Solar

[FlyingScot]

Originally Posted by brk-lnt

I have solar panels as well, in one of the best spots for solar in the US. I anticipate my system will "pay for itself" in 8 years, which means the ~$24K we spent post tax credits will have been recognized in utility bill cost savings.

However... If we invested that $24K and earned an average of 7% (currently earning much higher on other investments, so this seems conservative), and tax the growth at our average 24% tax burden (based on last 3 years of returns), I would have ~$36K in 8 years. So now my panels need to go another 4-5 years to "break even".

After maybe 15 years we will "break even", but it's a downhill slide, as the $24K we put to the panels could theoretically be earning continual interest.

Or, looking at it another way, I could set $24k aside for utility bill pre-payments and draw that account down over time, working against earned interest, and in that case we might realize an actual break-even point closer to 12 years.

This is ignoring the tax credit for solar, which you can argue is an opportunistic thing you should take advantage of, or a factor that causes false calculations.

Either way, a solar system is rarely, if ever, an "investment" in terms of net financial advantage.

Your heat pump example is closer to my initial comment in that if you have a high energy use appliance that needs replacement already, going with a high efficiency version is less of a hit than replacing a perfectly working unit. Still, these systems overall tend to not provide immediate net savings, but you may be able to offset their costs over a decade-ish of time, assuming they last that long and do not require any expensive repairs.

Not sure of your professional background, but when you say "this is ignoring the tax credit for solar" you raise a red flag that you are not calculating the return correctly. (You've got a couple of other mistake too, but I don't want to pile on.)

Returns on any investment should be calculated on an after-tax basis--the money that ends up in your pocket at the end of the day. When I said my panels were returning >15% per year that was a post-tax return (IRR) that would conform to any business school textbook or the (pretax) numbers that an investment firm such as Fidelity would provide on their investments.

15% is approximately 2X the long term after tax return on the stock market, with much lower risk. Any professional financial analyst would tell you that the solar on my house is a home run, driven by generous government incentives. Though as I concluded before--general online advice can be helpful, but every buyer should have their own specific situation analyzed by the installer.

[brk-lnt]

Originally Posted by FlyingScot

Not sure of your professional background, but when you say "this is ignoring the tax credit for solar" you raise a red flag that you are not calculating the return correctly.

Sorry, what I was trying to convey is that the cost to the homeowner is not representative of the actual cost, due to the government incentive. Thus if you want to calculate the "savings" of something like solar, you would really need to go by the actual system cost.

Or, to lay it out a little differently, government incentives do not necessarily scale. If someone pays half your restaurant bill, it might be cheaper than cooking at home, but that does not mean that overall dining out offers savings relative to eating in.

Originally Posted by FlyingScot

(You've got a couple of other mistake too, but I don't want to pile on.)

Go ahead, I always welcome informed debate and am happy to learn. Keep in mind I was trying to keep this discussion simple (but accurate) and not try to turn it into an ECON201 course.

Originally Posted by FlyingScot

Returns on any investment should be calculated on an after-tax basis--the money that ends up in your pocket at the end of the day.

To a certain degree, yes. IMO you need to consider broader factors if you are going to promote things like solar as a viable alternative.

Originally Posted by FlyingScot

When I said my panels were returning >15% per year that was a post-tax return (IRR) that would conform to any business school textbook or the (pretax) numbers that an investment firm such as Fidelity would provide on their investments.

I obviously can't debate that without you disclosing your numbers (which I am not asking you to do), but you would agree that your return rate as stated is far above most averages and norms? Or do you think that is the kind of return the average person should anticipate?

Originally Posted by FlyingScot

with much lower risk.

The risk part is very debatable, IMO. Tell me about risk at the end of the panel lifespan, after you have real data on panel failures/outages, damage, etc.

Originally Posted by FlyingScot

Any professional financial analyst would tell you that the solar on my house is a home run

A "professional" financial analyst would factor the value of the investment based on the final return, not an early midpoint number. So far though, from what you post, your "investment" in solar is fairing well above average.

[FlyingScot]

Originally Posted by brk-lnt

Sorry, what I was trying to convey is that the cost to the homeowner is not representative of the actual cost, due to the government incentive. Thus if you want to calculate the "savings" of something like solar, you would really need to go by the actual system cost.

Or, to lay it out a little differently, government incentives do not necessarily scale. If someone pays half your restaurant bill, it might be cheaper than cooking at home, but that does not mean that overall dining out offers savings relative to eating in.



Go ahead, I always welcome informed debate and am happy to learn. Keep in mind I was trying to keep this discussion simple (but accurate) and not try to turn it into an ECON201 course.



