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Solar Energy
mph323
Posts: 3,565 Member
in Debate Club
Since we're talking about home temp control I thought it would be interesting (and helpful to me) to see what people have to say about solar vs traditional heating/cooling. We live in an area where we use more cooling in the summer and less heating in the winter, and there's an aggressive campaign by various solar companies going on right now to get everyone on board with solar.
My husband wants me to seriously consider it, but I'm skeptical - some of the claims seem overly optimistic. My concerns are mainly
1. The system is expensive, so even if the reduction in heating/cooling bills is as advertised we would be adding a monthly payment until it's paid off (with the addition of interest on the loan).
2. PG&E is bankrupt and desperate, and has already announced they will start charging for putting excess power back into the grid. I'm a little concerned that they would eventually find a way to tax solar users for not using their service. PG&E is privately owned so I'm not sure what the law is regarding their ability to do this.
3. We plan to sell the house in 10-15 years, and my understanding is that the solar panels don't necessarily add value to the house, and we would end up on the negative side of thousands of dollars in the end.
Does anyone have any thoughts or experience?
My husband wants me to seriously consider it, but I'm skeptical - some of the claims seem overly optimistic. My concerns are mainly
1. The system is expensive, so even if the reduction in heating/cooling bills is as advertised we would be adding a monthly payment until it's paid off (with the addition of interest on the loan).
2. PG&E is bankrupt and desperate, and has already announced they will start charging for putting excess power back into the grid. I'm a little concerned that they would eventually find a way to tax solar users for not using their service. PG&E is privately owned so I'm not sure what the law is regarding their ability to do this.
3. We plan to sell the house in 10-15 years, and my understanding is that the solar panels don't necessarily add value to the house, and we would end up on the negative side of thousands of dollars in the end.
Does anyone have any thoughts or experience?
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I am not well-versed in solar yet but hubby and I are researching building our own system as it is cheaper overall vs. a complete system. With that said, I am unsure of the cost of a do it yourself built system but he said if we had one that could power our house with AC, it would take about 12 years for the system to pay for itself ... if you plan to sell the house in 10-15 years, you won't get a return on your investment in my opinion. But again, I am not well-versed. AC sucks up a lot of energy so you would need a fairly big set-up (at least where I live in SE Texas). Right now, we are looking at a smaller system to be able to keep our refrigerator, deep freezer and some fans or a small window AC going should we lose power. That kind of do-it-yourself unit to power just the incidentals is about $3,000 ...3
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UK here. I was reading a little about solar power the other day. The article was saying the pay back time is 5 years. Vastly different to 10 years ago when the panels cost way more and the power generated received a higher payment. Any surplus mostly goes into the grid, at least the older systems do. More modern ones in outlying areas, off grid can and probably do have batteries incorporated into the system.1
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Since we're talking about home temp control I thought it would be interesting (and helpful to me) to see what people have to say about solar vs traditional heating/cooling. We live in an area where we use more cooling in the summer and less heating in the winter, and there's an aggressive campaign by various solar companies going on right now to get everyone on board with solar.
My husband wants me to seriously consider it, but I'm skeptical - some of the claims seem overly optimistic. My concerns are mainly
1. The system is expensive, so even if the reduction in heating/cooling bills is as advertised we would be adding a monthly payment until it's paid off (with the addition of interest on the loan).
2. PG&E is bankrupt and desperate, and has already announced they will start charging for putting excess power back into the grid. I'm a little concerned that they would eventually find a way to tax solar users for not using their service. PG&E is privately owned so I'm not sure what the law is regarding their ability to do this.
3. We plan to sell the house in 10-15 years, and my understanding is that the solar panels don't necessarily add value to the house, and we would end up on the negative side of thousands of dollars in the end.
Does anyone have any thoughts or experience?
I'm a solar broker as a side business. My main business is recruiting and I helped some of the largest utility players in solar and wind decades ago (when it was new to North America).
1) Yes, the system is expensive. But here's the thing, if you own the home and have credit over 600 (and definitely over 650), it doesn't require any money down. At least in California, utility prices are already so high you'd typically save from day one. You typically will have a small utility bill, but unless you use a ridiculous amount of electric, most of the time they can spec a system that will more than 100% cover your usage.
Utility companies have tried, in many states including my own in AZ, to tax people a lot of money to deter solar. In every case, so far, those plans have been shot down by the courts as an attempt at a monopoly. Will they charge you? Yes they will. You'd likely have a surcharge on top of your bill. Not a lot, but something. Chances are, you already have a fixed cost now on your bill.
You'll want a battery in California, which adds to the front end cost of the system, but saves more in the long term. The grid there is sporadic. In AZ, I tell people not to buy a battery. In Cali, you need to. It stores around 90% of the excess you make during the day, which can then use in the evenings. If your battery goes beyond the storage limit, you're selling excess back to PG&E. That price is like 2 cents (one of the lowest rates in the nation) back to them (they charge you like 25 to 30 cents per kWh, one of the highest prices in the nation. That's why you want a battery).
