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The Return on Investment on Solar Panels

Post in 'The Green Room' started by mbcijim, Dec 5, 2008.

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  1. mbcijim

    mbcijim Member

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    I am a business owner that owns a lot of real estate. By lots I mean over 1,000,000 square feet.
    Most of the buildings are 10,000 - 30,000 sft commercial space.

    I have a consultant helping my company with some of the grant programs out there. For which we will probably apply.

    I was deeply dismayed though by the systems.
    50 KW System
    $350,000 Installed
    $3,589 average electrical generation (at $.06 KW) per year.
    That's basically a 1% return on investment. That's TERRIBLE.

    The commercial systems work because you get a subsidy from the utility, the federal gov't, and maybe the state gov't. No subsidies, no solar.

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  2. canyon

    canyon New Member

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    Try solar thermal (hot water in particular) and you'll find a much better return rate on your investment.
  3. j00fek

    j00fek Feeling the Heat

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    i would wait for the next gen solar pv panels or film to come out.
  4. homebrewz

    homebrewz Minister of Fire

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    Yes, efficiency will get much better in the near future:

    http://news.rpi.edu/update.do?artcenterkey=2507

    In the mean time, you could invest in energy saving devices, and practice energy conservation. For buildings that size, it would probably make a significant
    difference in consumption if, say, all the bathrooms had motion sensor lights that turn off after 5 or 10 minutes, etc.
  5. Jags

    Jags Moderate Moderator Staff Member

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    Good read Homebrewz
  6. homebrewz

    homebrewz Minister of Fire

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    Thanks! Its really exciting to see the progress thats being made. Plus, I was especially interested because RPI isn't that far from here.

    I think I remember seeing another article posted in this forum about similar work being done at MIT, maybe. All good stuff.
  7. mbcijim

    mbcijim Member

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    I posted this thread to show everyone how far we are from PV that pays for itself. We need a 10x increase in efficiency to make the solar effort self sustaining. Increases are great, but they don't begin to close the gap.
  8. Jags

    Jags Moderate Moderator Staff Member

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    If we waited for each new technology to be perfected before it was rolled out to the public, we would still be waiting on the automobile and the computer. Gotta start somewhere.
  9. mbcijim

    mbcijim Member

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    Are you willing to invest and accept a 1% return?

    To be honest, my PV guy is only calculating the generation rate for the KW - $.06/KW. Probably another $.05/KW gets whacked on for distribution, transmission, etc... All those costs are avoided, because your making it on site. But it is still only a 2% return if you include that money.
  10. Jags

    Jags Moderate Moderator Staff Member

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    Will I?? - NO! But there are a couple on this very site that have. So it must make sense for some.
  11. homebrewz

    homebrewz Minister of Fire

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    I think the initial investment varies from state to state due to the various rebate programs that are out there. Here in NY, NYSERDA (the agency that oversees the rebate program) will pay for up to 60% of a PV system. I know several folks who have systems, some are grid-tied, and some are off-grid. None of them regret their investment.
    I do agree however that for a grid-tied system, it might not be worth the investment for some people (Especially if they aren't good at energy conservation). Even if it meets nearly 100% of your power needs, I think there is still the matter of the monthly power bill which includes fees for using the power company's meter, etc.
  12. jdemaris

    jdemaris New Member

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    I'm not sure what this 1% return is - being discussed?

    I installed solar-electric and I regard it as a much better investment then something like buying a new car (that is often financed even making it a worse investment). We make all our own power, and it will take about 5 years for the system to pay for itself. Also gives us some security when the grid is down, and is also portable. If we move to a more rural area where no grid-power is available, we can take this system with us.

    I've got a 5250 watt grid-tie system with battery backup. Total cost was over $30,000. But, my out-of-pocket expense when all done with incentive cash and tax exemptions from the Fed and State government was not much.

    In total - the system cost us, out of pocket - $4,650.
    Electric bill previously was an average of $80 per month, and now it’s $13 per month (hookup service fee). That is a $67 per month savings. We also make and sell $100 - $150 back to the power company every year of excess power we make. That comes to $904 savings per year,
    is will take 5.14 years to pay for itself. Since all the equipment has a 5 year warranty (at least) - even with equipment breakdowns, it will pay for itself quickly. And if electric rates go up, the payback is even faster.

