What's the longest break-even point you'd accept for a solar system?

[wantons0up]

My electrical rates are pretty reasonable - $0.13 and no peak demand rates, it's a flat rate. So, solar has a long break-even point for me on a purchased system. I do plan on living in this house forever.

So I'm wondering - would you do a system with a 10 year break even? 13 year? 15? What's the number that is the longest you'd accept for a system? Just curious what people think on this.

[jimqpublic]

I stopped worrying about a few bucks once I was sure that my break-even point was under 10 years at current rates, including financing. We expect to live in the house at least that long, so worst case (system doesn't add to resale value) we won't have lost money.

Our NEM agreement with the utility is good for 20 years, many components are warranted for 25 years but others only 10 years. I hope the system is still producing without a lot of investment in 20 years. For us it's also a hedge against rising electricity prices.

It really depends on your local energy market conditions- $0.13 seems like a bargain. Do you expect rates to increase? Where we live the rates are much higher to start with and they go up the more power you use. The rate is $0.46/kWh between 2 PM and 8 PM in the summer under one of the current rate options- obviously offsetting that sort of rate has a much quicker payback.

[sdold]

I plan to live in my house for about ten years, so I was shooting for break-even at about five years, or about 7 years compared with keeping the money and investing it. I wouldn't have felt good about it taking 10 years or more, and these systems that will take 15 or even 20 years don't seem worth it to me at all. I'd rather buy a boat or build the shop I've always wanted.

[Sunking]

You tell us. Would you invest $10K to day and 10 years from now stil only worth $10K. Might work for you, but if I invest $10K today, 10 years from now I expect to cash out with $30 to $40K.

[paris401]

You tell us. Would you invest $10K to day and 10 years from now stil only worth $10K. Might work for you, but if I invest $10K today, 10 years from now I expect to cash out with $30 to $40K.

3x to 4x in 10years... where do I sign up?? not sure where u will find such returns.. unless u find the new apple...

[tatumjonj]

3x to 4x in 10years... where do I sign up?? not sure where u will find such returns.. unless u find the new apple...

Powerball.

[foo1bar]

You tell us. Would you invest $10K to day and 10 years from now stil only worth $10K. Might work for you, but if I invest $10K today, 10 years from now I expect to cash out with $30 to $40K.

And where are you investing and getting minimum of 12% average return on a short (10 year) investment?
Because that's the minimum you need to get even $30K back in 10 years.

Most people would look at this as very similar to a bond investment.
A 3% rate on a bond investment is more realistic.

If in 10 years that $10k still has a residual value of $4k and you've gotten $10K back in reduced bills over those 10 years you're well ahead of having invested $10K in a 3% bond.


Personally, I ignored both inflation and the (expected) increase in electric rates.
And then I looked at where I'd be in terms of electric payments for 8 years, compared to initial investment + expected maintenance. And at 8 year mark, it was already heavily in favor of installing solar. Longer terms made it even moreso. Even with expected increased maintenance / production decreases in later years.

So to answer the OP's question - I like 8 years. 10+ would mean I'd have to have VERY high confidence I'd still be there in 10+ years.
And beyond 10, it would be something I'd want to do a much more thorough analysis of, and probably isn't viable.

[tatumjonj]

The simple fact of the matter is there's no such thing as a for sure 12-15% investment. Anybody that invests knows that. And if you're making those kind of returns every year for 10 years, you're likely doing something much more similar to gambling than investing (day trading??). Whether you're investing or gambling, there's a chance that your investment can be worth less than $10,000 after 10 years or even worth zero. Your "investment" in solar electricity for your home is not going to be worth less than you paid for it if you did your research and purchased your system for a reasonable price. Plus you really need to factor in what a paid off solar system does to the value of your home. My system is being installed next month. It will be fully paid off in 37 months and will pay for itself in ~5 years. But even if I chose to sell my home before I ever recouped the cost of the system, what little monetary shortfall I accumulated in electric bills would more than be recouped by the value the system would add to my home.