Tesla makes one of the best batteries, but they just started this policy, just this year, where if you want their Power Wall (and it's one of the best batteries out there), you have to buy their solar panels -- totally priced way too high. Avoid that. Go with an LG Chem battery and a solid, reasonably priced panel, like a Q-Cell (much better bang for the buck).
3. Adding solar to your home increases the equity 3 to 5%. That's just a fact. It will not decrease any value. Anyone (any potential buyer of your home, that is) would be foolish not to roll up a solar payment into a mortgage after you've paid it for 10 or 15 years. Most go with 20 year finance (which you can get dirt cheap right now, rates are like 1.5%). So if a homeowner came and bought your home in 10 or 15 years, they know they would only have a few more years to pay, then mostly free electric.
Who you pick matters a TON! Some solar companies charge huge markups. One of the reasons I got into it was lack of good sales people that would answer questions like yours. The other reason is many will rip you off. The price of customer acquisition is huge in the solar business, so some of that gets passed onto to consumers. Other companies/sales people are just greedy. I show everyone my commission/profit. I do the company minimum every time. It's 5K. That's as low as my company allows. Some will put you in at 15K to 20K just markup and make more money as a result.
Hope that helps. I'm into solar a lot. I like to answer questions. I also have colleagues who sell in Cali. I usually don't. I normally stick to AZ, but I know people that wouldn't rip you off.
Just one more tip. If you ever will consider buying an electric vehicle, it might be worth overspecifying the system a bit (like 118% of usage from the last 12 months). Also, try to go with a Microinverter, not an Optimized String inverter (Enphase makes microinverters and most String Inverters are made by SolarEdge). SolarEdge are solid, but if you ever want to expand your system, Microinverters are the way to go.
BTW, the overly optimistic claims are usually ads on Facebook or similar. YES, they stretch the truth. But it should be no money down, should keep your payment close to what you pay now (and in Cali, that payment very likely could go down), will give you a 26% Federal Tax Credit (which most roll back into the loan to keep their payments down, some pocket it -- but if you pocket it, your payments will go up, typically at 18 months. Not a ton, but some). Know what your Federal Tax liability is. You can roll over the Fed Tax Credit for at least two years. Some CPAs say 3 if you can't take it all in one year.
Do not enter your information on an add on Facebook or similar unless you want bombarded by calls.5 -
@MikePfirrman ,Do not enter your information on an add on Facebook or similar unless you want bombarded by calls.
Just curiosity -- I recently heard of this construction (lacking the more usual "to be" before a verb phrase that is essentially the object in the sentence, "bombarded" in this case) as common in Idaho. Is this the construction you intended, and do you think it's common in Arizona? Linguistics in general and English regionalisms more specifically are an interest of mine -- personal as well as tangentially professional.3 -
rhtexasgal wrote: »I am not well-versed in solar yet but hubby and I are researching building our own system as it is cheaper overall vs. a complete system. With that said, I am unsure of the cost of a do it yourself built system but he said if we had one that could power our house with AC, it would take about 12 years for the system to pay for itself ... if you plan to sell the house in 10-15 years, you won't get a return on your investment in my opinion. But again, I am not well-versed. AC sucks up a lot of energy so you would need a fairly big set-up (at least where I live in SE Texas). Right now, we are looking at a smaller system to be able to keep our refrigerator, deep freezer and some fans or a small window AC going should we lose power. That kind of do-it-yourself unit to power just the incidentals is about $3,000 ...
If you had x number of dollars to invest would you put it in something where after 12 years you had gotten your x number of dollars back and not a penny more? No, you would call that a crappy investment.1 -
I am in Australia, where there are govt subsidies incentivising people to get solar. I also live in a place that is very good location wise for solar. Ie is flat and has low rainfall, therefore many sunny days.
Our outlay was about $20,000 after the subsidy. We paid some up front and rest on interest free loan.
We went from paying around 2,000 per year for electricity to positive returns of around 500 per year ie a saving of around 2,500 per year
Paid for itself in 8 years- and of course also continues on in the positive from there on.
For us it has been as financially beneficial as well as contributing to using less fossil fuels7 -
Theoldguy1 wrote: »rhtexasgal wrote: »I am not well-versed in solar yet but hubby and I are researching building our own system as it is cheaper overall vs. a complete system. With that said, I am unsure of the cost of a do it yourself built system but he said if we had one that could power our house with AC, it would take about 12 years for the system to pay for itself ... if you plan to sell the house in 10-15 years, you won't get a return on your investment in my opinion. But again, I am not well-versed. AC sucks up a lot of energy so you would need a fairly big set-up (at least where I live in SE Texas). Right now, we are looking at a smaller system to be able to keep our refrigerator, deep freezer and some fans or a small window AC going should we lose power. That kind of do-it-yourself unit to power just the incidentals is about $3,000 ...
If you had x number of dollars to invest would you put it in something where after 12 years you had gotten your x number of dollars back and not a penny more? No, you would call that a crappy investment.
