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Buying Solar Panels - Should this be looked at as an investment?

Started by MisterS, November 01, 2018, 09:39:20 AM

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MisterS

I've been curious about going solar for some time and have finally started to get some quotes to look at the numbers.  I would be looking to pay for this with cash using my savings or possibly using a HELOC, but owning the panels outright.  Summary, after tax rebate this is something between $16,000-$20,000 investment.  My monthly electricity bill is $150 average per year.  That goes to like $10/year for taxes or something.  So Let's just say my total cost is $18,000 and my savings is around $1800 year.  I look at this as a 10% return on investment per year...and if my electricity rates go up year after year, that savings rate also goes up.  I think the break-even point is around year 9 (+/-) which then gives me unlimited returns. 

My question to you is, am I looking at this the right way, instead of investing the $20,000 in the stock market, looking at a safe 10% return on investment?  Is SOLAR a scam or legit in terms of investing and saving money?  This is what is really intriguing to me, because if someone said you can have a guaranteed 8-10% return on your money, I would probably jump at it. 

NOTE:  I dont plan on moving anytime soon, at least 10 years.  I am saving for private high school and college, but maxing out retirement.  Starting to slowly invest more money in taxable accounts, but have large savings ($100K) that i have been using to pay for some home improvements, but mostly for emergency and long-term savings goals. 

Derrick

I like the thought of solar and I think we are getting closer to the point where it starts making sense. Two issues I have with it is it takes 10-15 years to breakeven (depending on costs, location/how much sun you get etc..) the average roof lasts 15 years or so, so just around breakeven point you have to take the panels off to repair the roof, then put them back down, they also require maintenance of periodic inspections, and cleaning to optimize performance.

I haven't looked into this aspect but the batteries that some systems have are expensive, I am not sure the lifespan or upkeep on these but think they need looked into and taken into consideration.

Personally for me I think investing is the better return for my money right now.

I hope solar prices keep coming down because we have a Tesla/Panasonic factory here that produces batteries and looking to ramp up production of a solar shingle like roof panels as well as the rear roof of my house is south facing and gets good sun all day.
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MisterS

Thanks for your input on this.  I guess that is the good news, the prices keep coming down on this.  I actually have someone coming to my house to give me a quote and talk to me in person, so I will ask some of the relevant questions.  I am about 50/50 at this point, but realize there are other things to do with that money and i can take my time to make that decision.  In regard to the roof, I thought about that, but they said its pretty painless to remove the panels, replace the roof and put the panels back up.  Assuming there is a cost with that.  Good questions to ask. T hanks for the reply.

deific

Quote from: Derrick on November 01, 2018, 10:37:34 AM
I like the thought of solar and I think we are getting closer to the point where it starts making sense. Two issues I have with it is it takes 10-15 years to breakeven (depending on costs, location/how much sun you get etc..) the average roof lasts 15 years or so, so just around breakeven point you have to take the panels off to repair the roof, then put them back down, they also require maintenance of periodic inspections, and cleaning to optimize performance.

I haven't looked into this aspect but the batteries that some systems have are expensive, I am not sure the lifespan or upkeep on these but think they need looked into and taken into consideration.

Personally for me I think investing is the better return for my money right now.

I hope solar prices keep coming down because we have a Tesla/Panasonic factory here that produces batteries and looking to ramp up production of a solar shingle like roof panels as well as the rear roof of my house is south facing and gets good sun all day.
Roofs last quite a bit longer than this, atleast 20 years more like 30. Provided they are installed correctly.

surpass

I bought the panels on my home almost 10 years ago.  The prices have come WAY down and I do wish I had waited.  My pay back period was around 20 years, which is too long.  The prices of panels are so much cheaper that the break even point should be half that.

I also bought them, because I wanted to do it for environmental reasons.  Its also why I bought a Chevy Volt electric car.  So for me it didn't come down to just dollars and sense. 

