solar analysis (Phoenix: sales, houses, landlord)

[hikernut]

Just for my own interest I did a discounted cash flow analysis of PV solar. Here are the assumptions I used...

Cost of installation is $3 per maximum watt of output
Servicable lifespan of 25 years
Output degrades over time at 1%/year
Value of electricity is 11 cents/kWh, increasing at 3% annually
Owner is able to use 2/3 of the available solar insolation for the Phoenix area

I did not add any allowance for maintenance, JFYI.

Using a discounted cash flow analysis, the result is a compounded return of about 7%. Keep in mind, since this is a savings and not reportable as income the return is effectively after taxes. 7% compounded after taxes is similar to long-run stock market returns.

The whole sticking point here is being able to use all of the electricity. Storage is too expensive today, and grid-tie contracts have their own issues. Now we just need some enterprising folks to figure out a cost-effective way to store energy. Keep in mind there are many ways to store energy

[Potential_Landlord]

BTW- I noticed that solar panel prices went up from ~40c per W to ~80c per Watt over the last year. Not sure if this is true on a wholesale basis as well I can only say about retail (few panels). Ouch. That should make installs a lot more expensive. We've seen energy prices go up across the board, so it's not out of the ordinary, plus tariffs.

When you calculate 11c per kWh, isn't that too low? I think we pay ~15c off peak and more than double on peak? - Thanks!

[hikernut]

Originally Posted by Potential_Landlord

BTW- I noticed that solar panel prices went up from ~40c per W to ~80c per Watt over the last year. Not sure if this is true on a wholesale basis as well I can only say about retail (few panels). Ouch. That should make installs a lot more expensive. We've seen energy prices go up across the board, so it's not out of the ordinary, plus tariffs.

When you calculate 11c per kWh, isn't that too low? I think we pay ~15c off peak and more than double on peak? - Thanks!

I just made some guesses. If electric rates are higher then obviously the return on investment will be higher.


There seems to be quite a variation in panel prices depending on the supplier. I just checked www.wholesalesolar.com. I've never purchased panels, from them or anyone else. I'm curious about the possibility, but not really into spending thousands of dollars on something like this until I'm sure we are not moving for a long time, and there is a good payback.

[Potential_Landlord]

Originally Posted by hikernut

I just made some guesses. If electric rates are higher then obviously the return on investment will be higher.


There seems to be quite a variation in panel prices depending on the supplier. I just checked www.wholesalesolar.com. I've never purchased panels, from them or anyone else. I'm curious about the possibility, but not really into spending thousands of dollars on something like this until I'm sure we are not moving for a long time, and there is a good payback.

Ugh. Those prices are even higher. I think you have to add sales tax now as well - the exception is gone if I'm not mistaken. Sunelec still seems to sell for around 70c per W in small quantities. But a year ago it was below 40 cents.

[jimj]

Originally Posted by hikernut

Just for my own interest I did a discounted cash flow analysis of PV solar. Here are the assumptions I used...

Cost of installation is $3 per maximum watt of output
Servicable lifespan of 25 years
Output degrades over time at 1%/year
Value of electricity is 11 cents/kWh, increasing at 3% annually
Owner is able to use 2/3 of the available solar insolation for the Phoenix area

I did not add any allowance for maintenance, JFYI.

Using a discounted cash flow analysis, the result is a compounded return of about 7%. Keep in mind, since this is a savings and not reportable as income the return is effectively after taxes. 7% compounded after taxes is similar to long-run stock market returns.

The whole sticking point here is being able to use all of the electricity. Storage is too expensive today, and grid-tie contracts have their own issues. Now we just need some enterprising folks to figure out a cost-effective way to store energy. Keep in mind there are many ways to store energy

It's on it's way! There are several companies that already have a solution that will store the 3 days worth of "Power on Demand" that is said to be required to effectively stop all need of the grid. The issue now is cost but they're working on that part of it...

[hikernut]

Originally Posted by jimj

It's on it's way! There are several companies that already have a solution that will store the 3 days worth of "Power on Demand" that is said to be required to effectively stop all need of the grid. The issue now is cost but they're working on that part of it...

For residential the only issue is cost. We've had batteries for a long time. When my dad was a kid they ran the farmhouse off batteries, back in the 1940s.

Are they close? Do they give an estimated timeframe when they'll have something that's economically viable?

[hikernut]

Originally Posted by Potential_Landlord

When you calculate 11c per kWh, isn't that too low? I think we pay ~15c off peak and more than double on peak? - Thanks!

I'm on SRP, so I looked up the current rates on their Basic Plan. The rates vary a bit depending on the month and the usage amount. Highest rates are over 13 cents.


FWIW, I re-did the analysis using 12.5 cents per kWh, and the return comes out to about 8.5% compounded. Again, this assumes $3/watt installed, and using 2/3 of the theoretical max sunlight available in Phoenix. If the cost could be driven down to $2.50 per watt then the return is almost 11%. That's getting interesting, IMO.

[hikernut]

Originally Posted by jimj

It's on it's way! There are several companies that already have a solution that will store the 3 days worth of "Power on Demand" that is said to be required to effectively stop all need of the grid. The issue now is cost but they're working on that part of it...

Can you point us to an article? I'm curious, but honestly don't know a lot about the state of battery technology.

[DougStark]

Wouldn't it make more sense to just super-insulate your home? I say this not knowing anything about solar pros/cons, but at least it's a home improvement with a good rate of return (when or if you sell.)

[hikernut]

Originally Posted by DougStark

Wouldn't it make more sense to just super-insulate your home?

To a point, sure. I'd guess most houses that are built today would benefit from a better shell. But there's a point of diminishing returns even with insulation and sealing. And of course, insulation won't run your washer/dryer, haha!