Switching To Solar Power, One Year Later 541
ThinSkin writes "Slashdot readers may recall Loyd Case's series of articles illustrating his experiences after switching to solar power for his family home. Loyd shared his one month update, a six month update, and now finally concludes his series after one year of solar power. Despite the $38,000 initial cost for the setup, Loyd is very optimistic after a $3,000 savings in one year, meaning that in about 12 years he will break even — though he suspects ten years is a better estimate considering other factors. Other reasons such as feeling 'green,' increasing the property value of his house, and the 'spousal acceptance factor' all support Loyd's decision on why he'd do it all over again if he had to." The article is spread annoyingly over multiple pages, like everything at the site, and the print version omits the graphs.
Return on investment (Score:5, Insightful)
ROE is a much better way of calculating economics than "payback time," by the way
Solar panel longevity (Score:4, Insightful)
Re:Return on investment (Score:3, Insightful)
A little off topic: If I went to any business today and promised them a 10 year ROI, they would laugh. In this economic climate 1-2 year ROI seems to what they are willing to risk.
Re:Return on investment (Score:3, Insightful)
...as long as the investment itself dosn't depreciate in value.
which in this case it surely will. In fact the way technological things change in general I would assume that his solar-power setting would have pretty much depreciated to some small fraction of 38k.
PS: I don't disapprove of this guy spending 38k on solar powering of his house even a tiny bit, but I think it is quite interesting to evaluate this stuff as parent suggested-
Bad Math (Score:5, Insightful)
He sums the article up by claiming that his return will be sooner than 12 years based on changes in his electricity usage (like his daughter leaving for college). This is bad math. He would have changed his usage either way, so he can't really count those watts as impacted by his investment in the solar panels. Overall though it seems like he's getting a decent return on his investment.
Re:Industy Standard Warranties (Score:3, Insightful)
Price of certainty. (Score:5, Insightful)
Re:Industy Standard Warranties (Score:4, Insightful)
Which is why solar is a good investment in those areas and not where you live.
Re:Return on investment (Score:5, Insightful)
Ah, what? He's not reselling the damn thing, he is making money off of it every month. So what if it depreciates, we were never measuring the value of the thing over time anyway. Though I'm guessing many of the components will not depreciate much, just the batteries and photovoltaics. Having his house set up to run off of photovoltaics will let him easily take advantage of whatever advances come along in module and energy storage. The power modules will last at least 30 years. See, he would never be reselling the thing independent of his house. The thing is a part of the house now, and the entire house will continue to appreciate. As people become more interested in solar, a house with solar already in place will appreciate faster.
Funny how so many people seem to want to find fault with solar energy, and use incomplete reasoning to look at only the possible negative consequences without looking at all the positives. Why do you think some people have such an irrational hatred of solar energy? I think the hippies are to blame. Nobody likes them, and they never fight back when you blame them, so I am going to go with definitely the hippies fault.
RTFA (Score:5, Insightful)
Futhermore, Wikipedia has this to say about Solar Panels and how efficient they are at a certain time frame:
Solar panels must withstand heat, cold, rain and hail for many years. Many Crystalline silicon module manufacturers offer warranties that guarantee electrical production for 10 years at 90% of rated power output and 25 years at 80%.
http://en.wikipedia.org/wiki/Photovoltaic_module [wikipedia.org]
"Spousal acceptance factor" (Score:4, Insightful)
Most of the time, if you care for your family, that's the #1 factor in your decisions. Unless your ambition is one of those short-lived, Hollywood marriages.
Re:No, he's NOT saving money (Score:5, Insightful)
And what long term investment would that be that reliably makes 5%? If he had invested that $38k in just about any stock or mutual fund in the past year, he'd have lost at least 30% of its value.
Re:Return on investment (Score:1, Insightful)
Because the short term cost is extremely high, and most people would rather buy a new Porsche then lay that amount of money out up front...regardless of ROI.
Re:Return on investment (Score:5, Insightful)
A lot of good that warranty is going to do... (Score:5, Insightful)
... if the company in question is still around to stand behind it. I get a laugh out of roofers that offer 50 year guarantee on roofs when they know full well they themselves are unlike to be around by then. A lot can happen in 30 years.
Re:No, he's NOT saving money (Score:5, Insightful)
Also factor in taxes. If you invest and make $1000, you owe taxes on it. If you save $1000 there's no additional taxes as it was already your money.
Re:Price of certainty. (Score:5, Insightful)
Re:Bad Math (Score:3, Insightful)
He sums the article up by claiming that his return will be sooner than 12 years based on changes in his electricity usage (like his daughter leaving for college). This is bad math. He would have changed his usage either way, so he can't really count those watts as impacted by his investment in the solar panels.
