Solar power system will take 18 years to pay for itself?

Hi,
I am in the midst of serious consideration of installing a grid tied solar panel system on my home in San Diego. I had an appointment with a sales guy today from a local company. My family's electric consumption averaged 1300kWh/month last year. A system large enough to cover this usage for the year looks like it'll cost me between $52000 and $56000 after the CEC rebates.
This was a lot higher than I thought but I was still seriously considering it. What I think may be shutting the door on this for me is that my average monthly electric bill is about $250. That means I am looking at about 18 years before this thing pays for itself. This is quite a bit longer than the current marketing blurbs on solar power would lead you to believe.
Is this typical?
thanks,
Mike

wrote in message

... A system large enough to cover this usage for the year looks like it'll cost me between $52000 and $56000 after the CEC rebates.
This was a lot higher than I thought but I was still seriously considering it. What I think may be shutting the door on this for me is that my average monthly electric bill is about $250. That means I am looking at about 18 years before this thing pays for itself. This is quite a bit longer than the current marketing blurbs on solar power would lead you to believe.

You need to study up a bit more on how to make an economic decision before making this one. First of all, Is the system likely (on average) to meet all of your home's electrical needs? It is possible that you will have some small electrical bill or some small net income from the system to consider.
Next, you need to consider maintenance costs for the system, with some reserve for unanticipated failures after the warranty period. What is the chance of storm damage? How long will your roof last? (You will have to re-install after a roof job)
Having done that, there is the big one to consider: the cost of capital. Money is expensive! and it will get more so over the next few years.
I hope that you and a few million others see your way clear to proceed.
Vaughn

mikehoyt@gmail.com wrote:

Hi,
I am in the midst of serious consideration of installing a grid tied solar panel system on my home in San Diego. I had an appointment with a sales guy today from a local company. My family's electric consumption averaged 1300kWh/month last year. A system large enough to cover this usage for the year looks like it'll cost me between $52000 and $56000 after the CEC rebates.
This was a lot higher than I thought but I was still seriously considering it. What I think may be shutting the door on this for me is that my average monthly electric bill is about $250. That means I am looking at about 18 years before this thing pays for itself. This is quite a bit longer than the current marketing blurbs on solar power would lead you to believe.
Is this typical?
thanks,
Mike

you forgot about interest, which will ensure it never pays. And maintenance, battery renewal, etc. Yes its typical of this overhyped technology.
I would suggest doing a proper financial analysis but it clearly isnt worth it.
NT

Before you do anything you should reduce your energy needs. According to your figures you are using more than 40kWh a day. You should be able to knock that figure down by a third without too much pain. Then see what a system would cost.
mikehoyt@gmail.com wrote:

Hi,
I am in the midst of serious consideration of installing a grid tied solar panel system on my home in San Diego. I had an appointment with a sales guy today from a local company. My family's electric consumption averaged 1300kWh/month last year. A system large enough to cover this usage for the year looks like it'll cost me between $52000 and $56000 after the CEC rebates.
This was a lot higher than I thought but I was still seriously considering it. What I think may be shutting the door on this for me is that my average monthly electric bill is about $250. That means I am looking at about 18 years before this thing pays for itself. This is quite a bit longer than the current marketing blurbs on solar power would lead you to believe.
Is this typical?
thanks,
Mike

mikehoyt@gmail.com wrote:

Hi,
I am in the midst of serious consideration of installing a grid tied solar panel system on my home in San Diego. I had an appointment with a sales guy today from a local company. My family's electric consumption averaged 1300kWh/month last year. A system large enough to cover this usage for the year looks like it'll cost me between $52000 and $56000 after the CEC rebates.
This was a lot higher than I thought but I was still seriously considering it. What I think may be shutting the door on this for me is that my average monthly electric bill is about $250. That means I am looking at about 18 years before this thing pays for itself. This is quite a bit longer than the current marketing blurbs on solar power would lead you to believe.
Is this typical?
thanks,
Mike
A Grid Tie system usually is not designed to replace all of your

electricity needs. Size it for you least consumption per month to start with and see how that goes. Sounds like the salesman may be smelling profit.
Michelle

I have done similar calculations and got even worse results. I wouldn't proceed at present unless I could see payback in about 5 years because of reasons other posters have given. I believe improving insulation is by far the best thing to do, in Canada at least. Reducing all forms of power consumption is also essential. When these things are done, if you need a lot of heating, solar walls or other types of solar thermal collection can help a lot. Then assess your power needs and size the panels accordingly. It might, just might, be then worthwhile, particularly if electricity cost continue to increase, as is virtually inevitable. Purchasing the equipment and doing the installation work yourself will, obviously, help justify it economically. Good Luck, everyone needs to get into this, and soon. Alan C
wrote in message

Hi,
I am in the midst of serious consideration of installing a grid tied solar panel system on my home in San Diego. I had an appointment with a sales guy today from a local company. My family's electric consumption averaged 1300kWh/month last year. A system large enough to cover this usage for the year looks like it'll cost me between $52000 and $56000 after the CEC rebates.