    I suspect many people out there did worse with money sitting in IRAs or mutual funds. Same with overpriced new cars that drop in value incredibly fast. In fact, many who invested in real estate are also doing worse - considering the value-drops and the taxes paid every year.

    I also add one more scenario. I have a remote property and cabin in the New York Adirondack mountains. I spent about $2500 on an off-grid solar electric system. 800 watts of panels, Trace inverter, and Trojan batteries. I've had it now for five years and it does all we need. If I hadn't, and hooked to the grid instead - we would of already paid $1,080 just in monthly hookup fees and not even counting any electricity used or the cost of installation and inpection. This was done with zero incentives - just cash out-of-pocket. If will soon have paid for itself. It's a simple system with little to go wrong and I see it as a great investment that suits our needs there perfectly (for a part-time use cabin).
  13. mbcijim

    mbcijim Member

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    Your looking at your return as if the state/federal/utility subsidy was free. Your $30,000 system cost you $4,650. It cost federal taxpayers/state taxpayers/electrical users $24,350. Your saving $904/year. That's a 17% return. But if you include the subsidy in your return, then it drops to 3.0%. I'd also venture that you did some work yourself/change in electric use, as your return is really good at 3%. None of my projections show that kind of return.

    I too will get the state/federal/utility subsidy, and my return will be a lot closer to 17% than to 3.0%. In order for these things to be mass marketable, and become main stream, even a 3.0% return is not palatable to large investors.

    The green movement acts like solar is a huge part of the solution. It is not at this time, without hundreds of billions, even trillions of subsidies.

    Don't criticize me for merely pointing out facts. I'm going to spend at least $3,000,000 on PV if I get the subsidies I think I am going to get. I get the whole solar thing. My point is without the three different subsidies, I would not have any interest in PV, because it doesn't begin to pay for itself.

    This has nothing to do with cabins in the adirondacks. If you think it does then you don't understand any of the points of this post.
  14. jdemaris

    jdemaris New Member

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    [quote author="mbcijim" date="1228813070"]
    Your looking at your return as if the state/federal/utility subsidy was free. [ /quote]

    No, that's not true at all. I don't regard anything, from any government entity as "free." I am simply looking at it as a present and unfortunate reality, regardless if I like it or not. We are taxed for it and we also pay for it in add-ons to utility bills - with no choice in the matter. That being said, my cost-calcutlation starts from that point - since I'm only including added-expenses to install solar - not those I have to pay anyway.


    [quote author="mbcijim" date="1228813070"]
    Your $30,000 system cost you $4,650. It cost federal taxpayers/state taxpayers/electrical users $24,350. Your saving $904/year. That's a 17% return. But if you include the subsidy in your return, then it drops to 3.0%. I'd also venture that you did some work yourself/change in electric use, as your return is really good at 3%. None of my projections show that kind of return.
    [ /quote]

    In regard to "return", maybe we are using that word differently. This system will pay for itself in a little over 5 years. I see that as a 100% return at that point, to me. Anything after that period of time is a bonus. Another "return" as am using the word, is some independence. My main motivator to install was this. I own some remote property 1000 miles from here, with no grid power available. By buying this system now, it enables me to take it with me later, out-of-state to live at the other remote property if I later choose to do so. The only restriction from the State incentive program is - the system has to stay in-state for two years - that's all.


    I'll also add this - and I've posted about it many times before on this forum. From what I've seen, the solar-incentive programs are a huge rip-off to most consumers - and acts more like a "make-work" program for certified installers. In New York, to qualify for State incentive-money, you are forced to hire a State-certified installer only, regardless of what they charge or even if they are even qualified to do electric work. I am a qualified electrician, yet many of these State certified installers are not. And, those installers usually require the homeowner -or business owner - to pay a big % markup on all materials used on top of rediculous labor charges. So, with many installations, ALL the incentive money - magically disappears. In my case, I did all the design work myself, bought the matrerials myself at wholesale, and did much of the installation work by working as a "subcontrator" for the certified installers on my own propertly. It was not an easy thing to do. With most installers - if I did things their way - I would of seen NO savings. To put it more clearly, I could of opted to do a total self-install, not get any State incentive money -and in the end -put the same size system in cheaper - except I wouldn't have the grid-tie.


