the grid, or net-metering isn't fair etc. etc. Not because it's true, but because it's in their narrow and short term interests to lie.
The difference is that I also think that net-metering is an unfair deal to utility companies. Again, someone needs to build the energy storage mechanism. You can't legislate away reality.
Unless it's dorm-fridge-sized, you can definitely run your refrigerator only during the day, generating ice to cool it during the night. Building HVAC systems often work this way, running the chiller to generate ice during the night (when electricity prices are low or even negative) and running the resulting chilled water through heat-exchanger coils during the day. And superinsulated fridges like Sunfrost models can stay cool during the night even without such extra thermal reservoirs.
A thing I haven't seen, but which ought to be practical, is a solar thermal fridge — for example, using the ammonia-absorption cycle that propane-powered fridges use, but heated with sunlight instead of flames. PV panels are typically 16% efficient, but it's easy for solar thermal collectors to reach 50% efficient, and they're also about five times cheaper per unit area (still). So you'd think it would make sense to power the fridge directly from sunlight.
As an EMH guy, I'd like to think that if an Einstein–Szilard cooler was more economical than grid power for A/C and/or food refrigeration that there'd already be systems for sale.
> And during the day, when you have peak-solar energy, you'll be at work and won't be taking advantage of it.
I'm in Central Texas and I have two dogs at home. Even if I'm not there, I still leave the air condition going so they are comfortable. The last time I checked, my A/C system was the biggest power hog and so my electricity consumption aligns very closely with when the sun is shining.
But not the only thing. My point is that its way too idealistic to assume that 100% of the costs will be covered.
I mean, yes, the laws as written seem to encourage a 1-to-1 transmission of energy. "Net Metering" is a law that subsidizes decentralized solar energy.
But in the future, when the subsidies run out and the laws are written to be FAIR (instead of written to encourage solar, as they are right now), you will not be allowed to purchase electricity and sell electricity back at the same prices.
All markets have a bid-ask spread. Wholesale prices are always going to be cheaper than retail prices.
I'm not sure what you mean by 100% of the costs will be covered. All I know is that I can reduce the amount of electricity that I buy during the day when I consume the most. The savings are greater than the cost so it's pretty much a no-brainer for me at this point. If I finance, I can pretty pay for the system with the money that I'm no longer using to buy electricity.
> when the subsidies run out
Why stop subsidizing solar? Do you think all energy subsidies are going away, or just solar?
I think that net-metering is going to go away once solar adoption reaches a certain critical mass. You can't keep giving away free batteries to consumers, someone eventually will need to pay for those batteries.
Other solar subsidies may remain a bit longer. But net-metering is probably the biggest once.
> I'm not sure what you mean by 100% of the costs will be covered. All I know is that I can reduce the amount of electricity that I buy during the day when I consume the most. The savings are greater than the cost so it's pretty much a no-brainer for me at this point. If I finance, I can pretty pay for the system with the money that I'm no longer using to buy electricity.
SunEdison's model has been proven to be incompetent. SolarCity's "MyPower" loans have been scuttled. That's WITH the current large number of pro-solar subsidies that the US Government is paying for.
I think that it's a "no brainer" to take advantage of SolarCity's deals as a consumer. But in the long-term, it looks like their finances are unsustainable.
Personally speaking, I'm more concerned about a long-term reliable model that manages to get the energy to the most number of people. Utility scale solar seems to be the best solution, although its a bit boring.
I'm not sure that the net metering argument applies to places like central Texas. People consume the most power when the sun is shining so solar, even without net metering, makes sense. Of course other regions are different.
> Utility scale solar seems to be the best solution
I don't think it makes sense to talk about a best solution. Large scale solar will contribute along with nuclear, coal, natural gas, wind, etc...
If you have space and money, you can create huge "gravity lamp" to store energy: lift up something massive using solar energy and electric motor, then it will slowly generate electricity at night using same motor as generator.
Or you can use "molecular spring", which is very compact, for same purpose.
How close are we to actually manufacturing molecular springs? My understanding is our materials science and engineering is not up for making macroscopic molecular springs yet, and what I can Google up seems to indicate we nowhere near macroscopic scale springs.
