cost of solar v. return on investment

24 posts / 0 new
Last post
frithtreegirl's picture
frithtreegirl
Status: Member (Offline)
Joined: Apr 29 2009
Posts: 2
cost of solar v. return on investment

My husband wants to do a 3.5 Kw on-grid ground-mount solar system.  It will cost us $15,000 after the rebate and the tax credit.  Our usage is such that if unchanged and if utility rates are unchanged it will take 20 years to recover this cost.  By that time we will have to have replaced the inverter two times, according to an expected life of 10 years for an inverter, and the panels will be at the end of their warrantied life.  Although I like the idea of solar (environmental responsibility, etc.), I don't see that it makes financial sense at this point in time.  Solar hot water makes sense to me, photovoltaic doesn't.  What am I missing on this?

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
Re: cost of solar v. return on investment

Hi frithtreegirl

Welcome to CM!

Yep I've had the same concerns. I ain't exactly young and that is a long time to wait on a return. On the other hand if you are out in a rural area and it allows you to get off the grid then I suppose there is some equity in just the simple satisfaction.

SteveW's picture
SteveW
Status: Gold Member (Offline)
Joined: Jan 21 2010
Posts: 490
Re: cost of solar v. return on investment

If solar hot water makes sense then just go with the solar hot water for now.

aggrivated's picture
aggrivated
Status: Platinum Member (Offline)
Joined: Sep 22 2010
Posts: 572
Re: cost of solar v. return on investment

I agree with the solar hot water since that takes a lot of energy and direct solar is much more efficient than using electricity. 

 Here's the gamble with solar electric as I see it.  You do solar now and 20 years from now electricity is costing just what it is now(or the 5%/yr increase most predict) and you sort of break even.  OR You do solar now and five years from now electricity costs over twice what it does now and you are smiling with your ten year break even. 
OR Inflation hits like many are predicting it will, then either way you are really smiling since electricity will cost more and so will installation of a system.   Right now I'm favoring solar electricity two to one.  What have I missed here? Abandoning the house because of civil unrest might be a slight risk in some areas.    I need somebody to talk me out of this quick before I put a system in myself.

TNdancer's picture
TNdancer
Status: Silver Member (Offline)
Joined: Aug 20 2008
Posts: 127
Re: cost of solar v. return on investment

25 years ago, we used 900kw/hrs month, and our bill was 25-30 dollars.   Today, we use 900kw/hrs/month, and that runs close to 100 bucks.

To think that electric rates aren't going to AT LEAST double in the next twenty years is a pipe dream.

And worst case, may not even be available on a regular basis, or at all.

IF you live up in the northeast, there are opportunities to sell SREC's ( Solar Renewable Energy Credits ) for up to 60 cents a kw/hr !!  Google it and check it out if that's your location.   A fixed mount 3.5kw system will probably produce 3,000kw/hrs/yr ( or more...location dependent), which if you can sell the SREC's, would generate $1,500/yr PLUS whatever you saved in electric cost...say another 500.....at 2k/yr, your payback drops to 7-8 years.

Although we get a decent infeed rate ( 12 cents over retail, retail is 9 cents right now ), payback is NOT the reason I installed my 3.2kw system ( soon to be a 5.6kw system when my next 10 panels get here )....I put it in as a backup system and for a day down the road when the grid may not be around.  Plus, when the power goes out, I flip the transfer switch and we keep right on operating.

 

 

deggleton's picture
deggleton
Status: Gold Member (Offline)
Joined: Mar 18 2008
Posts: 250
Re: cost of solar v. return on investment
TNdancer wrote:

...payback is NOT the reason I installed my 3.2kw system ( soon to be a 5.6kw system when my next 10 panels get here )....I put it in as a backup system and for a day down the road when the grid may not be around.  Plus, when the power goes out, I flip the transfer switch and we keep right on operating.

I agree this is the way to think about it, although here in Massachusetts, the grid is the backup system because we use our juice before we use the grid's.  We put the panels up in Q1 2009.  So far, we're on the grid, without batteries.  We plan to join TN dancer before long.  Must make room for the batteries!

David

frithtreegirl's picture
frithtreegirl
Status: Member (Offline)
Joined: Apr 29 2009
Posts: 2
Re: cost of solar v. return on investment

Thank you all for these responses.  It is helpful to get other viewpoints.  Additional data on our scene:  We are in the mountains of Southern CA.  Money is not unlimited.  We also want to upgrade our water system so it has fire-fighting capability and expand our irrigation system.  Also no greenhouse yet.  Part of the rush equation for solar has been a substantial rebate from the utility company that is a diminishing percentage as time moves forward.

