The Economy of Solar

[wdyasq]

I was thinking about how much money I could save if I had just a few solar panels. So, I did a few calculations. I then redid the calculations with a bit more optimistic view.

For instance, let us suppose one is paying $0.15 a watt for electricity. Now, we shall guess the solar panels are going to cost $4 a watt.

Our solar panels are very efficient and it cost us nothing to install them (sure). We average 8 hours of maximum output per day (in our dreams) and 103% efficiency on converting it back to usable current. It comes out to 3009W per panel watt per year. Let us call it 3kWh per watt per year generated.

Our costs for those 3kW if purchased would be ...$0.45. $4 a watt for the panels divided by $0.45 makes payoff in 8.88 years if I can get someone to sell me the panels at $4 (only in a dream) and loan money at no interest (fat chance) and I can also get an average of 8 hours of sunlight every day. This also supposes I the panels feed a small over-unity device (yet to be invented) and goes back into the grid.

I think a more realistic set of numbers would be 75% of power back into grid (2.25kW) and use the National average for electrical power. $0.0988/kWh and get almost 24 years for payback if no interest is charged. This is for the unattainable $4 a Watt solar panel. This also means of one just put the same money in a 9% municipal bond account and paid the bill from that they would end up with more money in the pocket.

OH well...

Ron

[Birdmmjb]

The point for a lot of us is to ues less "dirty" grid power and save a little of the greenspace arround us.

I dont like to depend on any one including the power company for all of my needs.  So I make some of my own I also grow a little of my own food ect. and try to consurve where I can to leave somthing for my grandchildren.

Jan

[commanda]

These things only make financial sense if you must live on a bush block out in the sticks, and the utility company want to slug you Big Buck$$ so they can have the priviledge of sending you a bill every quarter.

I was quoted $20K AU for my block in 2005 dollars.

Amanda

[windstuffnow]

  Solar panels are like prepaying your electric bill far far into the future.  The advantage is self sufficiency, no problem when the grid goes down and it offsets the lower winds in the summer here.  I knew when I purchased them I would never see a payback in my lifetime but my son will get them for free and will benifit from them.  It also makes me feel like I'm doing a small part in cleaning up the planet for my son and his kids.  

  When I purchased them they were actually 3.50 a watt at the time.  I think there are still some good deals out there for them but you have to hunt them down.

.

[jonas302]

Maybe if you can get a state rebate for a big system like here in MN small scale is just for fun I get asked twice a day how much my silly HF panels save me and if they could run the whole house from them I figure I will never break even and will have to replace the batts someday grid power is a very good value here at .087 and .035 for the off peak

[strider3700]

It's hard to break even economically if you borrow the money for the panels.  If you however have $20,000 that you are looking to invest into something then a solar setup can in many cases do better then the bank, bonds or the stock market on average.  Homepower magazine had an economic investment breakdown of solar setups a year or so ago and pointed this out.  They where basically aiming the article at retiring baby boomers looking for solid investments.  The security of your own power generation and the environmental benefits came across as secondary benefits.

[Volvo farmer]

I might disagree with that.

My bank has a checking account that pays 4.5% right now. Let's assume Ron's numbers are close to accurate and the payoff for solar is in the 20 year range. I've run the numbers before myself and gotten a similar result.

Lets run some really optimistic numbers. $20K in panels = 5KW@$4/watt, lets pretend we don't need wire or an inverter or panel mounts or anything. Assume 8 sun hours/365 days/year (right). 20 years @.15/KWhr= $43,800 in electricity produced in 20 years.

20,000 invested at 4.5% compounded monthly for 20 years = $49,100.

Electricity will likely rise in cost over the next 20 years but my other numbers are so ridiculously optimistic that it's a moot point. A wise investor can beat that 4.5% return over 20 years too, maybe even get 8-9%

As has been mentioned, solar pays when you bought a cheap piece of dirt and the power company wants $50,000 to run a wire to you. In this case, a $20,000 investment starts paying back on day one.

Rebates should also be taken into consideration. I probably got back over $4000 on my installation, some from the Feds on taxes, and some from an electric company using my capacity to offset their RE mandate. If rebates can get a person down to $2/installed watt, I think payback gets into the ten year range, which begins to get tempting to the average person.

 

[elvin1949]

 Me being 58 yr's old will never see a payback.

I have only 120 watts now.I am also working on a small motor conversion mill. Deal is i only pay 6 cents per KWA but when the last hurricane [Rita]

gave me a visit i lost 500 dollars worth of food.

 So i need a small system to run my freezer for about 30 min.a day when that happens.

 WORTH EVERY PENNY

later

Elvin

[strider3700]

You're forgetting about a few important things when it comes to measuring investments.