Or he'll pump the surplus electricity into the grid, and get paid for it. That's ignoring the increasing cost of electricity.
Re:Return on investment (Score:3, Insightful)
Re:Industy Standard Warranties (Score:2, Insightful)
Most manufacturers guarantee that their panels will give at least 90% of peak power at ten years, and 80% of power at 25 years. Yes, he's saving money.
These same manufacturers have guarantees that they will be in business in 25 years?
Re:Price of certainty. (Score:5, Insightful)
There are 3 types of systems for connecting to the grid:
Off-grid - self explanatory
Hybrid - can use battery power when the grid is out
Sync'd - they must be sync'd so that when the grid is out, the power from the panels is not used..otherwise you'd be trying to feed the grid yourself.
The last is the most common setup since the idea is to conserve electricity usage, not replace the need for the grid. If all the panels in a neighborhood were feeding energy into the, now dark, grid imagine the power company technician trying to work with the wires that are 'live' from the client side. They could shut off power from the distribution source, but it would still live from the residences preventing it from being safe.
I imagine it would be bad to run A/C stuff inverted from a variable DC line as well. If you are trying to run normal household stuff straight off the power output of the panels, as it gets later in the day, you'd start getting your own 'brownouts' in the house wouldn't you? And since this guys setup never produced more power than he needed it was always below demand.
Re:Return on investment (Score:1, Insightful)
So what if it depreciates,
Because there is a difference between
The first is a reasonable investment. The second is throwing away money.
we were never measuring the value of the thing over time anyway.
How else are you going to determine if it is a worthwhile investment? It is one thing to do something that benefits the environment if the cost to you is minimal. It is quite another if it costs you a year's salary.
Re:Price of certainty. (Score:4, Insightful)
I thought when the grid went down that synced panel set ups just cut them selves off from the grid, not that they cut them selves off from powering your home.
Re:Bad Math (Score:5, Insightful)
You're forgetting one detail.
Before putting on PV panels, when his daughter leaves, he'd just use less electricity. After adding the PV panels, when his daughter leaves he can sell more electricity to the power company.
Adding your own generating capability means a reduction in usage is also an increase in sales.
Re:Return on investment (Score:5, Insightful)
If that ROE is reasonable, why aren't zillions of commercial solar farms popping up everywhere? Or at least co-located with the wind farms that are being installed?
That 7.8% doesn't factor in the risk. Most of the initial investment is unrecoverable. The 10-12 years for return on the principal is based on many variables, most of which are volatile and unpredictable. The specific technologies are relatively new and bring their own unknowns. He wins big if electricity costs skyrockets and solar/alternate energy tech stagnates. Those are unlikely to both occur. He loses if power gets cheap or solar/alternate energy tech has some rapid advances.
He has essentially exchanged his exposure to energy price fluctuations for host of new risks. The rate of return is pretty decent in today's economy, but not by a huge margin. At 5% or 6%, it wouldn't fly.
At least this means residential solar is nearing viability.
On the other hand, viable residential solar is not good news for the nuclear industry because of the political externalities involved. Large numbers of voters entering the energy generation business will sharply increase the nimby factor.
Re:12 year payback? (Score:3, Insightful)
Re:Price of certainty. (Score:3, Insightful)
To all the people mocking his investment, your missing one thing. You do not know what the price of energy is going to do in the next few years. The guy in the article however is guaranteed a minimum amount of power each year from his solar panels at a rate he knows. (His initial investment / Life time of the panels). If the companies decide to hike the prices in two years time due a deterioration in Gulf politics for example, he is sheltered from its effects and lets be honest it's very unlikely the price is going to go down per kwh. He is also sheltered to a certain extent from the failure of the power network so if a situation does arise where there are rolling blackouts again, he knows he will a least have some electricity each day. One of the things that people constantly underestimate the price of is certainty.
And the price of energy is artificially low since we don't really factor the environmental cost into things. If you factor in environmental remediation, health care for people poisoned by the power plant pollution, etc, etc, fossil fuels would be very expensive. Just imagine how much gas would cost if we didn't pay for the military with payroll taxes but with a gas tax -- total out of pocket for the tax payer being the same, just let them see what they're really paying to make sure they have gas at the pump. Because the main reason we have a military is to protect our access to foreign oil. Don't tell me we need a military bigger than the rest of the world combined to protect us from Mexico and Canada.
Re:No, he's NOT saving money (Score:2, Insightful)
And what long term investment would that be that reliably makes 5%? If he had invested that $38k in just about any stock or mutual fund in the past year, he'd have lost at least 30% of its value.
Historically, almost any indexed fund provides 5%.