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1329
Re: cost of solar v. return on investment

CA generally has some of the best incentives in the country.  Here in NM a grid tie system can have a 10% ROI. I would really double check the ROI on your system.  Your costs even sound reasonable.  A family member did a 6.8 kW combo ground and roof mount for right at 50K pre-tax. With the 30% federal and 10% state it works out to be in the same ballpark $/install kW as the system you quoted.  Here the utility does net metering with a $0.13/kWh REC purchase for 12 years.  How good is the utility rebate you can get?

I can tell you having our PV and thermal (domestic hot water/radiant heat) systems has helped my anxiety level quite a bit and it's been great knowing it just cranks out power all day for the last 7 months and getting then the bonus of the monthly checks from the electric company. :-)  Note, the inverters (SMA Sunny Boys) we have have a 10 yr waranty and for a $1000 you can extend it to 20 yrs.

TNdancer's picture
TNdancer
Status: Silver Member (Offline)
Joined: Aug 20 2008
Posts: 127
Re: cost of solar v. return on investment
rhare wrote:

 

... getting then the bonus of the monthly checks from the electric company. :-)

 

Yeah.....that's where I'm headed as well.  

Past month's bill was 4 bucks, and I figure adding another 10x245w panels will bring us in the "they send us a check" area !   I have dual Outback inverters, and each of them takes about 200w to run, no matter what the solar infeed is, so ramping the panel arrays up to close to the max on the inverters doesn't affect that loss that IS being applied to the first set of panels.....meaning this set is like getting 400 "bonus" watts......or 2450w with no loss, depending on how you view it....

Anyhow, I'm shooting for 40-50/mo that they will owe us.  The way our ultility does it is a credit on the monthly bill, and a check once a year IF you have excess credit at year end.

Also plan to make this array dual axis tracking versus the single axis I have on the current arrays. Noticed the kw/hrs/day goes up a bit around the spring/fall equinox when the fixed tilt of the arrays are most closely perpendicular to th the sun ( they are fixed at lattitude )....enough so that I'm going to try a dual mount this time.

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: cost of solar v. return on investment

http://damnthematrix.wordpress.com/

I’ve been meaning for ages to talk about our solar power system, but simply never seem to find the time.  But since my last posting on this poor neglected blog, a few things have happened, like me landing a consultancy job selling solar power to people in my area.  Yes… a real job!  Sometimes it feels like I’ve rejoined the Matrix…

Some five years ago, when our house project was barely up (a roof but no doors windows or cladding!) we put 20 US64 amorphous solar panels on the roof (1.28kW) with a German inverter by the name of SunProfi 1500E.  Yes, it’s 1.5kW, and the E stands for Emergency, which means we have battery backup for when the grid fails and we have to endure a blackout.  Or not in our case, the system automatically and instantaneously switches to battery power when this happens.  To be honest, the battery backup is a real indulgence.  First, we started out with a tiny 17Ah battery bank (the more Amp hours the more energy you are storing) which very quickly turned out totally inadequate.  It was soon removed and replaced with a second hand 100Ah set of batteries which cost us the princely sum of $100 and a bottle of rum.  So far they were the better value for money, because they lasted maybe 18 months or more, but they eventually curled their toes up and died.  So, a replacement set made in China and bought on eBay arrived, for a grand total of $1300.  Gel cells…  never again.  They barely lasted long enough to run out of warranty, and the problem with this inverter is that it will not work at all without batteries, and if they are dying, prodigious amounts of solar power is wasted trying to keep them charged up, instead of feeding the grid.

new 500Ah battery bank

Luckily for us, my new boss is one of the few solar people around here who isn’t one of those greedy business people who jumped on the rebates bandwagon to sell grid connected PVs for a quick buck, he actually knows solar, and has been in the business for thirty years….  some people even consider him a guru of sorts!  That’s why I chose him to work for.  And he deals in and knows batteries very well.

