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

[Sunking]

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 have had my share of dogs. The trick is to pick more winners than losers. Since 2001 last time I lost my shirt, I learned how to manage my own accounts. When you stick wiht sectors you know and the cycles, you can do pretty good. One thing you learn quick is do the opposite of what the talking heads suggest. When Ford and GE were getting their teeth bashed in, it was time to buy as they were Broken Stocks that were still making money. I also learned is to have Stop Loss Orders on many of my holdings so I don't have any losses on ones I have gains already, and minimize new holding losses. What I learned is do not trust your financial adviser.

For Pete's sake get a Roth and max out yearly contributions. Start when you start your career. I don't care what level of income you make, you can retire comfortable by 59. Anyone can do it.

[HX_Guy]

I really don't understand this whole "return" thing on solar.

You're already spending that money...solar isn't an additional bill, it's a replacement for your current bill (at 100% offset), and a lot of times for less than what your utility bill was...so the return is instant.

How can I be the only one to see it this way?

[jimqpublic]

You're already spending that money...solar isn't an additional bill, it's a replacement for your current bill (at 100% offset), and a lot of times for less than what your utility bill was...so the return is instant.

Maybe I did it wrong, but my solar system bill (after taxes) was roughly 100 times as much as a typical monthly electric bill. Hence it will take over 8 years before the price paid is less than what I would have paid for electricity from the power company, not considering possible maintenance costs or changes in electric rates.

[Rdjntx]

first off it is not always a 100% offset. The return (i.e. break even point) is not instant. my ROI is about 5 years maybe a little less and that is on the excellent side of returns. I think most is in the 6-8 years average with some longer. Personally if I couldn't get an ROI of at least 7 years I don't think I would do it.

I really don't understand this whole "return" thing on solar.

You're already spending that money...solar isn't an additional bill, it's a replacement for your current bill (at 100% offset), and a lot of times for less than what your utility bill was...so the return is instant.

How can I be the only one to see it this way?

[HX_Guy]

Personally if I couldn't get an ROI of at least 7 years I don't think I would do it.

How much was your system and how much is your normal utility bill?

Say your system is $21,000 net after tax incentives, and your regular electric bill was $3,000 a year and we'll assume a 100% offset, so 7 year return.

Say you didn't do solar and just kept paying the electric company. In 8 years, you'll pay them $24,000...in 9...$27,000 and so on, and that's of course if their rates stayed the same over the next 10+ years, which they won't.

Point is, you're already paying that money...the electric bill isn't some optional bill that you'll eventually pay off, it's just a bill that keeps getting bigger.
That's why I don't see it as "I spent all this money, how long till I get it back?" because you were going to be forced to spend that money anyway.

[sensij]

That is a perfect example of what makes America great. Even small business owners can succeed with absolutely no concept of the time value of money.

[Rdjntx]

you used the words "so the return is instant" in your original post. now you are arguing a 7 year return which is not instant and is, in fact, what the rest of us have been saying. choose your wording wisely grasshoppah because they will bite you in the ass when you don't.

bottom line you are now expressing proper ROI in mostly correct terms.

for the record, my system was $37,000 for a 10kw system. after 25k in rebates (electric provider and installer) and the tax credit (Federal, no state) my cost out of pocket was about 8900 give or take. don't remember off the top of my head what my yearly electric bill was before the system but I do remember it worked out to be a 5-6 year ROI which was more than acceptable for me. but then I am not your average solar consumer. I purposely sized my system to take care of 100% of my electrical needs and over the year it has pretty much done that. so far I am ahead of the ROI estimate.

Most people size their systems to take care of a good share of their bill, but not all. California, which is a tiered system it makes no real sense (from what they say here) to take care of 100% of your needs due to it not being cost effective, so people build a system to keep themselves out of the upper tiers and deal with paying a bill in the tier 1 and 2. so they have a bill every month. this pushes their ROI out a couple of years or more.

How much was your system and how much is your normal utility bill?

Say your system is $21,000 net after tax incentives, and your regular electric bill was $3,000 a year and we'll assume a 100% offset, so 7 year return.

Say you didn't do solar and just kept paying the electric company. In 8 years, you'll pay them $24,000...in 9...$27,000 and so on, and that's of course if their rates stayed the same over the next 10+ years, which they won't.

Point is, you're already paying that money...the electric bill isn't some optional bill that you'll eventually pay off, it's just a bill that keeps getting bigger.
That's why I don't see it as "I spent all this money, how long till I get it back?" because you were going to be forced to spend that money anyway.

[HX_Guy]

you used the words "so the return is instant" in your original post. now you are arguing a 7 year return which is not instant and is, in fact, what the rest of us have been saying. choose your wording wisely grasshoppah because they will bite you in the ass when you don't.

I was talking in the sense of doing a loan or lease.

for the record, my system was $37,000 for a 10kw system. after 25k in rebates (electric provider and installer) and the tax credit (Federal, no state) my cost out of pocket was about 8900 give or take. don't remember off the top of my head what my yearly electric bill was before the system but I do remember it worked out to be a 5-6 year ROI which was more than acceptable for me. but then I am not your average solar consumer. I purposely sized my system to take care of 100% of my electrical needs and over the year it has pretty much done that. so far I am ahead of the ROI estimate.

