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Switching To Solar Power, One Year Later
ThinSkin writes "Slashdot readers may recall Loyd Case's series of articles illustrating his experiences after switching to solar power for his family home. Loyd shared his one month update, a six month update, and now finally concludes his series after one year of solar power. Despite the $38,000 initial cost for the setup, Loyd is very optimistic after a $3,000 savings in one year, meaning that in about 12 years he will break even — though he suspects ten years is a better estimate considering other factors. Other reasons such as feeling 'green,' increasing the property value of his house, and the 'spousal acceptance factor' all support Loyd's decision on why he'd do it all over again if he had to." The article is spread annoyingly over multiple pages, like everything at the site, and the print version omits the graphs.
ROE is a much better way of calculating economics than "payback time," by the way
http://www.geoffreylandis.com
So maybe it'll pay for itself in 12 years, but how long before those panels need to be replaced? That's what we really need to know in order to decide if he's actually saving money.
He sums the article up by claiming that his return will be sooner than 12 years based on changes in his electricity usage (like his daughter leaving for college). This is bad math. He would have changed his usage either way, so he can't really count those watts as impacted by his investment in the solar panels. Overall though it seems like he's getting a decent return on his investment.
He might be saving money, but in part because he is getting raped for electricity. His rates were 11 cents to 30 cents+ per kWh. I pay 7 cents per kWh all the time.
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To all the people mocking his investment, your missing one thing. You do not know what the price of energy is going to do in the next few years. The guy in the article however is guaranteed a minimum amount of power each year from his solar panels at a rate he knows. (His initial investment / Life time of the panels). If the companies decide to hike the prices in two years time due a deterioration in Gulf politics for example, he is sheltered from its effects and lets be honest it's very unlikely the price is going to go down per kwh. He is also sheltered to a certain extent from the failure of the power network so if a situation does arise where there are rolling blackouts again, he knows he will a least have some electricity each day. One of the things that people constantly underestimate the price of is certainty.
Which is why solar is a good investment in those areas and not where you live.
Futhermore, Wikipedia has this to say about Solar Panels and how efficient they are at a certain time frame:
Solar panels must withstand heat, cold, rain and hail for many years. Many Crystalline silicon module manufacturers offer warranties that guarantee electrical production for 10 years at 90% of rated power output and 25 years at 80%.
http://en.wikipedia.org/wiki/Photovoltaic_module
Most of the time, if you care for your family, that's the #1 factor in your decisions. Unless your ambition is one of those short-lived, Hollywood marriages.
"The agriculture ministry is not in charge of Gundam" - Japanese ministry official.
And what long term investment would that be that reliably makes 5%? If he had invested that $38k in just about any stock or mutual fund in the past year, he'd have lost at least 30% of its value.
... if the company in question is still around to stand behind it. I get a laugh out of roofers that offer 50 year guarantee on roofs when they know full well they themselves are unlike to be around by then. A lot can happen in 30 years.
ELOI, ELOI, LAMA SABACHTHANI!?
Also factor in taxes. If you invest and make $1000, you owe taxes on it. If you save $1000 there's no additional taxes as it was already your money.
I still have more fans than freaks. WTF is wrong with you people?
Most manufacturers guarantee that their panels will give at least 90% of peak power at ten years, and 80% of power at 25 years. Yes, he's saving money.
These same manufacturers have guarantees that they will be in business in 25 years?
Why would they? That would dry up the revenue generated by the "sin".
And what long term investment would that be that reliably makes 5%? If he had invested that $38k in just about any stock or mutual fund in the past year, he'd have lost at least 30% of its value.
Historically, almost any indexed fund provides 5%.
Yes, the past year has been bad, but if we are discussing long term investments, there are numerous funds he could invest in to get a 5% rate of return.
I also live in Sunnyvale and my power bill is even less than his post-solar level. The reason is that I live in a small apartment instead of a house!
Living green is nice, but living small is far better.
Exactly.
It means Return ON Investment.
Not Return OF Investment.
No money will be saved on this scheme until AFTER 10 or 12 years.
However even this is optimistic, because what is eventually returned on this investment will be worth far less than an equivalent amount today.
Further, maintenance costs will start to accrue well before that, and replacement parts will be needed for stuff that was obsolete the day it was installed, and may not even be available then.
There may be better equipment and cheaper equipment then. But more likely the failing part will be some obscure little piece requiring the replacement of some expensive big piece.
This is the risk of buying into a developing technology. The payoff is a long way down the road. Usually beyond the next generational change in the technology.
Still, it takes people like Loyd to go out there and do it with what is available, because we can't wait for the perfect solution or we would all still be living in Caves.
Sig Battery depleted. Reverting to safe mode.
Why pin the impending inflation on Obama? The $700 Billion TARP program started under Bush, and some nice legislation (Gramm-Leach-Bliley Act) got passed during Clinton that may be one of the underlying causes of this housing mess. Some political nerds and/or historians may dig up even more reasons that we're in this mess, but the point is that they're just different sides of the same coin. Why blame one guy, when the whole system is at fault?
Why people still routinely neglect compound interest I'll never know.
If he takes the $3000 he saves in electricity costs every year and invests that at 5%, he'll have $47,751.38 at the end of 12 years.
With your scenario, he has $68,242 but he will have paid $36,000 in electricity, leaving him with $32,242 if he "cashes out".
Personally, I'd take $47000 over $32000 any day.
Because the money spent needs to be factored as, how much could he have made investing it and provided he didn't take a loan to get it all change the equation.
Currently, all he needs to do to make his investment match an equivalent stock or real estate investment is go up on the roof and smash the panels with a hammer. Of course, since it's already paid back a portion, he'll have to smash out his windshield as well to break even.
It can and has been argued that the Fed's "printing" of money is simply replacing the money that was lost in the economy. This additional cash has a negligible impact on the total availability of money in the economy, therefore has caused little inflationary pressure and at least in the near term will not.
The egregious aspect is that the average Joe lost a bundle in 401K's and other investments, but only a little bit of the Tarp, or the extra cash being printed is being trickled down to them. By and large it's going to the banks and Wall Street entities, to keep them solvent. They were the main culprits, guided by greed, that lead to the economic melt down, and they got a bail out and the average person is financing it through their economic losses.
It's not what your Sig can do for you, but what you can do for your for your Sig.
That's bogus. Repeating from my other post -
Simple economics - the cost of manufacture is factored into the sale price. If the panels eventually pay for themselves, then that covers the manufacture costs - electrical, raw materials or otherwise. Sure the factory might get a better price for electricity than regular consumers, but there's also raw materials, labour and profit that's included in the price tag.
He doesn't consume a low amount of energy. He's actually pretty close to average for a household that isn't 100% electric appliances. You, on the other hand, consume an ungodly amount of energy.
Since I'm guessing you don't live in a desert, 2500 kWh in a 2000 sq ft home during a rainy month is ridiculously high. What do you do for a living that allows you to be able to afford such lunacy and still not recognize that your AC isn't working properly or you have something wired wrong? Do you grow pot in your house or something? Are you a stripper?
"I assumed blithely that there were no elves out there in the darkness"