Make container of highly porous material then fill it with a fluid which will avoid that material surface at molecular level.
AFAIK, it is invented years ago.
Ops point was that the original price of 40k in 2003 is now 7k for the total installation. That will change your math somewhat :) So even with your low power bill it's more like 6 years.
Effectiveness of this varies by state or region. For instance, when I was in the Bay Area 10 years ago and looked into this, PG&E would let your electricity bill get to 0, but wouldn't let you go into rebate territory. They just wouldn't pay you for the additional electricity generated. I think other states/utilities have different options.
Most solar quotes take this into consideration, and quote you for enough solar to get into the minimum bill for your region (most utilities have a few hundred Kwh you can use per month at an obscenely low rate, and then it ramps up from there--solar is quoted so that you'll always stay within that cheapest range.)
For my current house in Austin, I'm still interested in solar, but it was both more cost-effective and had a shorter payback time to re-insulate to R36 in the attic and redo our horrible system (which had no ducts at all--agh, stupid 1956 house) than it was to do solar at the time.
Sadly, not in very many places. In most US states, for example, utilities have lobbied to get laws that don't allow residential customers to sell power back to them, at most net-metering agreements will allow you to get credits from any excess power your panels generate (which is how my utility handles mine - unfortunately, since I generate more than I use, I can't actually make use of those credits fully, and I'm giving away some power to the grid).
The typical American median household income is $51k.
Spending $40,000 of that on "clean energy" so that they can "feel better" is well outside of the typical person's price range. Even $7000 would be cost-prohibitive, especially if they're paying or saving up for their kids.
A cold can of beer also makes you feel better. Its a hell of a lot cheaper too. The answer for the typical American is to wait for utility-scale to build Solar out for them.
When the city as a whole notices that solar is cheaper than running peaker plants or whatever, then the city / municipality can purchase an entire field of solar (AND the energy storage needed to make it useful) and give it out for the whole town.
And in the mean time, you can drink your beer on the porch while you wait for progress to be made.
US$40K was the cost when Chuck did it in 2003. Now we're talking about US$7000 over 25 years, which is US$23 a month. US$23 a month is not "well outside of the typical person's price range" in the US.
If you want to "save up for your kids", the way to do it is to invest your money in the investments that have the highest ROI, as long as you have enough liquidity to weather emergencies. Pay off your 23% credit card before your 17% credit card, pay off your 17% credit card before you start putting up solar panels that will have a 16% internal rate of return, and put up the solar panels before you buy the cold can of beer with its 0% ROI.
Twenty years from now, you'll be drinking your beer on the porch and sending your kids to college, while your typical American loser neighbors are whining about their credit card and electric bills.
> US$40K was the cost when Chuck did it in 2003. Now we're talking about US$7000 over 25 years, which is US$23 a month.
Chuck is replacing a $2000 inverter in just 10 years. If your emergencies include "fixing the damn solar panels that you bought", that's your own damn fault.
In any case, when middle-class Americans start buying solar en masse, I'll admit I'm wrong. But for now, I'm going to bet you that this is a luxury that is not cost-effective for the typical middle-class American.
It ain't like a Washing Machine, Refrigerator or Water Heater. I'll tell you that much.
It ain't like a washing machine in 2016, which everyone already has one of. It ai very much like a washing machine in 1916, when not many people had one yet, in that the year-over-year growth rate in installed solar panels is at about 26% (http://www.economist.com/news/business/21696941-solar-power-...).
An inverter that cost $2000 ten years ago now costs $400. (Amazon has a Bestek 2000W inverter for US$140 right now; three of these can supply more than what my house is wired for.) Even if you did have to buy a new $2000 inverter every 10 years, that's US$17 a month.
It's true that financing the up-front investment is a difficulty, and that's why Solar City is doing such great business. But as the component cost drops, accelerating both the IRR and the up-front investment size, that's less and less of a problem.
