Let's Talk Solar Panels on your House

Since getting a new roof on the house, I thought it might be a good time to look into going solar.  Did some internet research and figured it might make economic sense.  So I contacted Sunrun, the largest player around here, who works closely with our utility (BG&E) to do grid-tie systems.  

Had a guy come out to the house last week, designed us up a system that would meet something like 110% of our yearly energy needs, based on past bills.  Anything over what we use is sold back to BGE.  All fine and dandy.

So, the system as designed would estimated generate about 6,000 kW per year.  The installed cost was 22k.  

So, I started asking some questions, like you do.  The system would cover both sides of the A-frame roof of the house.  But one side is south facing, so it would obviously make more electricity than the north-facing roof.  So I asked what would be the cost for just panels on the south facing roof, and what is the predicted energy generation for each of the 2 arrays.

He told me that the system had a 20 year Parts and Labor warranty.  But when I read the contract, it said only 10.  I asked about the discrepancy.  He hasn't gotten back to me yet.

The quote he gave estimating annual savings listed a price/ kW for 16 cents.  Our total cost per kW is 11 cents.  Asked about that, too.  And asked how much we get per kW from BGE when we sell them electricity.  Is it 11 cents/ kW?  That's our current price, but that includes electricity (7.5 cents) delivery (3 cents) and taxes and fees (0.5 cents)

He told us our price would be 20k if we said "no" to the full 20 (10?) year warranty.  But then he showed me a "cash" price of 18k.  20k was if we financed.  And they weren't giving us 0% financing, either.  It was 4% for 10 years, or 6% for 20 years.  I asked about that price difference, too.  

Stuff doesn't last forever; he said inverters usually last about 15 years and cost about 4,000.  Panels lose about 0.5% of production capacity per year.  So I figured in a probable system life of 20 years.  Based on our current usage, the cost of the system, and even factoring in the 30% tax credit (plus another 1k in credits from the state) we just barely break even with the system, over 20 years.

So, doesn't seem like all that great of a deal.  Plus the guy didn't have a whole lot of answers and has been slow getting back to me.  

Anyone else have any experience with grid-tie solar?  Be curious to hear about it.  

The wisest thing I ever heard about solar was from my cousin. He is wealthy, and installed a complete solar system. He is also very smart.  He said, “I’m not kidding myself. I know that what I am actually doing is paying my electric bill 20 years in advance, but it’s important to me”. 

Sounds like it pretty much matches what you are seeing. 

The solar industry has expanded every step of the way to match their installed costs with the projected electricity costs over time, including various incentives. 

Its not a money maker. Is it important to you?

I don't have solar.  I've looked into it several times.  I have never seen it make sense financially, or even close :(

Math says you'll get a $660/year return on a ~$20K investment.  Not a good return.

Home Solar has seemed about 2 generations away from being worth it the last 4 generations of technology. 

My friends in New England have solar.  It made sense for them as they got a Federal Tax credit, a state tax credit and the power company end up paying them a few thousand a year for the excess energy they produce.  Their natural gas rates are also quite expensive.

When I looked into it, in Colorado it didn't make sense.  Our natural gas rates are pretty low, we don't have a state tax credit and the energy company doesn't buy back your excess energy.  Plus I don't have a good roof for the panels, no bog southern exposure.  So I passed on it.

In reply to SVreX :

Much like electric cars, I strongly suspect that the cost of the system is predicated largely upon the government kickbacks and has nothing to do, in reality, with the actual "cost".  In fact, I'm fairly certain the "cost" of the system in the proposal is based on the estimated cost per kW and the amount of energy produced.  

I'm not looking to make money here, I'd be happy to break even.  But paying my electric bill for the next 20 years in advance needs to provide me at least some future-time compensation for my money, if that makes any sense.

It's somewhat important to me/us.  Where we live, something like 75% of our electricity is generated from fossil fuels, and 20% from nukes (which I like, but Mrs VCH is not so keen on).  We are planning on opening our Air BnB sometime in the next year or 2, and being able to tout "solar power" on the Air BnB site might help us cater to certain demographics, too.  

Still, the #'s don't seem to be there.

I have a suspicion, when the federal subsidy gets cut from 30% to 20% next year, the prices of solar systems will "magically" fall 10%.  