    [quote author="mbcijim" date="1228813070"] The green movement acts like solar is a huge part of the solution. It is not at this time, without hundreds of billions, even trillions of subsidies.
    [ /quote]

    I don't believe it will ever be a solution on a mass level, anymore than wind or bio-fuels will ever be. The reality is - energy consumption goes up ever year - and as far as I can tell - the earth has finite resources - unless we find a way to tap into a black-hole energy field somewhere.
    Cutting back on frivolous air travel - and spending money to make the present USA more energy efficient - would give a much better return on the dollar that wasting money on alternative fuel sources.

    [quote author="mbcijim" date="1228813070"] Don't criticize me for merely pointing out facts . . .
    This has nothing to do with cabins in the adirondacks. If you think it does then you don't understand any of the points of this post. [ /quote]
    "The commercial systems work because you get a subsidy from the utility, the federal gov’t, and maybe the state gov’t. No subsidies, no solar. "

    My stating that I don't understand the 1% return statement is me stating exactly what I am thinking. It's not what I regard as criticism. And, maybe, to the converse, you don't understand my points on this post. You stated "No subsidies, no solar", yet many have done it with no subsidies - in home use and commerical use. Subsequently, the statement you made is true for many, but not true for all. My cabin in the Adriondacks, in my mind, falls into the same category as my neigbor who lives in an off-grid home, full time on 1200 watts of panels - it the dark and gloomy northeast - and also a couple of small businesses I know of in Massachusetts and New York that are also, off-grid and 100 % solar. All installed with no state incentive money. And now, with the Federal tax exemption raised, it can be even more attractive. There is something to be said for NOT getting the incentives from the State programs. It frees up many regs and makes installation a lot cheaper. One added note - we have half the sunshine that parts of the southwest gets. So, someone there can install a system half the size here and get a better return on their money.
  15. oldmilwaukee

    oldmilwaukee New Member

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    I did the work myself on my installation, and there were no state or federal incentives, other than a $2,000 tax credit, which I was not able to use. I have calculated that my payback is about 1.5% to 2%, which sounds like a miserable investment. (And this doesn't factor in the battery depreciation... I am off grid). On the other hand, the "returns" each year are tax free and indexed to the rate of inflation. I like this thread because you started by talking about the return as a yearly percentage instead of how-many-years. Talking percentages is the right way to think about it. When does a 2% investment payoff when you could have invested the money at 4%? Never! I find it frustrating to explain this to people. They just want me to tell them how many years it will take for my solar panels to pay off. They don't like the real answer - "never." so I nod my head if they suggest 30 years. Of course electrical rates can and probably will go up, which will make the ROI a little better in the future.

    But what's the rate of return on a 50" plasma TV? And why do people pay $200,000 for a half acre house lot when they can buy similar same land a few miles away for $20,000? Give me the $20,000 lot and $50,000 of solar panels and I'll have a $70,000 lot that makes its own electricity!

    I did my solar installation more for the independence-factor than the green-factor. For instance, I never would have bought a battery-less grid-tie system that turns off when the grid goes down. Those just don't make sense to me. I think they're a fad. If you're going to be dependent on the grid, why not have the power companies put the solar panels on their property instead of poking holes in your own roof? I'm sure they can manage the system more efficiently (i.e. cheaper).

    Here's a picture of my 5Kw system (been running for 2 years), soon to be 7.5Kw and then eventually 10Kw when I can afford to cover the whole roof.

    Attached Files:

  16. jdemaris

    jdemaris New Member

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    I calculated my payback as 100% in 5-6 years.