Most people size their systems to take care of a good share of their bill, but not all. California, which is a tiered system it makes no real sense (from what they say here) to take care of 100% of your needs due to it not being cost effective, so people build a system to keep themselves out of the upper tiers and deal with paying a bill in the tier 1 and 2. so they have a bill every month. this pushes their ROI out a couple of years or more.

I know a lot of people/companies preach the "peak shaver" system...personally I believe a lot more in the 100% offset. I just like not having to worry about what the utility does with the 50%...60%...70% that the solar is not covering.

[Mb190e]

How much was your system and how much is your normal utility bill?

Say your system is $21,000 net after tax incentives, and your regular electric bill was $3,000 a year and we'll assume a 100% offset, so 7 year return.

Say you didn't do solar and just kept paying the electric company. In 8 years, you'll pay them $24,000...in 9...$27,000 and so on, and that's of course if their rates stayed the same over the next 10+ years, which they won't.

Point is, you're already paying that money...the electric bill isn't some optional bill that you'll eventually pay off, it's just a bill that keeps getting bigger.
That's why I don't see it as "I spent all this money, how long till I get it back?" because you were going to be forced to spend that money anyway.

Exactly! The way I look at it, I pre-paid the next 25+ years of electricity at a discounted rate. Just like a lot of other things you pay upfront and you get a discount. Car insurance make monthly payments it's going to cost you more than paying the whole six-month premium. You're going to be paying the money anyhow, it's just a matter of if it's today, next month or next year.

[solarix]

In my experience, people won't go for solar when the payback time is 10 years or more. In our market, in Arizona, with 13 cent electricity, and 1650 kWh/yr per installed kW, we've been able to do 7 year paybacks throughout the last 7 years. As the price of solar has come down, the utility has consistently removed their rebate incentive to keep the cost to the customer the same through this period. If we could ever get the payback time down to 5 years, solar sales would explode.

[J.P.M.]

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.

Perhaps one other way to approach the situation is to look at the cost of a solar electric system like an investment situation where you have a sum of money and you want to make it work the hardest (have the greatest financial return) over some time period, say, 10 years, or 15, or whatever. The task then becomes one of examining alternate investment opportunities (options) and, because the future is unknown, making some intelligent, objective guesses as to what those options will do over the course of your selected time frame. Then, line those comparisons up and the one that has the largest accumulated benefit is the winner. For example, Do I spend $25K on a solar system that will eliminate my $2,500/yr. electric bill for 20 years and then I move, or do I invest that $25K in, say, a corporate bond that yields, say, 3%/yr. for 20 years and then returns my $25K ?

Intelligent financial choices are usually a lot more complicated than ($25,000 cost)/(2,500/year bill) = 10 year "payback". A bit of time spent acquiring some savvy about the time value of money and comparison of alternatives can pay big dividends.

When solar is compared to most other opportunities for investment, it is often not first or even very high on the list, when looked at in the cold light of day, and I say that as a solar advocate. Solar can work, but bending reality to present a false impression does no one, except shyster salespeople one any good. My apologies to the solar peddlers who are not shysters and who often wind up cleaning up the bad guy's mess.

Once the choice (best guess really, since the future for all alternatives is unknown to a certainty) of which investment may yield the best return, one can still choose another alternative. It is, after all, still a free country. But the choice will be made with more and hopefully better information. I have a hard time seeing that as a bad thing. It can be as simple or as complicated as one chooses. I'd suggest an analysis that goes a bit further than initial cost divided by money saved /year can produce more and better information. Unfortunately, that's the simplest to use, probably the most optimistic - two reasons why the peddlers grab it and use it so much.

My experience over the last 40 years or so is that a lot of folks with skin in the game tend to prey upon people's ignorance of not only solar energy but also financial analysis to bend the truth, use unrealistic assumptions and guide the gullible into situations that are not the best for the potential solar user, and may benefit only the peddler.

Caveat Emptor.

[Sunking]

Amazing how not many know what compounding interest is or how it works. If you look at income levels and wealth you can pretty much sum up 90% of the public has no clue.

[DanS26]

Powerball.

You mean Powerwall? 😄

[jimqpublic]

Perhaps one other way to approach the situation is to look at the cost of a solar electric system like an investment ...

...When solar is compared to most other opportunities for investment, it is often not first or even very high on the list, when looked at in the cold light of day, and I say that as a solar advocate. ....

Absolutely true, but the same is generally true regarding owning your own home free and clear. It is the goal of many people but probably not the best place to concentrate your wealth from an economic standpoint. It is however very good for peace of mind, knowing that whatever happens to your job, pension, inflation, or rental rates that you have a paid-for place to live (and paid-for electricity with solar). It's also a better financial decision than spending most of your money on rent and electric bills then blowing the rest on lattes, big screen TV's and beer.

[organic farmer]

You can not go into solar-power thinking there will be some financial gain.