In California, that's not true. First year, they are net positive in cash. Cali rips people off for energy costs. It's not uncommon for people to have $1000 utility bills in the Summer. A very large solar system will cost, ballpark, around $200 (that's a huge one) on a 20 year loan. Most 2000 SF houses could get by on around $160 a month (ballpark, including battery). That same house might have a $500 Summer utility bill. So would you rather pay $30 to the utility and $160 or for a solar loan or 500 all Summer?
Seriously, in California, if you have decent credit, getting solar isn't just a no brainer, it's insane not to have it.
I sell plenty of solar in Arizona, but it's much cheaper here for electric, so I usually can't offer too much savings from day one. It's more you'll save 15K to 30K over 25 years or so (plus the equity you gain in your home). Considering the average utility bill, here in AZ, is only like 150 a month, that's still a lot of money. The main advantage I have in AZ is that, in most cases, you don't have to buy a battery. Not needed. The utilities are still paying 6 to 8 cents a kWh for what you produce in excess of what you need -- back to the grid. That number is going down by around 10 percent per year. Eventually, AZ will be like Cali, where you only get 2 cents per kWh when you sell it back, necessitating a battery. Batteries make the upfront cost more (by 12K, 9K or so after tax rebate), but they also make what you produce more efficient, so you end up buying less from the utility and keeping more of what you produce, so it's not a bad trade off. If you don't have a battery, the price you get from the utility is your efficiency (here in AZ, roughly 50 percent).
People on this thread are also confusing "paying for itself" and "paying it off" -- completely different. It takes around 8 years to make the money it would have taken to pay it off back. But understand, in California, your net payments (from the residual utility bill and solar payment) will likely be much less from day one. You'll be net positive cash flow from day one with decent credit (and a solar provider that's not ripping you off).
@Lynn -- maybe it's my age (approaching 60). Not from AZ originally. From Southern Ohio, which might as well be Kentucky. I grew up in a small town that was very blue collar and 60% had Appalachian descent. I speak, to this day, with a slight country/Southern draw.
@paperpudding -- yeah, in Australia, you'd be foolish not to have solar. It's around 30% cheaper there, mostly due to regulation, permitting and just (in general) making everything harder. Even the individual states can make it harder. For instance, my contracts in AZ are two pages. In Cali, they are like 40 pages. That's why I don't sell in Cali but have business partners that do.0 -
Just to add one more thing, commenting on what paperpudding said, if you have decent credit in the US, it's no money down. And what most customers do is to take their Federal Tax Credit (26% of the system cost) and when they get it (in the form of not paying it to the Fed Govt in the form of taxes), put it toward the Solar Loan Principal. That keeps the system cost low. On most 20 year loans, for instance, you'll pay a lower amount for the first 18 months. If you decide to pocket the Fed Tax Credit (if your income qualifies for it), your loan will go up after 18 months (by like $30 a month). But also understand, utilities, on average, go up by 4% or so a year. So sometimes, even if you pocket that amount, which can be quite large, you're still not paying more for the loan that you would for the utility payment when you take 4% per year increases into account had you not gotten the solar.
Another issue to consider. The 26% Fed Tax rebate only lasts one more year (it was extended last year) into 2022. Also, the rate which you sell back to the utility, if you don't have a battery, is locked in for 10 years typically. I don't have a battery and have a solar system on my house. I sell what I don't use back to Trico, my utility, at 6.3 cents per kWh. I'll be locked in for 10 years at that exchange rate. In two years, if someone gets solar then, they will likely only get 4 cents for what they produce in excess.
With interest rates being the cheapest they've ever been, it's a really good time to buy solar. The wait times, on the other hand, especially in Cali, with all the regulation, is silly. Like 6 to 8 months at times. So if someone were to take advantage of the interest rates along with getting the 26% rebate, they better act soon.
The only possible advantage for waiting is that panel efficiency is slowly getting better. I installed a 400 Watt Bifacial panel on my neighbors home. It's a new panel made by a startup that built the largest solar factory in the world (a California based company). Now, you can't find their panels they are in such high demand. These panels are opaque and the sun shines through them. Unlike other panels, they have the solar cells on both sides and pick up 30% more energy on the back side through indirect light. And they aren't much more expensive than other panels and look great. He's super happy. His roof (by his choice) is covered on four planes with panels (he has a complex roof) and he's paying like $160 a month plus $23 for a utility bill (183 total). He was paying $210 to $220 a month. He's also a real estate agent and broker and knows that homes with solar sell for higher amounts.
I also see (possibly) the battery prices getting lower. There are products in the works where they have batteries that would replace your entire electrical box on your home (like a 3 in one -- electrical box, inverter and meter in one). I can see battery tech getting better and cheaper. Panels, I don't see, getting much better any time soon. I'm a tech recruiter as my first business and know that space really, really well.2 -
MikePfirrman wrote: »Theoldguy1 wrote: »rhtexasgal wrote: »I am not well-versed in solar yet but hubby and I are researching building our own system as it is cheaper overall vs. a complete system. With that said, I am unsure of the cost of a do it yourself built system but he said if we had one that could power our house with AC, it would take about 12 years for the system to pay for itself ... if you plan to sell the house in 10-15 years, you won't get a return on your investment in my opinion. But again, I am not well-versed. AC sucks up a lot of energy so you would need a fairly big set-up (at least where I live in SE Texas). Right now, we are looking at a smaller system to be able to keep our refrigerator, deep freezer and some fans or a small window AC going should we lose power. That kind of do-it-yourself unit to power just the incidentals is about $3,000 ...