Solar lives and dies by the tax incentives.  It only makes sense if you can get a large portion of your investment reimbursed by your fellow taxpayers.

Our regional power company really really didn't want to build a new power plant, and they were nearing capacity, so for a while they were offering pretty generous rebates on PV systems.  Then they merged with another regional player that had more extra capacity, and those rebates went away.

You may still want to do it to lessen your environmental impact, but don't do it for economic reasons.

volvoclearinghouse said:

It's somewhat important to me/us.  Where we live, something like 75% of our electricity is generated from fossil fuels, and 20% from nukes (which I like, but Mrs VCH is not so keen on).  We are planning on opening our Air BnB sometime in the next year or 2, and being able to tout "solar power" on the Air BnB site might help us cater to certain demographics, too.  

Different building?  New construction?

Can you just put a smaller solar system on that?  Obviously, your return is a bit different in this scenario as your investment gets you a competitive advantage in addition to the offset usage.

In reply to volvoclearinghouse :

Yep. Nailed it. 

As an AirBnB host, I seriously doubt solar panels will make the slightest difference. Bottom line will always be your reviews of your hospitality. 100% of the time. 

If the panels can’t hike your occupancy rate it your rental rate, they don’t add anything to your business. 

Although, if you install them with INTENT of being a business capital investment, it could have different tax consequences. (Hmmm...). (This could backfire too. Incentives might have to be pro-rated based on what percentage of you house is not owner occupied).

ProDarwin said:

volvoclearinghouse said:

It's somewhat important to me/us.  Where we live, something like 75% of our electricity is generated from fossil fuels, and 20% from nukes (which I like, but Mrs VCH is not so keen on).  We are planning on opening our Air BnB sometime in the next year or 2, and being able to tout "solar power" on the Air BnB site might help us cater to certain demographics, too.  

Different building?  New construction?

Can you just put a smaller solar system on that?  Obviously, your return is a bit different in this scenario as your investment gets you a competitive advantage in addition to the offset usage.

It is a different building, and it has a new roof on it.  The house we live in has an ancient metal roof that's rusty and supported by trees.  

I've heard the cost of the system can be depreciated over the expected life for business use...that's an aspect I need to research more into.  Could definitely tip the scales.  But since the different building is on the same piece of land as our primary residence that could get tricky.  

Do a Net Present Value calculation using the real numbers that you verify yourself.    Other peoples figures lie and liars figure, as the saying goes. 

Walk away from any salesman who lies - because saying 20 years when its 10 is a lie.   Telling you the wrong unit price for electricity is a lie. 

Lying salesmen tell lies and use the lies to sucker you into falling for a "Benjamin Franklin" close - getting you to say "yes" to a series of statements so you say yes to signing on the dotted line.

Almost all alternative energy is subsidized by various federal, state, and/or local tax breaks.  

  Those giant windmills everywhere can't pay for their long term maintenance, for instance, but can make a payout to those who are ninja's at exploiting tax breaks and subsidies.   

Fossil Fuels, nuclear and hydro pay from themselves, the rest are vanity power generation.

Solar panels never made sense to me, mainly because the expense and I live in the rust belt on the lake with lots of storms.I thought people only bought it to feel less guilty about the Man/bear/pig. Geothermal seems reasonable and I work at a organization that is nearly 100% run on Geothermal. I found this article that does a good breakdown, obviously the numbers may be off depending on the location https://www.popularmechanics.com/science/energy/a4597/4331401/

https://www.trinity-solar.com/business-owner/commercial-incentives/federal-incentives

Looks like you get the 30%, and depreciate the rest over 5 years with MACRS.  

In reply to volvoclearinghouse :

That’s only gonna apply to the portion that was used commercially. 

SVreX said:

In reply to volvoclearinghouse :

That’s only gonna apply to the portion that was used commercially. 

Since the solar panels will only be installed on the rental building, then they would be 100% used commercially.  

Interesting subject.  I have been interested in solar myself, but I am too broke to do it.

And looking at the above numbers, I will be too broke for a long time.  

I guess solar really needs one or two more breakthroughs to be ready for the masses.

When Walmart, Target ect. are having them installed on their roofs may just be the time to sign up. 

Another thought that would require two wiring systems in a house.  Solar and a battery bank to run LED lighting with DC , and traditional AC  to run most everything else.