Out of the blue, he bought an entire telephone exchange worth of backup batteries for a song.  Not gel cells, and not piddly 100Ah jobs, these were the Rolls Royces of lead acid batteries, 500Ah Yuasa, which, he claims, have been known to last as long as 34 years…..  pretty amazing.  So I bought a set of 24 (2 volts each to make 48V) for barely more than the last set of crappy Chinese batteries.  So far so good.  They are all housed in a brand new little cubby I entirely built out of salvaged materials, looks like it’s always been there!

new PVs

new PVs, old system at the back

One thing I have learnt from rejoining this industry after a 15 year period of retirement, everything’s changed.  The incentives to screw panels to one’s roof are now hard to ignore, let alone resist.  So we decided to top up our old system with a totally new one, 2.2kW of, this time, monocrystalline Chinese made PVs with a 2.8kW Chinese inverter.  Yes, China is taking over the world…

I estimate that now we have reduced our consumption to around 3 kWh per day, we will be feeding so much excess energy into the grid during the day that we should make two to two and a half grand a year profit out of the panels…  I now firmly believe that ten years from now, there will be people with panels, and people without power. Or at least people who will not be able to afford the power they currently take for granted.  Only time will tell, but at least we are ready.

UPDATE..

Since first writing this entry, Energex connected us up to our new “smart meter” which automatically works out how much imported energy we need to be charged for, and how much excess we get credited for.  After just three days, it reads +5, -24.  In other words, we have made 24 x 52c (= $12.48) and we owe 5 x 20x = $1, which means we made ~$11.50 profit from the solar panels…  and there’s something wrong with the new inverter, it cuts out for around 1/3 the time, awaiting a software upgrade.

UPDATE 2..

It's two days off three weeks since we were connected up.  The meter now reads +37, -172.  So we've made 172 x $0.52 = $89.44, and we owe 37 x $0.20 = $7.40 for a profit of $82.04  

The inverter has had its software update......  and today we made over 18 kWh, 17 of which would have been profit!  Love that sun....

Phil Williams's picture
Phil Williams
Status: Gold Member (Offline)
Joined: Oct 14 2009
Posts: 345
Re: cost of solar v. return on investment

TreeGirl,

I sold a solar system here in PA recently, and the numbers and payback were as follows:

10.25 KW Ground Mount System

Cost before rebates and tax break: $63,920.00

PA State Rebate: $12,500

Federal Tax Credit 30%: $19,176

Net Project Cost: $32,244

Annual SREC income: $3712.50 (Conservatively based on $300 per MW, I am currently getting $375 at my house)

Annual Utility savings: $1856.25 (Based on 15 cents per KWH)

ROI: You will recoup project cost in 5.79 years.

TNdancer's picture
TNdancer
Status: Silver Member (Offline)
Joined: Aug 20 2008
Posts: 127
Re: cost of solar v. return on investment

DTM,

 

Those batteries look a lot like my Absolyte LNB's....picked up a band new 1200amp/hr set for a song from a cell company that was selling out to another company and wanted rid of their inventory.  Mine is a 24v set up.

 

TNdancer's picture
TNdancer
Status: Silver Member (Offline)
Joined: Aug 20 2008
Posts: 127
Re: cost of solar v. return on investment
zeroenergy21 wrote:

TreeGirl,

I sold a solar system here in PA recently, and the numbers and payback were as follows:

10.25 KW Ground Mount System

Cost before rebates and tax break: $63,920.00

PA State Rebate: $12,500

Federal Tax Credit 30%: $19,176

Net Project Cost: $32,244

Annual SREC income: $3712.50 (Conservatively based on $300 per MW, I am currently getting $375 at my house)

Annual Utility savings: $1856.25 (Based on 15 cents per KWH)

ROI: You will recoup project cost in 5.79 years.

 

That's pretty close in line with the figures I've seen also.  Wish we could sell SREC's here in TN, as it would beat the 12 cents/kw/hr I'm getting now by several times.  IF it becomes available, I'm jumping ship !

Woodman's picture
Woodman
Status: Diamond Member (Offline)
Joined: Sep 26 2008
Posts: 1028
Re: cost of solar v. return on investment

Good info from all, related to issues I'm struggling with. 

I talked to a designer/installer recently who told me although he lived off grid and one can rig up their own batteries system for less money, batteries are typically not cost effective and the systems he recommends now send excess power back to the grid.  I noted while this meets my goals to save money and use more renewable energy sources, another important goal is to build RESILIENCY.  I want to be resilient to multiple day power outages due to a storm or other events.  He noted a generator would serve me best for that.

Loss of refrigeration is the only real nuisance during an extended power outage.  Heating, cooking, lights, etc. I can handle w/o electricity.  Would solar panels work w/o batteries just to run the 'frige a bit during the day to keep it cool? - assuming there's some sun.   Then I could just keep a small battery for radio, LED lights etc.  