    That wasn't me. My comment was in response to someone else's post - that poster's comment was "Are you willing to invest and accept a 1% return? "

    My take on the matter is this. Words and/or phrases do NOT mean the same thing to all people, all of the time. Context is important. It's connotation versus denotation. The "right" way to say something, if there are rules (and there are not) - is to know your audience and make sure they know, what you mean, when you say something. I'm not trying to be an idiot here, or play semantics. I'm not an investment wizard, and when I saw the original comment about "investing" and "return" - seems it meant something different to me than some others - that's all. If I invest $10,000 of my cash into something, and I eventually get all that $10,000 back - I call that a 100% return. If I got back $20,000 - I'd probably call it "doubling my money", or "$10,000 profit", or "100%" profit, or something along that line. That's just the way I use words, and I'm not the only one. That being said, I projected a time-frame when I will see a 100% return on my solar-electric installation - by MY use of the words - put together in a sentence.

    Mine works fine with the grid-down. It's down right now and . . . I'm on this computer. Whole town is out of power right now -we're having a big ice-storm. Just about any grid-tie system can be made to work in a grid-down situation - but you have to know how to do it. Installers won't tell you, and probably many don't even know how.

    I designed my own system and helped install it. I worked as a "sub-contractor" on my own property - but had to use state-certifed installers to get the incentive money. I did it for a level of independence - and might take the whole system with me if I move to a more remote area.

    Here are some photos of mine - including today during the ice-storm. Our battery bank can run the house for a week - even if the sun never comes back out.

    Our house sits on the side of a mountain, and our morning sun is blocked. So, I had to excavate a flat area, higher up into the side of the same mountain. I built a new barn there to serve dual purposes. Storage for some of my tractors, crawlers, and - to have one roof facing the correct direction, and having the desired fixed angle for the solar panels. If worked out well - but since it's 300 feet from my house - I installed the dual inverters and the battery bank in the barn - not at the house. So, the long run, from the barn to the house is 240 volts AC instead of 48 volts DC.

    I wasn't crazy about going grid-tie - but . . . in this area we often get two months (Feb-March) with virtually no sun. Without grid-tie, I'd be making a huge surplus of power in the summer and most would just get wasted. Now, even with two dark months, we make 110-120% per year of what we use. Grid-tie allows us to get our power back instead of wasting it.

    If I hadn't gone grid-tie - I could of used much cheaper solar panels, along with much cheaper inverters. So, it was almost a toss-up - but I make out pretty well with the incentive money. Many people do not. Certified installers often, are just legal thieves (in my opinion).

    Attached Files:

  17. jdemaris

    jdemaris New Member

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    I calculated my payback as 100% in 5-6 years.

    That wasn't me. My comment was in response to someone else's post - that poster's comment was "Are you willing to invest and accept a 1% return? "

    My take on the matter is this. Words and/or phrases do NOT mean the same thing to all people, all of the time. Context is important. It's connotation versus denotation. The "right" way to say something, if there are rules (and there are not) - is to know your audience and make sure they know, what you mean, when you say something. I'm not trying to be an idiot here, or play semantics. I'm not an investment wizard, and when I saw the original comment about "investing" and "return" - seems it meant something different to me than some others - that's all. If I invest $10,000 of my cash into something, and I eventually get all that $10,000 back - I call that a 100% return. If I got back $20,000 - I'd probably call it "doubling my money", or "$10,000 profit", or "100%" profit, or something along that line. That's just the way I use words, and I'm not the only one. That being said, I projected a time-frame when I will see a 100% return on my solar-electric installation - by MY use of the words - put together in a sentence.

    Mine works fine with the grid-down. It's down right now and . . . I'm on this computer. Whole town is out of power right now -we're having a big ice-storm. Just about any grid-tie system can be made to work in a grid-down situation - but you have to know how to do it. Installers won't tell you, and probably many don't even know how.

    I designed my own system and helped install it. I worked as a "sub-contractor" on my own property - but had to use state-certifed installers to get the incentive money. I did it for a level of independence - and might take the whole system with me if I move to a more remote area.

    Here are some photos of mine - including today during the ice-storm. Our battery bank can run the house for a week - even if the sun never comes back out.