On 3 Mar 2006 21:44:09 -0800, "mikehoyt@gmail.com" wrote:

Hi,
I am in the midst of serious consideration of installing a grid tied solar panel system on my home in San Diego. I had an appointment with a sales guy today from a local company. My family's electric consumption averaged 1300kWh/month last year. A system large enough to cover this usage for the year looks like it'll cost me between $52000 and $56000 after the CEC rebates.
This was a lot higher than I thought but I was still seriously considering it. What I think may be shutting the door on this for me is that my average monthly electric bill is about $250. That means I am looking at about 18 years before this thing pays for itself. This is quite a bit longer than the current marketing blurbs on solar power would lead you to believe.
Is this typical?
thanks,
Mike

"Typical".
I'm not sure. It seems you're paying about 19.2 cents/kWh. (1300kWh at $250).
If you can get TOU service, and if the rates are higher during the day (when you'll be generating your electricity), your savings will be more.
On the other hand, you did not take into account the cost of money in your analysis.
Let's say you have a 10kW system (you didn't mention it, so I'm making an assumption).
The cost, after rebate, might be a bit high for a grid-tied system, but I don't know what California installers charge, nor exactly what is included.
In designing a grid-tied system, depending on the buy-back provisions of the utility, it may be better to undersize a bit than to oversize.
Let's be optimistic and say you will exactly cover your electric usage of 250*12=$3,000/year and that your installed cost will be $52,000 after rebates.
If there were no cost of money, then your payback would be about 17.3 years.
However, you need to consider that you could invest the $52,000 someplace and earn a return on it. So, in addition to the savings of $3,000/year in electricity, you will also have the "cost" of not receiving a return on your investment. We could be conservative here and figure that you could invest these funds in safe Treasury's and earn maybe 4%/year with virtually zero risk.
So your real annual "savings" would be less than $3,000 per year.
There are financial formulas to figure this out, but it looks to me that, given the above data and assumptions, your true payback time would be closer to 30 years.
There are items we did not take into consideration. You've "invested" the money in your house. How much does the PV array change the value of your house? What will happen to the value of your house over the years if electricity gets more expensive?
Maintenance costs -- these should be minimal unless you have an out of warranty inverter failure.
You might also consider other benefits that are not easily quantified. There is a benefit in decreasing energy use from polluting sources. (This can and should also be done by using more efficient appliances and lighting at home).
At least your system has a positive economic benefit; the same cannot be said for many other items we purchase.
Hope this helps in your decision making. PV is expensive, but it does provide some tangible benefits.
-- ron (off the grid in Downeast Maine)

In article , "mikehoyt@gmail.com" wrote:

I am in the midst of serious consideration of installing a grid tied solar panel system on my home in San Diego. I had an appointment with .... is quite a bit longer than the current marketing blurbs on solar power would lead you to believe.

Depends on whether the "blurbs" are from honest people. The local pay through the nose guy says of grid-tied systems - don't buy them for payback, buy them for ecological politics (or words to that effect). My system will pay for itself the day it's installed, but that's because I'm not grid-tied, and it's pay through the nose for grid connection, or pay through the nose for solar.
As mentioned, you need to consider the cost of money, and what that money could be doing for you elsewhere. You also need to consider whatever tax breaks are presently in effect in your area - there's federal stuff now as well as your local ones, but the scale is limited. But being connected to the grid, you don't need to start with a system which covers your complete needs, since you are grid-tied - You could toss in a $6-10,000 system and see how you like it before expanding, or size your initial system to best use the available tax breaks, then size additions to it if and as future tax breaks make that attractive. In any case, the cheapest investment in solar _electric_ is to start by reducing your consumption - if your fridge is more than 7 years old, toss it and get a new energy-star fridge, etc...All that can be done before ever investing a cent in solar electric panels, inverters, etc.
If you are heating water without solar _thermal_ help, _that_ will pay for itself in short order, plus there is a federal tax credit for that at present if you use certified panels and don't connect a hot tub to them.
-- Cats, coffee, chocolate...vices to live by

"mikehoyt@gmail.com" wrote:

I am in the midst of serious consideration of installing a grid tied solar panel system on my home in San Diego.