Tom

 

Phil Williams's picture
Phil Williams
Status: Gold Member (Offline)
Joined: Oct 14 2009
Posts: 345
Re: cost of solar v. return on investment

TN Dancer,

               Are you sure you can't sell to another state? I am in PA, but my broker set me up as a producer in Ohio to take advantage of the better rates. If you are interested, let me know, and I can provide you his info, if you would like to find out.

Phil

 

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1329
Re: cost of solar v. return on investment
TNdancer wrote:

Also plan to make this array dual axis tracking versus the single axis I have on the current arrays. Noticed the kw/hrs/day goes up a bit around the spring/fall equinox when the fixed tilt of the arrays are most closely perpendicular to th the sun ( they are fixed at lattitude )....enough so that I'm going to try a dual mount this time.

I found that trackers just didn't make much economic sense, at least not where we are and our situation. A 2 axis tracker will get you about 40% production improvement over an array fixed to your latitude/due south.  This sounds really good,  however, when I figured the cost advantage (incentives/power costs/taxes (GRT/Income), the tracker advantage was down to 24%.  Next if you have an array that can be adjusted twice a year and your advantage is down to about 20%.  The trackers were expensive, added more complexity (mechanical motors, gears, electronics to break), and it sure looked like if you have cheap ground/roof mounting and space available, more panels would be a better choice.  I read too many horror stories about trackers breaking and eventually just being set to a fixed position.

I'm just saying, I would do some heavy duty spreadsheet analysis before sinking money into trackers particularly if you have spare room for more panels. That said, I know people who have trackers and swear they are great....

 

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1329
Re: cost of solar v. return on investment
TNDancer wrote:

That's pretty close in line with the figures I've seen also.  Wish we could sell SREC's here in TN, as it would beat the 12 cents/kw/hr I'm getting now by several times.  IF it becomes available, I'm jumping ship !

zeroenergy21 wrote:

Are you sure you can't sell to another state? I am in PA, but my broker set me up as a producer in Ohio to take advantage of the better rates. If you are interested, let me know, and I can provide you his info, if you would like to find out.

We are in the same boat., some states have a SREC market, others do not.  Here is a link that shows the SREC auction market.  Because we have a system > 10kW we get $0.15, but that also small compared to other states.  However, I don't let it worry me very much.  After all when/if things fall apart this type of incentive will probably disintegrate.  After all when everyone is broke, clean air incentives/mandates will be one of the first things to get the chopping block.

The ability to be resilient is my prime focus, with the incentives currently available make it easier to get done.  I give a much higher weighting to any immediate or very short term incentives versus any long term incentives that may vanish or become worth much less particuarly like our REC credits that are not inflation adjusted.

 

 

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: cost of solar v. return on investment
rhare wrote:

I'm just saying, I would do some heavy duty spreadsheet analysis before sinking money into trackers particularly if you have spare room for more panels. That said, I know people who have trackers and swear they are great....

I have to agree, for what it's worth....  If your trackers break post TSHTF, who's going to fix them?  And where will the parts come from?

Someone who lives just 5 miles from here had FOUR arrays on trackers on poles.  For years I noticed them all pointing in different directions, and you could tell when they were "fixed" because all of a sudden they'd all lign up.  He must've got sick of it all.....  they're gone now, ground mounted on fixed frames.

TNdancer's picture
TNdancer
Status: Silver Member (Offline)
Joined: Aug 20 2008
Posts: 127
Re: cost of solar v. return on investment
rhare wrote:
TNdancer wrote:

Also plan to make this array dual axis tracking versus the single axis I have on the current arrays. Noticed the kw/hrs/day goes up a bit around the spring/fall equinox when the fixed tilt of the arrays are most closely perpendicular to th the sun ( they are fixed at lattitude )....enough so that I'm going to try a dual mount this time.

I found that trackers just didn't make much economic sense, at least not where we are and our situation. A 2 axis tracker will get you about 40% production improvement over an array fixed to your latitude/due south.  This sounds really good,  however, when I figured the cost advantage (incentives/power costs/taxes (GRT/Income), the tracker advantage was down to 24%.  Next if you have an array that can be adjusted twice a year and your advantage is down to about 20%.  The trackers were expensive, added more complexity (mechanical motors, gears, electronics to break), and it sure looked like if you have cheap ground/roof mounting and space available, more panels would be a better choice.  I read too many horror stories about trackers breaking and eventually just being set to a fixed position.