First of all death and taxes are the only things certain in life.  I believe americans pay 15% in captital gains taxes these days.  The other thing to worry about when talking 10+ year long investments is the rate of inflation which I believe averages about 3% year over year.  That $50,000 may not buy you much in 20 years.  Hell 20 years ago $50,000 bought you a nice house around here.  These days $50,000 won't even get you a new pickup with a diesel engine.

[henjulfox]

Ron,

To play the devil's advocate...

I look at your numbers from the point of view of the $4.00 per watt investment returning $.45 per year. $.45 / $4.00 = 11.2% return on investment. Not bad. If you bring your assumptions closer to reality you'll probably double the cost. Here in Oregon, the combined Federal and State tax rebates pay for 1/2 the cost so I'm still at 11% return on investment.

The same comounding that makes an investment grow so nicely over time works both ways. The assumed $.15 cost of electricity, if it increases at 4.5% per year, will be costing me $.34 at the end of 20 years. My 1 watt panel will then be producing $.96 worth of electricity, giving me a 24% rate of return. Personally, I think the cost of electricity will rise at a rate much higher than 4.5% annually.

If I invest my $ conventionally I may get a nice rate of return. I have to pay taxes on the money I earn in my investments. Around 1/3 of my investment returns go away. My investment in solar panels offset the after-tax money I pay for electricity. I don't pay taxes on my returns.

Lastly, If I invest my money conventionally, at the end of 20 years I'll still have my money, plus what I've earned on the investment (less taxes). If I invest in solar panels, all I'll have is a bunch of 20 year old solar panels. If the cost of $4.00 per watt solar panels increases at 4.5% for 20 years, they will be selling for $9.23 per watt. I can probably sell mine on E-bay for $4.00 per watt.

-Henry

[thirteen]

I am planning on haveing a hydro / solar combonation off grid system when I am done for my retirement home.  Solar systems for outback systems it will be worth the money. Example; to get power to my house it was just under $78,000. Plus buying some right of way through state land. Everyone has there own usage for different types of systems.  At the rising cost for electricity (my bill alone has risen almost $42.00 per month in the last 1 1/2 years) solar will pay for it's self in 10 to 12 years for isolated property.  The city electricity costs will raise to cover there costs but if you can make a system that back feeds to the power company then the cost drops. Since every area is different there is alot of ground work to be done before buying panels. I would do more research on the cost of power. Your elect company has projected costs of producing electricity and estimated costs to each customer. Also thinking of the rising costs of correcting our enviroment our powers costs will rise more in the next 6/8 yrs. Not haveing a $300.oo power bill every month in 10 yrs when I am retired is a very inviting proposition. Many people will have enough money not to worry about power bills but I won't so an investment in solar panels is a good one for me. Looking ahead to using a 401 Solar Retirement Plan.

Mans greatest accomplishment in this world is new ways to destroy himself. MTROY

[wdyasq]

I will eventually have a large PV array. As much as I enjoy dealing with Government and other 'helping' forms of income redistribution and social engineering, I will probably get the 're-bait'. These 're-baits' may just be a way to locate the panels so those with them will be identified for later special treatment. These views are my own, developed from near 60 years of observation.

As others have pointed out a real reason will be energy independence. It will be nice to have the ability to supply one's own electricity to keep food from spoiling and have a little light if the 'grid' goes down. (so the predators can find one)

The original calculations started out as 'would it be worthwhile to grid-tie a ~5kW wind turbine' and if a $6000 MPPT turbine controller would be a worthwhile addition as opposed to a $3000 grid tie inverter. The variables of wind throw that calculation all over the place. That and this month's electrical bill showed two rates; $0.043kWh and $0.075kWh with the bill averaging $0.0609kWh including a base charge of $5.27. These are not the normal charges. I'm a little bit unsure how to setup a formula if there are variables that are unpredictable.

BTW, my normal bills reflect a ~$0.15kWh cost.

It is always enlightening to throw things out on the fieldlines forum. One gets several responses; the reasoned, the dream (nightmares included), wishful non-thinking, the clueless, the misinformed, the half informed, the flame-thrower and the rational. If I have missed anyone's attitude it is strictly unintentional.