SVreX said:

In reply to volvoclearinghouse :

That’s only gonna apply to the portion that was used commercially. 

Ok, I misunderstood. I thought the panels were going on the main house. 

That could still affect the incentives if they are for a prImary residence, etc. 

In reply to noddaz :

It makes more sense if you're using solar shingles/tiles because you're replacing the roof with solar rather than replacing the roof and adding solar.

I don't have much to add beyond the fact that SolarCity/Tesla very much do offer a 20 year warranty on the panels, and they'll extend it if you pay cash.

The panels I have in my employers solar field also carry a 20 year warranty from another vendor.

From those data points I'm going to say that 20 years is pretty standard.

Only way that I could ever make it make any bit of financial sense was on a new build where you roll the cost into a mortgage. With rates rising, that may not be the case any longer--and it always required you to ignore time value of your money. 

noddaz said:

 

When Walmart, Target ect. are having them installed on their roofs may just be the time to sign up. 

 

Too late. They have nearly 150 megawatts of capacity each:

WalMart, Target, and others

jharry3 said:

Fossil Fuels, nuclear and hydro pay from themselves, the rest are vanity power generation.

You might want to rethink that, when fossil fuels and nuclear each receive billions in tax subisidies.

The financing options aren't bad.  10 years at 4% with a 20k principal (and figuring in the tax rebates) came out to around $150/ mo.  Of course, that's double what the current electric bill is...but then the system is paid for in 10 years and has, theoretically, another 10 years of "free" electricity.  So it breaks even, neglecting the time value of money.  

Of course, it also neglects any future rises in electricity rates.  

It looks like for residential, with the tax creds, it's about a break-even proposition.  For businesses that can depreciate the solar assets, it probably is a net positive on the bottom line.  Hence why Wal-mart, target et all are starting to do it.  

I still need more of my questions answered.  There's at least a dozen companies doing the solar thing in our area, I'll ask around.  

I worked home construction as a young man. During that time sky lights became the rage. I worked for a wise old builder who said "roofs don't leak till they have a hole in them" he was right. I repaired a lot of leaks back then.  A few weeks ago I had a job repairing a ceiling from water damage due to a leaking sky light, home was built in the early 2000's. I thought of the old man.

I bought a new car for myself, once. I ordered the sunroof. Took delivery and the first night it rained with the car parked in the apartment complex lot. Jumped in the next morning excited to drive my new car only to find my cloth bucket seats were giant wet sponges, and now I was soaked & late. I remembered the old mans words "Roofs don't leak till they have a hole in them."

Last week my next door neighbor had solar electric panels installed. Guys were there drilling holes through the very old flat tile roof for two days. The roof really needs to be replaced and has been repaired several times since I've been here. I thought of the wise old mans words. Meanwhile I asked said neighbor why he was getting the panels. He explained that his bill was more than double other neighbors with basically the same house & occupant quantity. He'd had the electric company out several times as well as an electrician checking to find a problem. Guess they didn't figure out his wife turns the AC down and opens the sliding glass door for fresh air when he leaves for work. Not wanting to instigate a domestic I didn't tell him.

Here in FL if there's a roof leak the termites will eventually take up residence. They'll chew up the house till repairs are made or there's a long enough drought to kill them off. I've had to replace roof joists, trim, etc. on my own house due to leaks & termites when previous owners didn't repair.

Neighbors system

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[URL=http://s240.photobucket.com/user/NOTATA/media/neighbors/20190114_104008_zpsccpslbhb.jpg.html][/URL]

In reply to NOT A TA :

Yep.  Hence why I wouldn't do it on an old roof, but the building in question has a brand new roof, installed in 2017.

I also inquired about roof leaks.  Since the roof in question is standing seam metal, they don't actually drill through the roof- they clamp to it.  No penetration = no chance of leaks.  

SVreX said:

noddaz said:

 

When Walmart, Target ect. are having them installed on their roofs may just be the time to sign up. 

 

Too late. They have nearly 150 megawatts of capacity each:

 

WalMart, Target, and others

I hope that they plan on installing them in places that both have an abundance of sun as well as a risk to power going out. 

Like hurricane risk areas. Where Walmart ends up being one of the largest sources of food.