Yes, the past year has been bad, but if we are discussing long term investments, there are numerous funds he could invest in to get a 5% rate of return.
I got the same results with no investment (Score:2, Insightful)
I also live in Sunnyvale and my power bill is even less than his post-solar level. The reason is that I live in a small apartment instead of a house!
Living green is nice, but living small is far better.
Re:A ten year ROI? (Score:5, Insightful)
Exactly.
It means Return ON Investment.
Not Return OF Investment.
No money will be saved on this scheme until AFTER 10 or 12 years.
However even this is optimistic, because what is eventually returned on this investment will be worth far less than an equivalent amount today.
Further, maintenance costs will start to accrue well before that, and replacement parts will be needed for stuff that was obsolete the day it was installed, and may not even be available then.
There may be better equipment and cheaper equipment then. But more likely the failing part will be some obscure little piece requiring the replacement of some expensive big piece.
This is the risk of buying into a developing technology. The payoff is a long way down the road. Usually beyond the next generational change in the technology.
Still, it takes people like Loyd to go out there and do it with what is available, because we can't wait for the perfect solution or we would all still be living in Caves.
Re:Time value of money (Score:1, Insightful)
Re:No, he's NOT saving money (Score:5, Insightful)
Why people still routinely neglect compound interest I'll never know.
If he takes the $3000 he saves in electricity costs every year and invests that at 5%, he'll have $47,751.38 at the end of 12 years.
With your scenario, he has $68,242 but he will have paid $36,000 in electricity, leaving him with $32,242 if he "cashes out".
Personally, I'd take $47000 over $32000 any day.
Re:Return on investment (Score:3, Insightful)
Panels are not the likely issues.
Panels are in the 20-30 year range (tho at 80% power).
Inverters and batteries are the issue.
Inverters can go bad every 5-7 years and batteries more frequently than that.
On the plus side... power seems to be ~280% more expensive over 20 year periods that I researched. 2 cents in 1968, 5 cents in 1988, 15 cents in 2008.
So in 10 years, presumably, his power bills will be about double what they are now.
And that assumes no period of high inflation-- recent government printing of money could lead to a period of high inflation. If we return to 1980's inflation, his project could pay off very quickly.
And no period of energy bill increases-- if oil quickly returns to over $100 a barrel and natural gas doubles-- then electric bills could go up a lot.
Of course if we get a period of hyperinflation (20%-70%+), then he will have hit the jackpot.
Re:Solar panel longevity (Score:3, Insightful)
If it's blocking light, it is making a difference.
If you can see the dust, it's a noticeable difference.
If it's noticeable to your eye, it's definitely affecting the efficiency of the panel.
Your story would have been much better if you had suggested rain instead of a hose.
Re:I am not so sure... (Score:3, Insightful)
Because the money spent needs to be factored as, how much could he have made investing it and provided he didn't take a loan to get it all change the equation.
Currently, all he needs to do to make his investment match an equivalent stock or real estate investment is go up on the roof and smash the panels with a hammer. Of course, since it's already paid back a portion, he'll have to smash out his windshield as well to break even.
Re:Time value of money (Score:2, Insightful)
It can and has been argued that the Fed's "printing" of money is simply replacing the money that was lost in the economy. This additional cash has a negligible impact on the total availability of money in the economy, therefore has caused little inflationary pressure and at least in the near term will not.
The egregious aspect is that the average Joe lost a bundle in 401K's and other investments, but only a little bit of the Tarp, or the extra cash being printed is being trickled down to them. By and large it's going to the banks and Wall Street entities, to keep them solvent. They were the main culprits, guided by greed, that lead to the economic melt down, and they got a bail out and the average person is financing it through their economic losses.
Re:Price of certainty. (Score:3, Insightful)
The rest of the world does usually manage to get their oil without large militaries.
Re:WTF is this madness? (Score:3, Insightful)
That's bogus. Repeating from my other post -
Simple economics - the cost of manufacture is factored into the sale price. If the panels eventually pay for themselves, then that covers the manufacture costs - electrical, raw materials or otherwise. Sure the factory might get a better price for electricity than regular consumers, but there's also raw materials, labour and profit that's included in the price tag.
Re:This is not a lot of power.... (Score:2, Insightful)
He doesn't consume a low amount of energy. He's actually pretty close to average for a household that isn't 100% electric appliances. You, on the other hand, consume an ungodly amount of energy.
Since I'm guessing you don't live in a desert, 2500 kWh in a 2000 sq ft home during a rainy month is ridiculously high. What do you do for a living that allows you to be able to afford such lunacy and still not recognize that your AC isn't working properly or you have something wired wrong? Do you grow pot in your house or something? Are you a stripper?
Re:Return on investment (Score:3, Insightful)