Also, I just starting using Arcadia Power for my electric bill.  They work with your current electric company and half your energy produced will automatically be renewable power with no additional cost.  I just opted for the paid 100% wind power option, paying a little extra per kilowatt hour for environmental reasons.  They also have a community solar panel option you may want to look into. 

Cheezus

I have a $25,000 system on my house.  The previous owner put them up, didn't think he would be selling the house, and sold the house barely a year later.  He didn't get a penny for them based on what I paid for the house.

They save roughly $150/mo on the electric bill.  It's my second home and we are only there 4 - 6 days per month, it's nice as my electric bill is usually around $15/mo even in Florida running AC (as we aren't there using it regularly).

Personally, solar is still so young that I would wait.  Even just another 2 - 3 years. 

But I do see your point as it's a near guaranteed 8% - 10% ROI.  If you want to go for it, it's going to pay for itself.  You won't lose money unless you sell the house.  So the risk isn't severe.

nycrite

I'd be weary about two aspects of this investment. One was already mentioned in the form of battery replacement frequency and cost. The other is the useful life of a solar panel. Although replacement costs will decline as manufacturing becomes more efficient, is it reasonable to assume these will last 15, 20, or even 30+ years?

Cheezus

Quote from: nycrite on November 02, 2018, 12:23:44 PM
I'd be weary about two aspects of this investment. One was already mentioned in the form of battery replacement frequency and cost. The other is the useful life of a solar panel. Although replacement costs will decline as manufacturing becomes more efficient, is it reasonable to assume these will last 15, 20, or even 30+ years?

Depending on the utility, a battery may not be necessary at all.  I have no battery and just feed in to the grid since I get credits.  If you don't get credits, then you need to store the excess electricity and use it.  This totally depends on the specific utility.

The panels are said to last 25 - 30 years.  But that doesn't mean you need to replace them after 25 years, it just means they are making less and less electricity and that's the point where you may want to consider replacement, though they'll still be generating power.

Kendall

I did a lot of calculations before we put solar on our house.

Calculate the average daily power use over a year, to include summer vs. winter demand, and anticipate any new loads you might get soon (like a hot tub)
Aim for enough panels to supply that load and no more, this gets you to breakeven soonest. My installer wanted to put 11 panels on the roof, we needed 15. 
Panels have a 20 year life. They are about 20% efficient and lose 0.5% of efficiency per year. The inverters have about a 10 year warranty and that may be the expected life.
And the roof should be new before putting on the panels to avoid the reinstallation cost.

I had to make a spreadsheet to find breakeven, this got very complicated.

Best case scenario for us, it will take 8 years to reach breakeven on cost, this is in sunny California.

JC

We have had solar on our house for ten years now.  We even put it on our rental property five years ago.  Here are a few observations:

1.  Remember the Solar Tax Credit (not depreciation).  That saves you 30%.

2.  Make sure you have a good roof prior to install.  Solar panels tend to protect roofs from sun, wind and rain, so should last longer than similar non-solar roofs.  I am told that the cost of a new roof can sometimes be rolled into the install, qualifying some or all of it for 30% tax credit.  But consult your tax advisor on that one.

3.  In our state (CA) energy costs are high and keep going up.  So this is an "investment" which keeps paying more over time.

4.  Keep in mind the psychological aspect.  I love receiving a $10 electric bill every month (the monthly connection fee to grid).  I feel like my costs are controlled, and I am sticking it to PG&E every month.  Very satisfying. 

5.  My tenants love not paying for electricity.  I make sure they remember this frequently.  We have high retention rate for good tenants, perhaps partly because of this.  Not sure putting solar on an apartment makes sense financially, but it is worth it to us.

6.  We have an electric car.  No more hassles of going to gas station to fill up, and electric costs for recharging are now very low. 

7.  I still can't make getting storage battery like Tesla's pay, so am holding off on this for a few years.



Cheezus

The Tesla powerwall only makes sense if you can't sell back to the grid OR you desire electric backup for power outages.  But for emergency backup, I'd prefer a $400 generator.