If you had x number of dollars to invest would you put it in something where after 12 years you had gotten your x number of dollars back and not a penny more? No, you would call that a crappy investment.
In California, that's not true. First year, they are net positive in cash. Cali rips people off for energy costs. It's not uncommon for people to have $1000 utility bills in the Summer. A very large solar system will cost, ballpark, around $200 (that's a huge one) on a 20 year loan. Most 2000 SF houses could get by on around $160 a month (ballpark, including battery). That same house might have a $500 Summer utility bill. So would you rather pay $30 to the utility and $160 or for a solar loan or 500 all Summer?
Seriously, in California, if you have decent credit, getting solar isn't just a no brainer, it's insane not to have it.
I sell plenty of solar in Arizona, but it's much cheaper here for electric, so I usually can't offer too much savings from day one. It's more you'll save 15K to 30K over 25 years or so (plus the equity you gain in your home). Considering the average utility bill, here in AZ, is only like 150 a month, that's still a lot of money. The main advantage I have in AZ is that, in most cases, you don't have to buy a battery. Not needed. The utilities are still paying 6 to 8 cents a kWh for what you produce in excess of what you need -- back to the grid. That number is going down by around 10 percent per year. Eventually, AZ will be like Cali, where you only get 2 cents per kWh when you sell it back, necessitating a battery. Batteries make the upfront cost more (by 12K, 9K or so after tax rebate), but they also make what you produce more efficient, so you end up buying less from the utility and keeping more of what you produce, so it's not a bad trade off. If you don't have a battery, the price you get from the utility is your efficiency (here in AZ, roughly 50 percent).
People on this thread are also confusing "paying for itself" and "paying it off" -- completely different. It takes around 8 years to make the money it would have taken to pay it off back. But understand, in California, your net payments (from the residual utility bill and solar payment) will likely be much less from day one. You'll be net positive cash flow from day one with decent credit (and a solar provider that's not ripping you off).
@Lynn -- maybe it's my age (approaching 60). Not from AZ originally. From Southern Ohio, which might as well be Kentucky. I grew up in a small town that was very blue collar and 60% had Appalachian descent. I speak, to this day, with a slight country/Southern draw.
@paperpudding -- yeah, in Australia, you'd be foolish not to have solar. It's around 30% cheaper there, mostly due to regulation, permitting and just (in general) making everything harder. Even the individual states can make it harder. For instance, my contracts in AZ are two pages. In Cali, they are like 40 pages. That's why I don't sell in Cali but have business partners that do.
The post I was quoting said a 12 year payback for the panels, I took that as the poster understood payback as stated on Investopedia.com
What Is the Payback Period?
The payback period refers to the amount of time it takes to recover the cost of an investment. Simply put, the payback period is the length of time an investment reaches a break-even point. The desirability of an investment is directly related to its payback period. Shorter paybacks mean more attractive investments.
Given a 12 year payback, that would not be considered a good investment in any way shape or form. 8 year payback is going to be pretty marginal unless we're talking about large, sure returns after the 8 years and a very long life for the asset.
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Theoldguy1 wrote: »MikePfirrman wrote: »Theoldguy1 wrote: »rhtexasgal wrote: »I am not well-versed in solar yet but hubby and I are researching building our own system as it is cheaper overall vs. a complete system. With that said, I am unsure of the cost of a do it yourself built system but he said if we had one that could power our house with AC, it would take about 12 years for the system to pay for itself ... if you plan to sell the house in 10-15 years, you won't get a return on your investment in my opinion. But again, I am not well-versed. AC sucks up a lot of energy so you would need a fairly big set-up (at least where I live in SE Texas). Right now, we are looking at a smaller system to be able to keep our refrigerator, deep freezer and some fans or a small window AC going should we lose power. That kind of do-it-yourself unit to power just the incidentals is about $3,000 ...
If you had x number of dollars to invest would you put it in something where after 12 years you had gotten your x number of dollars back and not a penny more? No, you would call that a crappy investment.
In California, that's not true. First year, they are net positive in cash. Cali rips people off for energy costs. It's not uncommon for people to have $1000 utility bills in the Summer. A very large solar system will cost, ballpark, around $200 (that's a huge one) on a 20 year loan. Most 2000 SF houses could get by on around $160 a month (ballpark, including battery). That same house might have a $500 Summer utility bill. So would you rather pay $30 to the utility and $160 or for a solar loan or 500 all Summer?
Seriously, in California, if you have decent credit, getting solar isn't just a no brainer, it's insane not to have it.