[Alisobob]

I looked at it in a simple way...

I looked at my last 3 years of SCE billing, and averaged it.. it came to a little over $3200 annually.

In 5 years, that would be $16k spent with SCE

My solar was $15,400 ( after tax credit)...... for 100% usage offset.

So, basically a 5 year return.

If it was much more, I probably would not have done it.

[Sunking]

3x to 4x in 10years... where do I sign up?? not sure where u will find such returns.. unless u find the new apple...

Bought 1500 shares of Priceline in Oct 2008. 100 shares of Amazon same month year, 1000 shares GE in Jan 2009 when they tanked, 100 shares of Ford Motor in Dec 08 when they tanked, Sierra Wireless, Amazon, and the list goes on and on. Over the last 10 years well above 12% when averaged out. Hell Disney is up 500% in 5 years. Good thing it is all Roth protected from Uncle Sam, no taxes.

Do some reading, invest in markets you know and understand, and the cycles. It is not hard. Took me loosing my shirt twice to learn the lessons of using brokers managing my money. Hell my Priceline buy was enough to retire on.

Looking for the next big wave. Look for companies that will antiquate SATV and CATV. I gave you one play already.

[organic farmer]

I am on pension. My wife will soon be getting her pension. We wanted to spend money now that would lower our bills then.

Plus the grid goes down a lot here. Some of our townsfolk do not have electricity in their homes, but of homes here that do use electricity everyone is either equipped with generators, or else powers their homes using solar/wind. If you want electricity, then you must equip your house to make electricity. Connecting to the grid simply does not mean you will have any power tomorrow, or next week.

We have lived here 9 years, so far we have not observed any month with power all month long.

'Break-even' point was never featured in our discussion to go with solar-power.

[alterego]

In Michigan through consumers we are 8.9 cents at less than 600 and 11.9 cents over 600 some time ago I calculated total sale with taxes equals 14.9 cents a retired employee of consumers is telling me 39 cents by 2017.

[tatumjonj]

Bought 1500 shares of Priceline in Oct 2008. 100 shares of Amazon same month year, 1000 shares GE in Jan 2009 when they tanked, 100 shares of Ford Motor in Dec 08 when they tanked, Sierra Wireless, Amazon, and the list goes on and on. Over the last 10 years well above 12% when averaged out. Hell Disney is up 500% in 5 years. Good thing it is all Roth protected from Uncle Sam, no taxes.

Do some reading, invest in markets you know and understand, and the cycles. It is not hard. Took me loosing my shirt twice to learn the lessons of using brokers managing my money. Hell my Priceline buy was enough to retire on.

Looking for the next big wave. Look for companies that will antiquate SATV and CATV. I gave you one play already.

We all have our homeruns we can brag about. You can't reproduce those results consistently because if you could you'd be the only guy in the world that could. I'm a pretty fair investor and truth be told, I've been retired since I was in my mid 30s, but I'm not going to dare to suggest that I have some sure fire plan to make 15% and I've never picked a dog. I've picked plenty of them as has everybody else. And I bought 20,000 shares of shares of Ford at ~$3 which I still own and it hasn't done a damn thing in two years.

[pleppik]

So I'm wondering - would you do a system with a 10 year break even? 13 year? 15? What's the number that is the longest you'd accept for a system? Just curious what people think on this.

The answer is going to depend on what your goals are. If installing solar is a purely financial decision, then you want an IRR higher than what you can get on a comparable investment over the lifetime of the panels....but interest rates on treasury bonds are low these days, and there's a high probability that a new solar panel installation will last 25+ years (maybe with a new inverter thrown in along the way), so even a 10 year payback looks pretty good. With a 25-year system life, a 10-year payback corresponds to about 8.6% IRR, much higher than the return you can get on a treasury bond.

But solar isn't always a purely financial decision. For me personally, I also wanted to reduce my carbon footprint. Other people may be motivated by dislike of their local power company. If that's part of the equation for you, you may be willing to accept a lower return in exchange for those non-financial benefits.

[Panelmal]

6 years