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.

Comments

Return on investment

[Geoffrey.landis]

Three thousand dollar savings per year on a 38000 investment is a 7.8 percent rate of return on investment-- not bad, as long as the investment itself dosn't depreciate in value.

ROE is a much better way of calculating economics than "payback time," by the way

Re:Return on investment

[spun]

Ah, what? He's not reselling the damn thing, he is making money off of it every month. So what if it depreciates, we were never measuring the value of the thing over time anyway. Though I'm guessing many of the components will not depreciate much, just the batteries and photovoltaics. Having his house set up to run off of photovoltaics will let him easily take advantage of whatever advances come along in module and energy storage. The power modules will last at least 30 years. See, he would never be reselling the thing independent of his house. The thing is a part of the house now, and the entire house will continue to appreciate. As people become more interested in solar, a house with solar already in place will appreciate faster.

Funny how so many people seem to want to find fault with solar energy, and use incomplete reasoning to look at only the possible negative consequences without looking at all the positives. Why do you think some people have such an irrational hatred of solar energy? I think the hippies are to blame. Nobody likes them, and they never fight back when you blame them, so I am going to go with definitely the hippies fault.

Re:Return on investment

[rev_sanchez]

If he'd gotten a loan and the loan payments were near $3,000/yr (which is pretty unlikely) or his average electricity savings increased over the life of the loan (more likely) he could offset his loan with his electricity savings and have a cost of little to nothing. I don't think solar is the best energy saving home improvement most people could make for their dollar but it's starting to get competitive.

Re:Return on investment

[paeanblack]

If that ROE is reasonable, why aren't zillions of commercial solar farms popping up everywhere? Or at least co-located with the wind farms that are being installed?

That 7.8% doesn't factor in the risk. Most of the initial investment is unrecoverable. The 10-12 years for return on the principal is based on many variables, most of which are volatile and unpredictable. The specific technologies are relatively new and bring their own unknowns. He wins big if electricity costs skyrockets and solar/alternate energy tech stagnates. Those are unlikely to both occur. He loses if power gets cheap or solar/alternate energy tech has some rapid advances.

He has essentially exchanged his exposure to energy price fluctuations for host of new risks. The rate of return is pretty decent in today's economy, but not by a huge margin. At 5% or 6%, it wouldn't fly.

At least this means residential solar is nearing viability.

On the other hand, viable residential solar is not good news for the nuclear industry because of the political externalities involved. Large numbers of voters entering the energy generation business will sharply increase the nimby factor.

Solar panel longevity

[royallthefourth]

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.

Bad Math

[Itchyeyes]

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.

Re:Bad Math

[jeff4747]

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.

You're forgetting one detail.

Before putting on PV panels, when his daughter leaves, he'd just use less electricity. After adding the PV panels, when his daughter leaves he can sell more electricity to the power company.

Adding your own generating capability means a reduction in usage is also an increase in sales.

Price of certainty.

[GammaStream]

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.

Re:Price of certainty.

[afidel]

The big cost looming for electrical generation has nothing to do with the Gulf, it has to do with a Carbon tax/cap. Unless we go crazy building nuclear plants there WILL be a significant increase in electric rates if we are at all serious about stopping CO2 buildup.

Re:Price of certainty.

[pixelpusher220]

Actually, he probably won't have any electricity when the grid is out. We just went to an alternative energy show this weekend and learned the following:

There are 3 types of systems for connecting to the grid:

Off-grid - self explanatory

Hybrid - can use battery power when the grid is out

Sync'd - they must be sync'd so that when the grid is out, the power from the panels is not used..otherwise you'd be trying to feed the grid yourself.

The last is the most common setup since the idea is to conserve electricity usage, not replace the need for the grid. If all the panels in a neighborhood were feeding energy into the, now dark, grid imagine the power company technician trying to work with the wires that are 'live' from the client side. They could shut off power from the distribution source, but it would still live from the residences preventing it from being safe.

I imagine it would be bad to run A/C stuff inverted from a variable DC line as well. If you are trying to run normal household stuff straight off the power output of the panels, as it gets later in the day, you'd start getting your own 'brownouts' in the house wouldn't you? And since this guys setup never produced more power than he needed it was always below demand.

Re:Price of certainty.

[Altus]

I thought when the grid went down that synced panel set ups just cut them selves off from the grid, not that they cut them selves off from powering your home.

Re:Industy Standard Warranties

[h4rr4r]

Which is why solar is a good investment in those areas and not where you live.

RTFA

[Kneo24]

If you had RTFA you would see that the panels are quoted as having a 30 year warranty. So in 30 years. If they break down before that, he gets freebies, and I imagine those will produce more electricity. All in all, it's worth it.

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

"Spousal acceptance factor"

[blind biker]

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.

Re:No, he's NOT saving money

[Grishnakh]

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.

A lot of good that warranty is going to do...

[Lead Butthead]

Now I read his initial article close to a year ago, so I don't remember what type he got, or if it even specifically mentions it. However his panels are rated to last 30 years. I imagine the warranty specifically mentions how much they will output as their life increases. It should be fairly obvious to see if it's putting out what it should be in those 30 years. If they don't, well, his warranty will cover that.

... 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.

Re:No, he's NOT saving money

[AuMatar]

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.

Re:A ten year ROI?

[icebike]

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.

Re:No, he's NOT saving money

[Zalbik]

Why people still routinely neglect compound interesting I'll never know. If he took that $38,000 and put it in a long term investment at a mere 5%, he'd had 68242.54 at the end of 12 years. Yes, it's green, yes, it's cool, but no, he's not saving money.

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.