If you do want to bet on it, I imagine you can buy stock or long-expiry call options in coal-mining companies (BTU is in penny-stock territory right now because they filed for bankruptcy a couple weeks ago, and ACIIQ is too because they filed for bankruptcy in January), or puts on SCTY and Enel Green Power. This is a terrible idea and will lose you money, and you should not do it.
Because you refuse to calculate, you are doomed to talk nonsense.
> It's true that financing the up-front investment is a difficulty, and that's why Solar City is doing such great business
On the contrary. SolarCity hasn't made a profit and their stock has tanked. It seems like solving the up-front cost issue is difficult.
Widespread deployment of Utility-scale Solar will harm SolarCity and their customers (who have entered into long-term purchase agreements). If Widespread Solar LOWERS prices in the long term, then SolarCity dies.
Good for the world of course, but SolarCity's bets are on the wrong side of progress IMO.
Solar panels don't have to be replaced annually. They have 30 year warranties as standard, and are likely to last at least 40 years. Spending $100 per month to eliminate your $110 (the us average) and rising electric bill makes sense even if you don't value renewable energy on principle. This isn't even considering the fact that you can sell renewable energy credits for the energy you sell back to the grid.
THE FREAKING ARTICLE UNDER DISCUSSION IS ABOUT UTILITY-SCALE SOLAR.
Why would electric bills be rising if solar is getting cheaper? If solar is cheaper and more efficient today, and utility-scale solar can afford efficiencies like motors (to directly face the sun throughout the day), and building the panels on the ground (easier to maintain, fewer rooftop deaths)... why would I want to jump the gun and purchase solar for myself?
Tell me, do you think you can beat $.06/kWh that Utility-scale Solar is getting TODAY? Do you think you can beat the estimated cost of $0.03/kWh in 5 years?
I THINK the article is trying to say that electric prices in America is going to start going down, thanks to solar. Depending on how quickly solar gets deployed of course.
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Now yes, I do realize that buying your own solar comes with its own rewards. But we cannot ignore the risks. Gas prices have halved from their height of $4/gallon, and other forms of energy have also dropped in price.
Most noticeably, solar. No reason to buy solar yourself if you can just wait for the utilities to deploy solar after all.
First off, that 40K was the cost 10+ years ago, not today. Even so, lets be honest - the population of HN is not the median household. Even if the average American cannot afford to pay cash for solar, many software engineers probably can.
I've been trying to do this calculation myself. One factor I hadn't initially put in was the fact that I didn't need to think about a backup generator for our (east coast) storms.
You might—I do. Your inverter won't power the house when the grid supply is down. Why? Well, because if the grid supply's down, it's probably because there's a line down somewhere. Therefore there's a lineman trying to pick that line up somewhere. He's going to be handling both ends of a broken, downed line. The generator-side line is tagged out, that's safe. The house-side line? Well, that's up to you—and so your equipment will deactivate to avoid creating a safety hazard for grid maintenance staff.
A generator probably beats a lot of battery systems (which along with the right inverter and a transfer switch is another way to use the solar for backup power).
Well one issue with grid-tied systems is that when the grid is offline they provide no power (they explicitly don't want to back feed into the power lines and kill some lineman who things power is off). So one of the certification issues is to make sure that your inverters recognize that state and shut down.
But a side benefit of putting in the system was we did a lot of electrical panel work, and as as result put 8 circuits on to a transfer switch (the incremental cost was the transfer switch and the electrictian's time wasn't materially affected.) So when the power does go out we can fire up a generator and switch over to gen power easily.
I keep a close look at the economic of rooftop pricing in TX - it's still not profitable switching but getting close.
Cons:
- Retail cost of electricity is already v low in most of TX (Houston, Dallas) - so it's hard to compete.
- not much competition in the solar rooftop installation space (due to first point above)
- No net metering policies in Houston, Dallas.
I live in a brand new home. Spray foam insulation. Keep the AC at around 74 year round. I also have natural gas running in to my house for my stove and water heater. All of my light bulbs are LED.
> How long until you start seeing a return on investment?
Why can't the utility companies do the financing (upfront investment), place them on our roofs, and get a little bit of the profit? Seems like a win-win situation.