    Our house sits on the side of a mountain, and our morning sun is blocked. So, I had to excavate a flat area, higher up into the side of the same mountain. I built a new barn there to serve dual purposes. Storage for some of my tractors, crawlers, and - to have one roof facing the correct direction, and having the desired fixed angle for the solar panels. If worked out well - but since it's 300 feet from my house - I installed the dual inverters and the battery bank in the barn - not at the house. So, the long run, from the barn to the house is 240 volts AC instead of 48 volts DC.

    I wasn't crazy about going grid-tie - but . . . in this area we often get two months (Feb-March) with virtually no sun. Without grid-tie, I'd be making a huge surplus of power in the summer and most would just get wasted. Now, even with two dark months, we make 110-120% per year of what we use. Grid-tie allows us to get our power back instead of wasting it.

    If I hadn't gone grid-tie - I could of used much cheaper solar panels, along with much cheaper inverters. So, it was almost a toss-up - but I make out pretty well with the incentive money. Many people do not. Certified installers often, are just legal thieves (in my opinion).

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  18. chad3

    chad3 Feeling the Heat

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    Good info. I'm still up in the air about the panels. I have a great set up to see the sun just about all day on the two sides of my roof, but still need to look more into this. Same as the other option that I've heard for "being green" of the thermo-pump.
    I'll be coming back to this plenty.
    Chad
  19. jdemaris

    jdemaris New Member

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    If you ever have tech questions - or simply want a solar-electric catalog - there are some great people at New England Solar. Runs by a small group of very skilled people who will spend a lot to time talking to you. They specialize is mostly off-grid for the New England area. When you call, you usually do not get a salesman on the phone - you get an engineer/electtrician with a lot of hands-on experience.


    http://www.newenglandsolar.com/index.htm
  20. j00fek

    j00fek Feeling the Heat

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    jdemaris, how does your system perform in the winter. im trying to figure out how it will work after snow for instance.
  21. jdemaris

    jdemaris New Member

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    Winter in itself is no problem - in regard to snow and cold. Solar panels often "overproduce" and exceed their normal wattage ratings in extrreme cold. Same can happen in bright sun when there's a lot of snow cover. Snow is also never been a problem. Even after a two-three foot snow storm, they clean themselves off fast. Even when they get iced - as soon as the sun hits them, they warm up enough to self clean.

    One minus to winter is that the solar angle changes - so you get less direct sun per day. But, the big problem is our particular climate here. Come late February and sometimes all of March - it's just dark, gloomly, sunless, and extrremely windy. Perfect time of year for a wind generator and lousy time of year for solar panels. That is a sort of "microclimate" for this area. Often, just 20 miles away the weather is much nicer, in the valleys away from the mountains.
    Here's a record of my last "calender" year - starting in June 2007 and ending June 2008. Note the months of October, November, January and February. Those are the four dark months I had to actually use electricity from the power company. Any month that shows a negative reading is a month when I made more power than I used and spun the meter backwards.

    6/26/07 - 7/2/07 negative 54 KWh meter reading 99946
    7/2/07 - 8/1/07 negative 346 KWh - meter reading 99600 $16.21 service charge
    8/1/07 - 8/30/07 negative 304 KWh - meter reading 99296 $16.21 service charge
    8/30/07 - 9/28/07 negative 299 KWh - meter reading 98997 $16.21 service charge
    9/28/07 - 10/30/07 negative 144 KWh- meter reading 98853 $16.21 service charge
    10/30/07 - 11/30/07 used 132 KWh from accum. credit, 98853 reading. $16.21 charge
    11/3/0/07 - 1/2/08 used 449 KWh from accum credit, 99,434 reading, $16.21 charge
    1/2/08 to 2/1/08 used 215 KWH, meter read 99649 $16.54 charge
    2/1/08 to 2/29/08 360 KWh used, meter read , last credit of 297 KWh used $24.96 total bill
    3/1/08 to 3/27/08 negative 17 KWh, meter read 99992 $16.54 bill
    4/1/08 to 4/29/08 negative 282 KWh, meter read 99710 $16.54 bill total neg now 299 KWh
    4/29/08 - 5/29/08 negative 214 KWh, meter read 99496 $16.54 bill
    6/27/08-7/31/08 negative 361 KWh, meter read 98848
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