Ron

[bob g]

i think henry and others have made some good points

however one should also remember good old ben franklin

"a penny saved, is a penny earned" well.. not really

we have to remember that good old ben was not paying federal income taxes, and other fica deductions, so the reality is probably closer to

" a penny saved is two pennies earned"

and maybe more after one factors in all other costs related to making an income.

so to have the 14 cents to pay the electric bill one needs to make around 28 cents just to be able to do so, (sure,, your mileage may vary)

so using this knowlege perhaps it takes 8 dollars work to pay 4 dollars a watt, but it is a one time cost, and if there is a tax incentive to do so, you may end up back near the 4 dollars anyway... but

the "real"cost of utility power in "work" dollars is significantly higher than most folks want to think about.,,, and it will likely also rise over time as taxes always seem to go up.

being Green and all that aside, there is a certain feeling one gets when he is able to do for himself, a certain satisfaction, a kind of inner piece, and security.

that alone (to me) is worth the investment, in at least some solar

on the subject of solar, if you are relentless in looking about, they can be had for  as little as 2 bucks a watt used,, maybe even less.

ask suppliers if they have any used, check with demolision companies they take down schools and other buildings that sometimes have panels up on the roof, state auctions (all those road signs, telecom companies and their service providers, etc.

bob g

[finnsawyer]

What if you could get the solar panels for $0.10 per watt?  Well, it's not my pipe dream.  There was a report on the tube about a researcher that has developed a new type of solar cell that he actually prints using a printing press.  A series of special plastic and carbon "inks" that are sensitive to different parts of the spectrum are printed on a flexible substrate.  The fellow thinks they will eventually get the price down to $0.10 per watt.  So, there's always hope.  

[Volvo farmer]

Good points!

A watt is a watt huh? Bankers can print all the money they want and my watts aren't deflated at all. Maybe solar is a better investment than I originally thought!

[Volvo farmer]

Ask anyone who has followed this industry for the last ten years what they think of this claim. This fellow is the latest in a long line of people who have promised to bring solar cell technology along that will reduce cost by a degree of magnitude. None have ever come to fruition, and there have been quite a few claims like this in the last ten years.

Sure it's possible that this technology will come about. I personally don't believe a word of it till I see it on the shelves though. Too many have already failed to make good on their promise in this area for me to believe any report I see on the tube, or elsewhere.

[finnsawyer]

Still, were it to happen it would have quite an effect, wouldn't it?  In that case you could kiss small scale wind power goodbye.

[wdyasq]

"What if you could get the solar panels for $0.10 per watt?  Well, it's not my pipe dream.  There was a report on the tube about a researcher that has developed a new type of solar cell that he actually prints using a printing press.  A series of special plastic and carbon "inks" that are sensitive to different parts of the spectrum are printed on a flexible substrate.  The fellow thinks they will eventually get the price down to $0.10 per watt.  So, there's always hope.  

GeoM"

Hold your breath until it happens .....

I'm with the fellow planting Volvos here, "I'll believe when i see it and I haven't seen it yet." to quote an old Billy Jes Shaver song. For as long as I have been interested in 'RE' I have been hearing the same song...unfortunately, it has always been sung a bit off-key.

In support, I too read the article about the new printing process. I think it shows promise. If the cost of new solar cells does get down to even $2 a Watt it will throw new dynamics into the solar industry and economic calculations. At $1 a Watt it is almost a no-brain deal. At $0.50 a Watt one is speaking near 100% ROI in a years time.

If this happened, the 'sell it back to the utility' program will end abruptly. I it would not surprise me to see laws enacted to require grid-tie where practical. One would be enticed to 'grid-tie' so the government-utility complex would have control over the consumer.

Ron

[DamonHD]

Wind will be good for some things (eg where there's not good sunlight) and PV will be good for somethings, and in some cases those overlap, eg to reduce lower winter solar energy with increased wind power.

The balance might shift a little.

IMHO...

Rgds

Damon

[DamonHD]

... to replace lower winter solar energy with increased wind power.

[spinningmagnets]

I believe if someone actually invents a process that makes PV panels for 1/10th the cost, they will sell them for whatever the market will bear, perhaps just 10% lower than the next best competitor (sounds cynical, but thats what I've seen happen with other products).

Because electrical generation is actually fairly cost-effective (at todays prices) electricity delivered to your home is fairly cheap. Cheap electricity leads people like me to be wasteful. I have two CRT TV's instead of LCD's. They work, so why buy a new one that uses less juice? My cable box (I found out) is a constant drain. I also have central air-conditioning, etc.

I have to earn $1.00 to have a seventy cents to spend, but a dollar NOT spent is an entire dollar saved.

I believe there's a crisis brewing, and politicians are reluctant to talk about it, because it won't get them elected. The big problem is, when the fecal extrusions hit the rotating air-distribution device, anything that provides off-grid power (like PV) WILL GO UP IN PRICE!

Please think about that,...just when the price of electricity goes way up, the price of PV will go up with it, due to a sudden demand. Do you doubt it?

During earthquakes and hurricanes, a small $1,000 generator will cost $3,000. We've all seen it happen. Yelling that it isn't fair won't change it.