As others have pointed out, the financial analysis looks awful, and the time-value-of-money thing only makes it worse.
However, "if" power costs rise, your payback will come sooner, and the value of the installation if you were to sell your house will rise as well.
The good thing about grid-tie is that you don't have to size it for your load, and the payback period for a $10K system is the same as for a $50K system, so you can buy what you can "afford".
If I have any money left after my house construction is finished, I'm going to try to talk the CFO into as much solar electric as we can afford, but since the financial analysis shows it to be a horrible investment, it's a difficult discussion, even when power is 50 cents per KWHR and rising. She tends to agree with me, but putting the money in a better investment and using the interest to pay the electric bill has a certain appeal as well.

wrote in message

Hi,
I am in the midst of serious consideration of installing a grid tied solar panel system on my home in San Diego. I had an appointment with a sales guy today from a local company. My family's electric consumption averaged 1300kWh/month last year. A system large enough to cover this usage for the year looks like it'll cost me between $52000 and $56000 after the CEC rebates.
This was a lot higher than I thought but I was still seriously considering it. What I think may be shutting the door on this for me is that my average monthly electric bill is about $250. That means I am looking at about 18 years before this thing pays for itself. This is quite a bit longer than the current marketing blurbs on solar power would lead you to believe.
Is this typical?
thanks,
Mike

What's so bad about that considering the utilities run on bond issues and stock sales? Why can't the end user obtain financing as well as the centralized power authorities who keep us in bondage to their FOR PROFIT machine? Because they are greedy. That is why, and they don't want to free us from the hard yoke we are in already. They will fail as has been proven time and again in societies throughout history. Their bondage game will erode away as the forces of freedom will drive their traps out of society in due time. 100 and 50 year old polluting technologies are a thing of the past as we look to the future.

wrote in message

Hi,
I am in the midst of serious consideration of installing a grid tied solar panel system on my home in San Diego. I had an appointment with a sales guy today from a local company. My family's electric consumption averaged 1300kWh/month last year. A system large enough to cover this usage for the year looks like it'll cost me between $52000 and $56000 after the CEC rebates.
This was a lot higher than I thought but I was still seriously considering it. What I think may be shutting the door on this for me is that my average monthly electric bill is about $250. That means I am looking at about 18 years before this thing pays for itself. This is quite a bit longer than the current marketing blurbs on solar power would lead you to believe.
Is this typical?
thanks,
Mike

Another reason the USA loses so much nowadays is because they are so addicted to their old school ways.

mikehoyt@gmail.com wrote: That means I

am looking at about 18 years before this thing pays for itself. This is quite a bit longer than the current marketing blurbs on solar power would lead you to believe.
Is this typical?
thanks,
Mike

18 years with subsidies, 30 years without. this is typical. A high school science book is much more truthful than a marketing blurb.
-- Steve Spence Dir., Green Trust, http://www.green-trust.org Contributing Editor, http://www.off-grid.net http://www.rebelwolf.com/essn.html

George Ghio wrote:

Before you do anything you should reduce your energy needs. According to your figures you are using more than 40kWh a day. You should be able to knock that figure down by a third without too much pain. Then see what a system would cost.

Won't that just make the economics look worse?

mikehoyt@gmail.com wrote:
Hi,
I am in the midst of serious consideration of installing a grid tied solar panel system on my home in San Diego. I had an appointment with a sales guy today from a local company. My family's electric consumption averaged 1300kWh/month last year. A system large enough to cover this usage for the year looks like it'll cost me between $52000 and $56000 after the CEC rebates.
This was a lot higher than I thought but I was still seriously considering it. What I think may be shutting the door on this for me is that my average monthly electric bill is about $250. That means I am looking at about 18 years before this thing pays for itself. This is quite a bit longer than the current marketing blurbs on solar power would lead you to believe.
Is this typical?
thanks,
Mike

-- The e-mail address in our reply-to line is reversed in an attempt to minimize spam. Our true address is of the form che...@prodigy.net.

Sure it will.
I prefer the start small scenerio. Build in a large capacity grid tie and go small on the PV at the start then add to it using the savings gained from the grid. Saving 20 bucks a month? Throw it into a 4% savings until you have enough to buy another panel. Now you're saving 40 bucks a month, repeat the process until you're saving the 3 grand a year. And if needed, you have the cash for emergency needs.
Max www.northernmichigansolar.com

I like it as a special interest hobby but it will never pay for iteself in my lifetime, even not considering amortization of moneys.
Now if our TOU billing ever gets implemented properly it may pay as the rates skyrocket.
"beemerwacker" wrote in message

Sure it will.
I prefer the start small scenerio. Build in a large capacity grid tie and go small on the PV at the start then add to it using the savings gained from the grid. Saving 20 bucks a month? Throw it into a 4% savings until you have enough to buy another panel. Now you're saving 40 bucks a month, repeat the process until you're saving the 3 grand a year. And if needed, you have the cash for emergency needs.
Max www.northernmichigansolar.com