To a certain degree, yes. IMO you need to consider broader factors if you are going to promote things like solar as a viable alternative.



I obviously can't debate that without you disclosing your numbers (which I am not asking you to do), but you would agree that your return rate as stated is far above most averages and norms? Or do you think that is the kind of return the average person should anticipate?



The risk part is very debatable, IMO. Tell me about risk at the end of the panel lifespan, after you have real data on panel failures/outages, damage, etc.



A "professional" financial analyst would factor the value of the investment based on the final return, not an early midpoint number. So far though, from what you post, your "investment" in solar is fairing well above average.

The basic difference is that you appear to be evaluating the societal impact of solar instead of the impact to the homeowner. As Peter from NH Solar points out, the societal impact is much more than financial.

As my post opined, the individual homeowner should be evaluating the impact ONLY to himself when looking at the numbers. In this case, that means giving yourself full credit for the tax incentive. I was more than happy to have the government pay 30% of the cost of my system. To go back to your restaurant comparison--if a restaurant is having a 2 for 1 night, I would not stay home because the savings is artificial or a one-time thing, etc. From a financial perspective, I care only about the size of my bill.

My returns are typical for a system in eastern Massachusetts. I'm confident they are repeatable there, but I do not know the returns for NH or other states. A good local installer should be able to provide these quickly based on the individual homeowner's sunlight, roof, equipment selection, current electricity cost, and state incentives. The risk really is low--there are millions of these installed, with expected repair costs and lifetime performance well understood. I would compare the risk to a corporate bond--even at 5%, you'd be doing quite well in today's environment.

[Biggd]

Originally Posted by FlyingScot

The basic difference is that you appear to be evaluating the societal impact of solar instead of the impact to the homeowner. As Peter from NH Solar points out, the societal impact is much more than financial.

As my post opined, the individual homeowner should be evaluating the impact ONLY to himself when looking at the numbers. In this case, that means giving yourself full credit for the tax incentive. I was more than happy to have the government pay 30% of the cost of my system. To go back to your restaurant comparison--if a restaurant is having a 2 for 1 night, I would not stay home because the savings is artificial or a one-time thing, etc. From a financial perspective, I care only about the size of my bill.

My returns are typical for a system in eastern Massachusetts. I'm confident they are repeatable there, but I do not know the returns for NH or other states. A good local installer should be able to provide these quickly based on the individual homeowner's sunlight, roof, equipment selection, current electricity cost, and state incentives. The risk really is low--there are millions of these installed, with expected repair costs and lifetime performance well understood. I would compare the risk to a corporate bond--even at 5%, you'd be doing quite well in today's environment.

The social impact it what I get stuck on. I don't like the looks of them on any roof and I'm sure I'm not alone. I also have talked to people that say they are a pain to deal with if you have a roof leak. I don't like them but that's JMO!

[NH.Solar]

Fun stuff and some very intelligent arguments... I always have learned the most valuable information from my clients, or in this case debaters. All of your points are good and individually applied probably valid. Every solar installation is different and has unique challenges. Do you recall me as as saying that we did our first bi-facial solar ground mount in Meredith? That client has an absolutely perfect roof for solar ...but like BiggD she absolutely was against it. So we installed a split bi-facial ground mounted array next to her home and it not only looks good, she also gained some extra winter production over the roof mount. Her 9.4 kW array produces about 12 mWh per year but most importantly a BIG boost in power is there from January til March and most of that is directly consumed by her new air sourced heat pump Hvac system. She is easily saving $2K per winter month over what she had (electric baseboard). I figured Mary's payback at nine years but now that she has the mini-split system I bet it would be closer to five or six. And again,if you install solar the tendency is to be a little freer with your consumption, and it is a little easier to live with the very enjoyable personal gluttony when you know that the power has been cleanly harvested from the abundant power of the sun

[Biggd]

Originally Posted by NH.Solar

Fun stuff and some very intelligent arguments... I always have learned the most valuable information from my clients, or in this case debaters. All of your points are good and individually applied probably valid. Every solar installation is different and has unique challenges. Do you recall me as as saying that we did our first bi-facial solar ground mount in Meredith? That client has an absolutely perfect roof for solar ...but like BiggD she absolutely was against it. So we installed a split bi-facial ground mounted array next to her home and it not only looks good, she also gained some extra winter production over the roof mount. Her 9.4 kW array produces about 12 mWh per year but most importantly a BIG boost in power is there from January til March and most of that is directly consumed by her new air sourced heat pump Hvac system. She is easily saving $2K per winter month over what she had (electric baseboard). I figured Mary's payback at nine years but now that she has the mini-split system I bet it would be closer to five or six. and again,if you install solar the tendency is to be a little freer with your consumption, and it is a little easier to live with the very enjoyable personal gluttony when you know that the power has been cleanly harvested from the abundant power of the sun

If I had a large property then that's the only way I would want solar, a ground system.