I sell plenty of solar in Arizona, but it's much cheaper here for electric, so I usually can't offer too much savings from day one. It's more you'll save 15K to 30K over 25 years or so (plus the equity you gain in your home). Considering the average utility bill, here in AZ, is only like 150 a month, that's still a lot of money. The main advantage I have in AZ is that, in most cases, you don't have to buy a battery. Not needed. The utilities are still paying 6 to 8 cents a kWh for what you produce in excess of what you need -- back to the grid. That number is going down by around 10 percent per year. Eventually, AZ will be like Cali, where you only get 2 cents per kWh when you sell it back, necessitating a battery. Batteries make the upfront cost more (by 12K, 9K or so after tax rebate), but they also make what you produce more efficient, so you end up buying less from the utility and keeping more of what you produce, so it's not a bad trade off. If you don't have a battery, the price you get from the utility is your efficiency (here in AZ, roughly 50 percent).
People on this thread are also confusing "paying for itself" and "paying it off" -- completely different. It takes around 8 years to make the money it would have taken to pay it off back. But understand, in California, your net payments (from the residual utility bill and solar payment) will likely be much less from day one. You'll be net positive cash flow from day one with decent credit (and a solar provider that's not ripping you off).
@Lynn -- maybe it's my age (approaching 60). Not from AZ originally. From Southern Ohio, which might as well be Kentucky. I grew up in a small town that was very blue collar and 60% had Appalachian descent. I speak, to this day, with a slight country/Southern draw.
@paperpudding -- yeah, in Australia, you'd be foolish not to have solar. It's around 30% cheaper there, mostly due to regulation, permitting and just (in general) making everything harder. Even the individual states can make it harder. For instance, my contracts in AZ are two pages. In Cali, they are like 40 pages. That's why I don't sell in Cali but have business partners that do.
The post I was quoting said a 12 year payback for the panels, I took that as the poster understood payback as stated on Investopedia.com
What Is the Payback Period?
The payback period refers to the amount of time it takes to recover the cost of an investment. Simply put, the payback period is the length of time an investment reaches a break-even point. The desirability of an investment is directly related to its payback period. Shorter paybacks mean more attractive investments.
Given a 12 year payback, that would not be considered a good investment in any way shape or form. 8 year payback is going to be pretty marginal unless we're talking about large, sure returns after the 8 years and a very long life for the asset.
The payback years ago might have been 12 years. In the US, more like 2 now. In California, less. Break even points are more productive than payback periods. There is no cost upfront. The only time that payback periods are pertinent is when someone pays cash for a solar system. Even if they have the money, that's stupid. Even though you get a nice discount with cash purchases, I've convinced many in their 60s and even some in their 70s to hold onto their money and finance it. Why pay for a solar system all upfront when, if you live in the house for 7 years, on a 20 year finance, someone else will gladly pay the 13 year balance and then have free electric (and gladly pay 3% to 5% more for the house!). Why would anyone pay cash upfront is beyond me unless they have money to burn. With 1.5% financing, you can break even, many times even be cash positive, in year one.
I wasn't cash positive from day one, but that was by choice. I went with a 12 year loan, not a 20 year loan. The reason? I intend on winding down and having some fun in retirement in 12 years. I'll be living off of part time income and investments. Instead of a $600 Summer A/C bill, mine will be around $200 max (I got a smaller system than I could have purchased because I know a lot about improving my home's efficiencies) and my solar system will be paid for. $400 or so, when you're looking out for every dime, is a lot of money. I'm likely paying around $20 more (between my utility bill and solar payment) than I did before. I'll break even in two years but have my system paid 100% faster than most.1 -
I live in Southern California. When I lived in a one bedroom apartment, it cost about $200 per month to cool the place to 78 degrees in summer. Temps regularly reach the 90s to 100 range. If I wanted the place cooler it would have cost much more.
When I first moved into my 4 bedroom house, my electricity bill was $400+. I got solar 3 years ago. Now I pay my solar bill and my Edison bill is close to zero or just a few dollars. I often get a credit for most of the year and have no bill. My solar bill is $165 a month and that’s without applying the tax credit towards the bill. If I had done that also, the bill would have been close to $100 a month. In winter, my usual electricity bill was between $100-140.
Since then, our energy costs have risen and I know some neighbors who pay $500-$600 in summer. So yes, solar was 100% worth the investment. Once my panels are paid off then I will have probably have 5-10 years of free energy and no bill at all based on the usual lifespan of the system.5 -
@nooshi713 -- this is a typical example. Yeah, my son sold Solar in San Diego (and later LA) for a year. He left the job because his company focused on leases. He also didn't care for their ethics. That's the only exception in California why someone shouldn't get solar. Either they would have to do a stand alone unit or perhaps if their credit isn't solid. I would never, ever encourage anyone to get a solar loan.1
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MikePfirrman wrote: »Theoldguy1 wrote: »rhtexasgal wrote: »I am not well-versed in solar yet but hubby and I are researching building our own system as it is cheaper overall vs. a complete system. With that said, I am unsure of the cost of a do it yourself built system but he said if we had one that could power our house with AC, it would take about 12 years for the system to pay for itself ... if you plan to sell the house in 10-15 years, you won't get a return on your investment in my opinion. But again, I am not well-versed. AC sucks up a lot of energy so you would need a fairly big set-up (at least where I live in SE Texas). Right now, we are looking at a smaller system to be able to keep our refrigerator, deep freezer and some fans or a small window AC going should we lose power. That kind of do-it-yourself unit to power just the incidentals is about $3,000 ...