Protesters get to the "I hate oil" rallys in cars that burn gasoline...

Learn everything you can, reduce your use, buy as much independence as you can afford as soon as you can.

"Heavier-than-air flying machines are impossible." - Lord Kelvin, president, Royal Society, 1895.

[bob g]

i figure every dollar i save  is not just the 1.35 i have to earn, but

a portion of the wear and tear on the vehicle, gas, insurance, tires etc.

extra money spent on meals at places that are not healthy (so that is also another cost that will come home to roost as well).  then when you figure the commute times and factor in the extra hours against what i am actually paid for....

a dollar saved is more like 2 bucks earned and probably if i was honest closer to 3 bucks.

but i am with ya,,, better prepare now

i just call it insurance

or a moderately expensive hobby

bob g

[ZooT]

Well.....the way I feel about it is, if I put the money/work out now, I'll save time later......

Time which would have normally been spent working to pay an electric bill....

As it sits right now, I'm selling my time to a company in return for a paycheck, but once that time is gone, it's gone forever...

In effect I'm building something to produce renewable energy thus that I might be able to enjoy more nonrenewable time at some point in the future....or at least have otheroptions as to what to do with money earned then other than paying a bill...

[BigBreaker]

Just because you "own" your land doesn't mean you have a license to capture the sunlight hitting it, of course.  You friendly local/federal politician is willing to cut you in on a deal, though.  You buy the panels and we'll split the power 50/50 with you into the grid.

It almost sounds plausible, doesn't it?

[Jeff]

thirteen,

I'm with you on not having those bills when I retire. I only wish I got started on this RE lifestyle earlier. Here's a good "what if?" (as in my case): What if you suddenly become disabled/unable to work? Current politics and policy can't be relied upon to help most people through a situation like that.

It's hard to calculate, but my average monthly kWh usage used to be around 480, with a total bill of about $100. There's many other charges added beside 0.10c per kilowatt. Anyway, now with $500 invested in solar panels, inverter, and batteries, my monthly average is $22-25. That's $75/month saved, and a payoff in 7 months! So the $4/watt or kW is a non-issue in the big picture. An additional $500 invested would take me off the grid entirely, but does anyone REALLY think some social service program would help someone do that? NO, they want people "indentured" to them and the various local businesses!

So, all in all, I'm reducing my monthly bills permanently (even if the set-up gives up after 20-25 years, I'm replacing them), I'm doing my part to reduce the dependency on oil, and helping the environment. Not to mention, I'm showing everyone in my area it can be done, and much cheaper than the $20000 the electric company claims!

Just my 2c.

[finnsawyer]

I understand solar is big in Europe.  Most parts of Northern Europe are farther north than where I live at 47 degrees north latitude.  And Northern Europe isn't exactly noted for its sunny clime.  Also, solar cells are somewhat more efficient at lower temperatures.  Given a large enough collecting area (i.e. cheap enough cells) even the winter sun can provide considerable power.

[DamonHD]

In mid-winter in London on average 1kWp (ie name-plate) of south-facing panels (with some sort of sensible tilt) will collect about 1kWh per day on average.  For of five times that mid-summer.  Thus our home could in principle be taken off-grid entirely with ~8kWp (allowing for battery and other losses) of PV, needing somewhat over 50m^2 of roofspace which we just about have...  However, it's east- and west- facing rather than south- facing which means that we wouldn't actually get that 8kWh each day, but we could go a long way towards it.

And in all but mid-winter we could be net exporters, maybe as much as 80% of each day's electricity.

Given the postage-stamp-size house that I live in with my family, it's amazing that we can get that close with PV this far North even in the depths of winter.

(The big fly in the ointment, and one of the major reasons why I'm not rushing off to do this right now, is that our roof pitches face east and west, not south, thus halving potential output unless I think of something clever and within 'permitted development rights'!  We could still be electricity neutral throughout the year with our roofspace/orientation if we wanted to be.)

Rgds

Damon

[finnsawyer]

Your situation is about as good an argument as there is that the utility of solar power generation simply depends on the price of the cells.  It's tough to retrofit anything.  Things work better when you start from the ground up.  The maximum sun angle here on December 21 is 19.5 degrees.  The problem is that my roofs all have a 4 in 12 pitch.  They certainly wouldn't be ideal for catching the winter sun.  We also have snow issues, which vary from year to year.  Currently we have received about 50 inches.  My barn roof would present a 20 foot by 40 foot area and would be great for catching the summer sun as it is south facing.  Still, I feel tracking would make more sense in the summer.  Currently solar plus wind would make the most sense.  Neither is cheap.