[8gv]

If a new roof is required, can the solar equipment be removed and then reinstalled?

At what cost?

How does re-roofing early to get it done prior to a solar installation figure in to the ROI?

Does rooftop solar equipment increase or decrease the resale value of the home?

Does it diminish the pool of potential buyers?

How fast is the technology advancing?

Will today's installation become obsolete in ten years?

[FlyingScot]

Originally Posted by 8gv

If a new roof is required, can the solar equipment be removed and then reinstalled?

At what cost?

How does re-roofing early to get it done prior to a solar installation figure in to the ROI?

Does rooftop solar equipment increase or decrease the resale value of the home?

Does it diminish the pool of potential buyers?

How fast is the technology advancing?

Will today's installation become obsolete in ten years?

Removing the system to replace roof, and then reinstalling would be pricey, and really mess up the economics I described before. I think you'd want a roof with a lot of life remaining--hoping NH Solar has the number here.

Also--on the leak risk mentioned above--a good installer will have insurance protecting you from any leaks in your roof due to solar. As I noted before, they've done this many times.

The aesthetics depend on the house and the panels. I have all black panels on a relatively new home, and they look great. From my neighbors' compliments, I would guess they have added to curb appeal and home value.

Tech is advancing slowly but steadily. I don't think my panels will be obsolete in ten years, but since I'll have them paid for in 6 or 7, and printing cash after that, I will not mind if there's a newer-better version, I'm still ahead.

[NH.Solar]

If the roof is over ten years old we generally advise our clients to consider replacing it before installing an array. There are a lot of variables however that can change this the main two being the pitch and the quality level of the original shingles. The roof may look fine but over time the UV rays of the sun will bake the oils out of shingles and they become brittle. Walking on them while installing an array can cause fractures or breakage and could result in a leak. Often a client can get away with just doing the south plane under the array because that is the one that will have seen the most direct sun. Once the array has been installed the shingles below will never age because they are now shaded from the direct UV rays by the panels. An additional benefit that comes from changing out the shingles before an solar installation is that the cost of re-roofing the plane under the solar array can be added to the cost of the installation and becomes subject to the 26% Federal ITC. Removing and re-installing a solar array would cost thousands of dollars so not doing the job correctly up front is a false economy.
In my experience a properly done solar installation will usually add value to a home in direct proportion to its gross cost and can also increase the homes marketability. If there are two identical homes and house A is listed for 300K and has an average $200/monthly utility bill (~1000kWh/mo), and house B is listed for 320K and has a near to zero monthly utility cost, which do you think will sell first? (...a rhetorical question, it depends on the buyer). Remember too that if you as the seller are able to add the full gross cost to the selling price of the home and sell it, you are already ahead of the game because you will have already pocketed the ITC and PUC rebate. All of the homes we have installed solar on have sold quickly and easily. A leased solar system on the other hand is definitely a detriment to a homes value and marketability. In fact there is nothing good to be said for leased systems and that is why the trend died so quickly.
As FlyingScot pointed out the aesthetics on an installation are a key element. We use all black modules whenever possible because the array then looks more uniform and sleek. An additional benefit is that they shed snow a little better than silver framed modules.
Yes the tech is advancing constantly but I might differ with the term slowly. Every week we are seeing something new coming out, most are relatively minor advancements but every now and again there is something really substantial, especially in regards to home energy storage. So does that mean it is wise to hold off until the next great thing comes along, probably not. As FlyingScot again pointed out a system that meets your needs today will still probably still be fully meeting those same needs 30 or more years from now.

[ishoot308]

Originally Posted by NH.Solar

If the roof is over ten years old we generally advise our clients to consider replacing it before installing an array. There are a lot of variables however that can change this the main two being the pitch and the quality level of the original shingles. The roof may look fine but over time the UV rays of the sun will bake the oils out of shingles and they become brittle. Walking on them while installing an array can cause fractures or breakage and could result in a leak. Often a client can get away with just doing the south plane under the array because that is the one that will have seen the most direct sun. Once the array has been installed the shingles below will never age because they are now shaded from the direct UV rays by the panels. An additional benefit that comes from changing out the shingles before an solar installation is that the cost of re-roofing the plane under the solar array can be added to the cost of the installation and becomes subject to the 26% Federal ITC.

What about solar shingles? Similar to this... https://www.solarreviews.com/blog/wh...solar-shingles

What’s your thoughts on these?

Dan