If you had x number of dollars to invest would you put it in something where after 12 years you had gotten your x number of dollars back and not a penny more? No, you would call that a crappy investment.
In California, that's not true. First year, they are net positive in cash. Cali rips people off for energy costs. It's not uncommon for people to have $1000 utility bills in the Summer. A very large solar system will cost, ballpark, around $200 (that's a huge one) on a 20 year loan. Most 2000 SF houses could get by on around $160 a month (ballpark, including battery). That same house might have a $500 Summer utility bill. So would you rather pay $30 to the utility and $160 or for a solar loan or 500 all Summer?
Seriously, in California, if you have decent credit, getting solar isn't just a no brainer, it's insane not to have it.
I sell plenty of solar in Arizona, but it's much cheaper here for electric, so I usually can't offer too much savings from day one. It's more you'll save 15K to 30K over 25 years or so (plus the equity you gain in your home). Considering the average utility bill, here in AZ, is only like 150 a month, that's still a lot of money. The main advantage I have in AZ is that, in most cases, you don't have to buy a battery. Not needed. The utilities are still paying 6 to 8 cents a kWh for what you produce in excess of what you need -- back to the grid. That number is going down by around 10 percent per year. Eventually, AZ will be like Cali, where you only get 2 cents per kWh when you sell it back, necessitating a battery. Batteries make the upfront cost more (by 12K, 9K or so after tax rebate), but they also make what you produce more efficient, so you end up buying less from the utility and keeping more of what you produce, so it's not a bad trade off. If you don't have a battery, the price you get from the utility is your efficiency (here in AZ, roughly 50 percent).
People on this thread are also confusing "paying for itself" and "paying it off" -- completely different. It takes around 8 years to make the money it would have taken to pay it off back. But understand, in California, your net payments (from the residual utility bill and solar payment) will likely be much less from day one. You'll be net positive cash flow from day one with decent credit (and a solar provider that's not ripping you off).
@Lynn -- maybe it's my age (approaching 60). Not from AZ originally. From Southern Ohio, which might as well be Kentucky. I grew up in a small town that was very blue collar and 60% had Appalachian descent. I speak, to this day, with a slight country/Southern draw.
@paperpudding -- yeah, in Australia, you'd be foolish not to have solar. It's around 30% cheaper there, mostly due to regulation, permitting and just (in general) making everything harder. Even the individual states can make it harder. For instance, my contracts in AZ are two pages. In Cali, they are like 40 pages. That's why I don't sell in Cali but have business partners that do.
Thanks.0 -
Great information here - I really thought it would be much more of a debate
I'm convinced to take the next step and sit down with a couple of solar companies and listen to what they have to say. Our PG&E monthly bill during the summer is 400+ even while conserving power as much as possible, and I only see it going up every year.
Thanks for the input, I really value your opinions 😊
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Given a 12 year payback, that would not be considered a good investment in any way shape or form. 8 year payback is going to be pretty marginal unless we're talking about large, sure returns after the 8 years and a very long life for the asset.
Just commenting on this - since I was person who mentioned paying for itself in 8 years - and gave my rounded off figures of how that happened for me.
Yes it is large sure returns after 8 years and long life of the assett (I think the basic structure has 25 year guarantee)
We have now had solar for 11 years - since paying for itself we are least $2, 500 per year better off - and that will continue on into future years1 -
If we are concerned to do what we can and think about global warming, then are able to make use of solar technology, to me it makes sense. As does decreasing the heat/cold sensitivity of our homes.
Last night I was hearing a scientist telling how Norway and Sweden were once under deep ice. Then as the world changed and the ice was lost, so the land has risen. This land rise caused quakes, tsunamis and other geological issues. The scientists are warning Greenland has started the same process with the same expected consequences, not immediately but over decades to come.
Here our petrochemical fuel is being now sold with ethanol added to reduce emissions, its controversial land for fuel or food. I heard of one country which is drawing carbon from the atmosphere. Makes me feel we are so far behind in decreasing our emissions.
20 years ago we let trees grow in the garden, I hope they are doing their bit too, the gt grand children love running through them.1 -
MikePfirrman wrote: »@nooshi713 -- this is a typical example. Yeah, my son sold Solar in San Diego (and later LA) for a year. He left the job because his company focused on leases. He also didn't care for their ethics. That's the only exception in California why someone shouldn't get solar. Either they would have to do a stand alone unit or perhaps if their credit isn't solid. I would never, ever encourage anyone to get a solar loan.
I'm sorry but everything you have said about how you suggest acquiring a solar system involves a loan. Some keywords, credit score, discount for cash (says interest is involved), no money down, low interest rates.
How does the way your customers get a system not involve a loan?