I'm just saying, I would do some heavy duty spreadsheet analysis before sinking money into trackers particularly if you have spare room for more panels. That said, I know people who have trackers and swear they are great....

If I were buying the trackers, I'd tend to agree with you...simply buy more panels.  But I've had two arrays on home built single axis trackers for 2 years now, and like them.  I have a pretty good shop, and am fairly handy about things.....my cost for both was about 600 bucks.  Cool

TNdancer's picture
TNdancer
Status: Silver Member (Offline)
Joined: Aug 20 2008
Posts: 127
Re: cost of solar v. return on investment
zeroenergy21 wrote:

TN Dancer,

               Are you sure you can't sell to another state? I am in PA, but my broker set me up as a producer in Ohio to take advantage of the better rates. If you are interested, let me know, and I can provide you his info, if you would like to find out.

Phil

 

I checked with a broker and from what I could determine, the ONLY part of Tennessee that qualifies is a very tiny section in northeast around Kingsport that is served by Appalachian Power.

 

But yes, I'd sure like the info and will contact your broker to see if it's a possibility !

 

Thanks !

 

andy

TNdancer's picture
TNdancer
Status: Silver Member (Offline)
Joined: Aug 20 2008
Posts: 127
Re: cost of solar v. return on investment
Damnthematrix wrote:
rhare wrote:

I'm just saying, I would do some heavy duty spreadsheet analysis before sinking money into trackers particularly if you have spare room for more panels. That said, I know people who have trackers and swear they are great....

I have to agree, for what it's worth....  If your trackers break post TSHTF, who's going to fix them? 

 

Probably the same guy that built them and fixes EVERYTHING around here......ahahahaaaaa..

Already have spare controllers, and figured out how to run all the arrays from single controller ( thru a couple simple relays ). I did have controller issues initially, and it took some months to work those out.  During that time, I left the arrays in the fixed "noon" position, and kept gather data...from which I now know I pick up about 25% more kw/hrs from tracking.

Semi-worst case, SHTF, they don't track anymore and I'm stuck with a fixed array.

Complete worst case, EMP or Carrington Event takes out my inverters and charge controllers, and the whole mess is fairly useless. On my "to do" list is save up for spare parts for these.   I did rebuilt one Outback inverter that took a lightning hit ( my fault....not enough grounding and arrestors ), and to repair a 1700 buck inverter costs 1200 bucks in parts for virtually everything INSIDE the inverter.

Phil Williams's picture
Phil Williams
Status: Gold Member (Offline)
Joined: Oct 14 2009
Posts: 345
Re: cost of solar v. return on investment

Andy,

        The company I use is Knollwood Energy, just ask for Gary. The number is 862-432-0260. Good luck!

Phil

 

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1329
Re: cost of solar v. return on investment
Tndancer wrote:

Probably the same guy that built them and fixes EVERYTHING around here......ahahahaaaaa..

It's always nice to have a hobby!  I probably would have tried the tracker path if I had the tools, time, mechanical skills.  For me it was a oh sh*t I need to do something now moment a little over a year ago when I really started prep work and it was tough enough just getting someone to build the system I wanted.  No one wants to build a system with batteries unless you are off-grid.  They all treat you like some whack job... hmmm maybe they are right.   Even with lots of time to do research, getting bids, it still took 9 months once I decided to pull the trigger to have a functioning thermal solar and PV syst em up and running - but I'm much less stressed now.

For me it was easier to go simple and hopefully trouble free path so that I can focus on other things, like a garden!  I have all the Mel's mix (Square Foot Gardening) components, now I just have to start playing in the dirt....   This is going to be a much bigger transition for me since my idea of cooking at home has generally been pulling a take-out/delivery menu from a drawer. Tongue out

"That will be $2050.00 for the Kung-pao chicken and $4000.00 post-peak delivery charge, would you prefer to pay with dollars or gold?" Surprised

 

TNdancer's picture
TNdancer
Status: Silver Member (Offline)
Joined: Aug 20 2008
Posts: 127
Re: cost of solar v. return on investment

I understand.  Most folks won't go the route I did, and that's fine.

Solar power was one of our last prep areas in a self sufficient lifestyle plan that has spanned 20 years.

I'm the bulldozer operator, the logger, the sawmiller, the carpenter, the plumber, the electrician, the mason, the farmer, the butcher, the welder, the mechanic, basically, you name it....so I figured it was time to add ' the solar installer' hat to the list....ahahaaaaa.....even went and took a NABCEP certification course for solar installers at a local university after doing mine in case I decided to go commercial with it.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments