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I'm wondering why the OP is leasing in the first place. Solar panels have come way down in price over the years. Our place is 100% solar off the grid (though the grid is at the end of the driveway) and we have no utility bill at all. But we can have a swamp cooler for a/c. There's not enough power for traditional a/c.
My husband is a solar contractor (well, was) and he routinely advised people NOT to install solar unless they were wealthy, IF the grid was available. Solar is wonderful but does not really amortize effectively. If your property is off the grid, it makes total sense. In the 80's our there was no grid for us, but now there is. But we have no need of it. The sense of independence is terrific.
I agree that solar needs to be subsidized to get it "off the ground", at least for awhile. But at present, the utilities have too much control over it....
This is not true. States vary on the reimbursement for energy generated in excess of your home's actual usage -- that's called net metering. Technologically, the electric utility can't see how much energy you use, only how much energy they supply to your meter at the house.
Absolutely correct--far more complicated than most customers realize, and critical to a customer's decisionmaking.
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Originally Posted by functionofx
So you are subsidized, and have taxes in excess of $11,000 per year.
Without the tax rebates, which cover more than half the cost of your solar electric production, it would take over a decade to payback the cost.
Incentives like this, skew the market, and only those who have enough income will be able to enjoy the benefit. The rest will be stuck with schemes designed by installers who have marketing, accountants, and financial experts, in addition to solar experts all working to make the best deal for the installer.
When solar power makes sense without subsidy, it will be great. We also need a venue for solar to store power after sunset. Creating energy during bright days, then nothing at night, means the power company has to keep a lot of generation plants running hot to make up any failure of the solar component. This may not be inexpensive.
Focusing on the bold: it's not so much a need to keep plants running hot--it's a need for flexible generation that can quickly ramp up in response to solar production falling off. What kind of power fits that profile today? Natural gas & pumped hydro.
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Originally Posted by DCforever
I'm an electrical engineer with 35 years experience in the power industry. Grid connected solar and wind do not need storage. That's a silly myth hyped by opponents -- coal lobby. The power grid is built with substantial redundancy and can easily handle the fluctuation associated with solar and wind. Grid level storage would be a wonderful thing because that redundancy currently burn fuels and storage would alleviate that. But this storage would be part of the grid, not part of a generation unit. On the flip side roof mounted solar provides substantial grid benefits. Most residential areas in cities are in generation deficient areas and energy has to be imported. That strains the grid. Grid connected rooftop solar relieves that congestion at exactly the time of greatest need -- a hot summer day.
On the issue of financial viability, simple payback is often used but is a relatively poor measure of financial performance. But let's look at the viability of something with a 10 year payback. That means 100% of your costs are returned over a ten year period. That's approximately a 7% return on invested capital. Given that one can finance a solar system using a home mortgage at less than 5% interest, it should be clear to all that this is economically an attractive investment. Tax benefits just improve the return.
"Easily" handle the fluctuation associated with solar & wind is only true when solar & wind are a small part of the generation portfolio. When they become a large part of the portfolio, the grid needs flexible resources to operate at times of peak load when the sun is not shining.
I am not confident in your financial viability analysis. 100% of your costs returned over a ten year period is a 0% nominal return over ten years. Of course, you have to account for the depreciated value of the panels, the net present value of your projected energy bill savings, and the returns you would earn with an alternative instrument (say, broad-based mutual funds).
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Originally Posted by TwoByFour
My personally belief is that the grid needs to be operated independently from power production. Currently the local utility owns both but it is a conflict of interest since they dictate who can attach to the grid based on their own agenda for selling power.
If the grid were operated independently, it would be more of an open market place where power producers - home PV systems, the utility company, independent wind or solar farms, etc sell their product (power) and consumers buy it at the market rate. This would also encourage independent grid-storage providers to attach to the grid and buy/sell power.
In many parts of the US, the grid is at least partly independent from power production. Many utilities purchase power from independent producers who competitively bid for contracts. Those competitive power costs are passed through to utility customers--the utility earns no return on them. It might be invisible to you, but it is often the state of play.
No free lunch. I've done a lot of math and look at various offerings. The ones throwing in subsidies always overcharges on service than show you a big fat government rebate check will offset many of the costs but solar for most people is not off the grid. Anyone that signed up a $20k job and still have to pay double the amount of bills monthly so the future is cheaper is getting ripped off.
To be off the grid you need a lot of equipment to retain your energy generation. I could imagine rich guys have array of batteries and other backup power to keep themselves off the grid but these are the guys that shouldn't mind $0.13/kwatt.
I don't think solar is worth it for anybody right now, the costs in the long run far outpaces having just having your local power. Once the panels and services drops below $10k for an avg install then we it becomes a good choice.
What a circus. Power rates are CHEAP during nights and weekends. He should be paying a third of what he is. The OP got ripped off.
Power rate here is flat rate 24 hours a day. It goes up and down with oil prices since most power in Hawaii is from diesel generators, but it is around $0.31 / KWH. Maui may go to a variable rate for power.
Absolutely correct--far more complicated than most customers realize, and critical to a customer's decisionmaking.
Focusing on the bold: it's not so much a need to keep plants running hot--it's a need for flexible generation that can quickly ramp up in response to solar production falling off. What kind of power fits that profile today? Natural gas & pumped hydro.
"Easily" handle the fluctuation associated with solar & wind is only true when solar & wind are a small part of the generation portfolio. When they become a large part of the portfolio, the grid needs flexible resources to operate at times of peak load when the sun is not shining.
The grid has to be able to accommodate the loss of the largest generating unit without loss of load. That's typically 1,000+ MW Nuke. It will be a long time before additional spinning reserves are needed.
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Originally Posted by TheCityTheBridge
I am not confident in your financial viability analysis. 100% of your costs returned over a ten year period is a 0% nominal return over ten years. Of course, you have to account for the depreciated value of the panels, the net present value of your projected energy bill savings, and the returns you would earn with an alternative instrument (say, broad-based mutual funds).
Your financial skills are not up to the task. Leave it to the professionals. A ten year payback is approximately a 7% return on assets.
The grid has to be able to accommodate the loss of the largest generating unit without loss of load. That's typically 1,000+ MW Nuke. It will be a long time before additional spinning reserves are needed.
If load drops 20% daily while solar panels are operating at their highest efficiency, then peak electricity usage comes just as solar panels stop producing useful power, then you need flexible generation that can quickly ramp to meet the load you didn't have when the panels were reducing load. In a pre-distributed generation grid, this wasn't a concern, because you didn't have the drastic load swing that high solar penetrations produce. So the grid relied on baseload from (usually) coal & nuclear plants, supplemented by some other generation assets.
With high solar penetration, the grid needs flexible generation assets: natural gas & pumped hydro.
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Originally Posted by DCforever
Your financial skills are not up to the task. Leave it to the professionals. A ten year payback is approximately a 7% return on assets.
Are you actually saying that covering your costs over 10 years equals a 7% return? That doesn't make any sense.
A 7% annual return over 10 years on $10k will yield a total value of just under $20k. Merely getting 100% of the 10k investment back at the end of ten years is a 0% return.
As I mentioned in my post, you would need to factor in the depreciated value of the panels you still own after 10 years and net present value of future energy bill savings after 10 years, which you would compare to the performance of other available investments in order to determine if the solar panels are a wise monetary investment. And you would also want to account for the net salvage.
I'm an electrical engineer with 35 years experience in the power industry. Grid connected solar and wind do not need storage.