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Theoldguy1 wrote: »MikePfirrman wrote: »@nooshi713 -- this is a typical example. Yeah, my son sold Solar in San Diego (and later LA) for a year. He left the job because his company focused on leases. He also didn't care for their ethics. That's the only exception in California why someone shouldn't get solar. Either they would have to do a stand alone unit or perhaps if their credit isn't solid. I would never, ever encourage anyone to get a solar loan.
I'm sorry but everything you have said about how you suggest acquiring a solar system involves a loan. Some keywords, credit score, discount for cash (says interest is involved), no money down, low interest rates.
How does the way your customers get a system not involve a loan?
I’m not sure but maybe he meant purchase instead of lease? I have heard when you lease a system the savings are not as good. I purchased my system but it is financed and I still save a ton of money.2 -
Really wanted to add solar when I put a new roof on my house several years ago. The contractor I was going to use came and did an assessment. My neighborhood has homes just shy of 75 years old, so there's lots of mature trees. There was just too much shade on my roof for part of the day that at the time it didn't pencil out. We thought about adding solar on a pedestal out in the back yard where there was solar access. That would have taken pretty much most all of my vegetable garden and been pretty ugly.
Now that it's six years later I wonder if costs would have come down enough to put a smaller system up on the roof that would not produce as much power but would make financial sense.
The trees help keep summer temperatures down in our houses. Good thing. Nobody has A/C around here. Well not many people do anyway.1 -
Theoldguy1 wrote: »rhtexasgal wrote: »I am not well-versed in solar yet but hubby and I are researching building our own system as it is cheaper overall vs. a complete system. With that said, I am unsure of the cost of a do it yourself built system but he said if we had one that could power our house with AC, it would take about 12 years for the system to pay for itself ... if you plan to sell the house in 10-15 years, you won't get a return on your investment in my opinion. But again, I am not well-versed. AC sucks up a lot of energy so you would need a fairly big set-up (at least where I live in SE Texas). Right now, we are looking at a smaller system to be able to keep our refrigerator, deep freezer and some fans or a small window AC going should we lose power. That kind of do-it-yourself unit to power just the incidentals is about $3,000 ...
If you had x number of dollars to invest would you put it in something where after 12 years you had gotten your x number of dollars back and not a penny more? No, you would call that a crappy investment.
You're ignoring the added value to the house (when you sell). I have no idea what that might be, but it seems extremely unlikely to be zero or negative. My recollection last time I was in the market, people were required to make property tax and utility payment info available to potential buyers.2 -
Theoldguy1 wrote: »MikePfirrman wrote: »@nooshi713 -- this is a typical example. Yeah, my son sold Solar in San Diego (and later LA) for a year. He left the job because his company focused on leases. He also didn't care for their ethics. That's the only exception in California why someone shouldn't get solar. Either they would have to do a stand alone unit or perhaps if their credit isn't solid. I would never, ever encourage anyone to get a solar loan.
I'm sorry but everything you have said about how you suggest acquiring a solar system involves a loan. Some keywords, credit score, discount for cash (says interest is involved), no money down, low interest rates.
How does the way your customers get a system not involve a loan?
I’m not sure but maybe he meant purchase instead of lease? I have heard when you lease a system the savings are not as good. I purchased my system but it is financed and I still save a ton of money.
It's a loan for a Solar purchase. Like a home loan, the solar system acts as the collateral. If you do a Solar Lease, you're essentially renting a solar unit on your house.
Just like a home purchase, there is a loan involved. But you loan to own. Leasing a solar system means you will never own it and it's a foolish venture. For some, it might save them money, but typically, if you're leasing, you put a lien against your home. If you miss one payment (and most that have leases have marginal credit and have missed payments on other loans before), they can take your house.
Yes, what I meant to say was I would never do a solar lease. Solar loans are necessary to buy a solar system.3 -
So someone with the funds making one total payment is not permitted to do so? Is there a law which prevents full payment? Were the bill $10,000 they are not permitted to pay $10,000 so there would be no interest incurred and the set up would be purchased outright?1
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This got me thinking about something that might seem silly.
What is the payback period for buying a house?
My mortgage will be paid off in a few years, so I currently have a relatively small part of my payment that goes to interest. The rest goes to equity. I have always considered the interest portion of my mortgage as my "rent." As a renter, I only ever pay rent. Rent can increase though. As an owner, I have other expenses like water heaters, new roof, new windows, property tax, paint, and tree trimming among others.
That said, I don't ever even "see" any of my equity unless/until I sell the house.
I am certain that my net worth has increased faster as a mortgage holder than a renter. My buddy never wants to own. He says he always wants to be able to just move. Yet he doesn't move. He did move when he had a partner. She left right after he renewed his lease. His lease is a lot more than my mortgage. He accumulates no equity.
I bought my house about 20 years ago and have refinanced twice. Both times were no-fee opportunities to get lower rates; the last was a much shorter term loan that will be done soon leaving me "rent free."
Since my plans don't include selling, and since it has already been 20 years, that sort of means my payback period is decades not years. Perhaps I was a fool to buy property.
Not.4 -
So someone with the funds making one total payment is not permitted to do so? Is there a law which prevents full payment? Were the bill $10,000 they are not permitted to pay $10,000 so there would be no interest incurred and the set up would be purchased outright?
Paying in full would be fine for someone that's going to live in the house for a while. It would save them money, perhaps. It depends on their viewpoint. If I had 10K in cash, I'd invest it, but that's me. I tripled my investments in stock over the last year. But if someone had the cash and wasn't 60 or 70 years old and wanted to pay cash, sure.
But most solar systems aren't 10K. Most are 25K to 35K. When a couple that's 60 comes to me and says, why not pay it in cash, I'd tell them to think cautiously. What if they can't live in the house in 10 years. Paying cash makes the point at which you break even much, much longer. Also, many are taking it out of their retirement savings.
If the goal is simply to save money and that can be done in year one, with a 20 year loan, why not borrow it? If interest rates were 7%, that would be one thing, but they are very cheap currently. And if worst case scenario happens and you have to leave the home in 5 years, you haven't paid all of it for the next home owner.0 -
Let me add that my solar system did add value to my home as well. I have refinanced a few times and gotten several appraisals and was told it added value.2
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I confess that I did not read all of these replies, but thought I would share my experience in Colorado. In either 2019 or 2020, my husband and I had several solar companies quote a system for our house. I do not recall the overall cost, but the least expensive one had a payback of 17 years. We planned to pay cash and here in the US, at that time, there was a 26% subsidy from the federal government. Even with all that, it still was a 17 year payback! That would have been an absolutely terrible investment decision to go forward with that. Also, where we are, there is a regulation of some sort which prohibited us from installing the system to provide 100% of our needed power. We would very much like to become more “green”, but not at that great of a cost.0
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So someone with the funds making one total payment is not permitted to do so? Is there a law which prevents full payment? Were the bill $10,000 they are not permitted to pay $10,000 so there would be no interest incurred and the set up would be purchased outright?
I know I am in Australia and not US - so things might be different.
But here, sure, you can pay the whole amount upfront here if you want- and if I hypothetically was buying a solar system now and had the money in savings to do that , I would.
Theoretically it would be better to only pay the deposit and pay the rest off over time - since it was an interest free loan and I could then get interest on my savings.
But since interest rates are ridiculously low at the moment, any such savings would be miniscule and IMO not worth the bother - I would just pay it all upfront if I could.
11 years ago when I bought my system, interest rates were higher so that equation would of been different - and anyway I didnt have enough in savings to pay it all upfront even if I wanted to, (most people probably don't) so moot point for me.
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paperpudding wrote: »So someone with the funds making one total payment is not permitted to do so? Is there a law which prevents full payment? Were the bill $10,000 they are not permitted to pay $10,000 so there would be no interest incurred and the set up would be purchased outright?
I know I am in Australia and not US - so things might be different.
But here, sure, you can pay the whole amount upfront here if you want- and if I hypothetically was buying a solar system now and had the money in savings to do that , I would.
Theoretically it would be better to only pay the deposit and pay the rest off over time - since it was an interest free loan and I could then get interest on my savings.
But since interest rates are ridiculously low at the moment, any such savings would be miniscule and IMO not worth the bother - I would just pay it all upfront if I could.
11 years ago when I bought my system, interest rates were higher so that equation would of been different - and anyway I didnt have enough in savings to pay it all upfront even if I wanted to, (most people probably don't) so moot point for me.
There is no such thing as an interest free loan. The present value of the interest is built into the price. Demand a cash discount then compare.0 -
well there was in Australia when govt was subsidising such to incentivise people to get solar systems - was not possible to negotiate a cash price.
Moot point for me now anyway - I bought my system 11 years ago and long ago paid out loan.
But, sure, people in other places who have the cash to pay unfront and want to do that - try this and see if it works out cheaper to pay all upfront, maybe it will be.0 -
MikePfirrman wrote: »So someone with the funds making one total payment is not permitted to do so? Is there a law which prevents full payment? Were the bill $10,000 they are not permitted to pay $10,000 so there would be no interest incurred and the set up would be purchased outright?
Paying in full would be fine for someone that's going to live in the house for a while. It would save them money, perhaps. It depends on their viewpoint. If I had 10K in cash, I'd invest it, but that's me. I tripled my investments in stock over the last year. But if someone had the cash and wasn't 60 or 70 years old and wanted to pay cash, sure.
But most solar systems aren't 10K. Most are 25K to 35K. When a couple that's 60 comes to me and says, why not pay it in cash, I'd tell them to think cautiously. What if they can't live in the house in 10 years. Paying cash makes the point at which you break even much, much longer. Also, many are taking it out of their retirement savings.
If the goal is simply to save money and that can be done in year one, with a 20 year loan, why not borrow it? If interest rates were 7%, that would be one thing, but they are very cheap currently. And if worst case scenario happens and you have to leave the home in 5 years, you haven't paid all of it for the next home owner.
Isn't the loan due when you sell the house? Surely the system conveys like any other attached fixture? You'll still be paying for it for the next owner -- the only difference is that you'll be taking it out of your proceeds at sale.1
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