You are so very smart. It is a pleasure to meet you on this forum. Spain at one time was a solar leader, the grid instability and high cost of electricity impoverished the country, a solution recently enacted was to tax solar producers. It is possible for the government to tax any type of energy, including solar or wind. Infrastructure costs are not insignificant for net metering. Take a look here - http://www.usu.edu/ipe/wp-content/up...ull-Report.pdf
Let me know where they went wrong, your expertise likely far exceeds that of the academics who wrote the piece. A summary from the linked document, regarding solar reliability concludes:
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Because solar power is intermittent and inefficient, it increases the need for backup power plants. Solar power is also commonly generated in remote locations, far from high electricity demand. Making solar power reliable would require expensive investments in grid-level energy storage and transmission infrastructure. The current costs of making solar power physically reliable outweigh its limited benefits.
Not wanting to copy too much of the report, please check and comment on how the poor are affected. It turns out they bear the brunt of the cost. We further impoverish our poor with solar subsidies. Check also the lifetime cost per megawatt for various types of power, solar is at the top, and is many times more expensive than natural gas.
Spain's government has recently approved a new national law on self-consumption of energy that taxes solar installations disproportionately. Most notably, the majority of self-consumers will be also taxed for the electricity they generate and consume in their premises, via their own PV systems.
It is wonderful to have an expert such as yourself to help me understand where all these folks have gone wrong. Today staring out my New England landscape, every roof has close to a foot of snow on it, and has for a day or so, and will likely be mostly covered for a week or two as more snow is coming Sunday to Monday night. Does solar produce power under a foot of snow? Does heavy snow, ever affect the structure of a solar power system? Tell me, what level of decrease in power production should one expect over a 20 year solar panel lifespan?
The majority of manufacturers offer the 25-year standard solar panel warranty, which means that power output should not be less than 80% of rated power after 25 years.
Some panels have a drop of 20% in energy output after 11 years, the best seem to have a 16% drop after 25. How can an average consumer evaluate the type of solar cell they are purchasing, there is so much variation in type of panel. Is there any maker that legitimately guarantees output of solar panels over time? If so what is the guarantee? Will they replace with a newer better panel? Will they cover depreciated value lost over a 20 to 25 year lifespan? Consumers have no guarantee they can rely upon. For a large power company, with engineers such as yourself, this isn't a problem. For mom and dad who don't understand how PV works, this is a problem.
Last edited by functionofx; 02-10-2017 at 04:06 PM..
I know little about home solar but one thing I have been made aware of is if leasing, what happens when you sell your home? I have heard some horror stories.
When I was interested in leasing solar power I kept asking the salesperson 'what happens if I sell the house?' and she kept ignoring the question. I asked her again and demanded an answer. She said if I sold the house the new owners could take over the lease, or I'd have to remove the solar panels at my expense and any repair for any damage to my roof would be my responsibility.
If load drops 20% daily while solar panels are operating at their highest efficiency, then peak electricity usage comes just as solar panels stop producing useful power, then you need flexible generation that can quickly ramp to meet the load you didn't have when the panels were reducing load. In a pre-distributed generation grid, this wasn't a concern, because you didn't have the drastic load swing that high solar penetrations produce. So the grid relied on baseload from (usually) coal & nuclear plants, supplemented by some other generation assets.
With high solar penetration, the grid needs flexible generation assets: natural gas & pumped hydro.
Your scenario is not realistic. Reading your post, it seems you don't understand the difference between load and resource.
We have generation resources already that can quickly ramp up and down -- simple cycle gas turbines are cheap to buy, easy to site and respond well. Coal and Nuclear generally doesn't ramp at all so it's useless in this scenario.
Quote:
Originally Posted by TheCityTheBridge
Are you actually saying that covering your costs over 10 years equals a 7% return? That doesn't make any sense.
A 7% annual return over 10 years on $10k will yield a total value of just under $20k. Merely getting 100% of the 10k investment back at the end of ten years is a 0% return.
As I mentioned in my post, you would need to factor in the depreciated value of the panels you still own after 10 years and net present value of future energy bill savings after 10 years, which you would compare to the performance of other available investments in order to determine if the solar panels are a wise monetary investment. And you would also want to account for the net salvage.
I can't help you. Your understanding of the very basics of fiance is inadequate. BTW depreciation is not a consideration in NPV. It's a consideration in accounting.
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