Mythical $3.50/watt installation?

[gugy]

I'm in SD and I think you should be able to do better. I signed up last week with a small Company that had good reviews. My PV system will be around 5.85 KW with Kyocera Panels and a SMA Inverter. Included is a sub-panel and a 240V outlet for my EV. My total cost before rebates is $3.23 per W.

That sound good. Yeah, I will shop around. I just want to make sure whoever I pick to install it will be around down the road in case the panels have issues and they can honor the warranty replacing it.

[lkstaack]

The reasons for high costs in California are obvious. The market is responding to what the buyer will pay. Many Californians feel pressure to buy now when they see their neighbors getting PV and hear advertisements predicting the quick end to Net Metering. They are primed for PV. Then, why should a large PV company agree to $3.50/w when their salesmen are lining up buyers at $5.00/w? Local companies won't expand to meet demand because they fear a post Net Metering/Fed Tax PV industry recession.

High prices for equipment in the US? Perhaps that's the market responding to government subsidies.

[gugy]

The high costs in California are obvious. The market is responding to what the buyer will pay. Many Californians feel pressure to buy now when they see their neighbors getting PV and hear advertisements predicting the quick end to Net Metering. They are primed for PV. Then, why should a large PV company agree to $3.50/w when their salesmen are lining up buyers at $5.00/w? Local companies won't expand to meet demand because they fear a post Net Metering/Fed Tax PV industry recession.

High prices for equipment in the US? Perhaps that's the market responding to government subsidies.

Yeah, couple of my bids sales people are saying I need to make my decision fast because of the Net Metering thing. Since what they quoted me seems high, I am in no hurry.
While I like the concept of Solar sometimes I wonder if I should bother with. Yes electric prices will go up but I hate the idea of overpaying for something I don't desperately need now.

[donald]

The high costs in California are obvious. The market is responding to what the buyer will pay. Many Californians feel pressure to buy now when they see their neighbors getting PV and hear advertisements predicting the quick end to Net Metering. They are primed for PV. Then, why should a large PV company agree to $3.50/w when their salesmen are lining up buyers at $5.00/w? Local companies won't expand to meet demand because they fear a post Net Metering/Fed Tax PV industry recession.

High prices for equipment in the US? Perhaps that's the market responding to government subsidies.

I think you are right. In California, at least, the federal tax credit may mean nothing for the homeowner. The price would likely be under three dollars without the credit and the threat of it ending. Currently it's pay more, perhaps much more, per watt. And then get most of the excess back from the federal government.

In an undistorted market, solar installers would be expanding their business. Under employed electricians would be moving into the area.

I am in favor of actively encouraging solar through tax and other policy. I am in favor of accurately pricing fossil fuels. But I'm not in favor of using my federal tax dollars for nothing. In California at least, the federal tax credit appears to not add more solar. I don't have another explanation for the numbers.

[tj289]

UKiwis, I'm also in San Diego area. Can you advise provider/installer you used or pm me. So far with the bids I've received (4.8-5.4kw system) the bids are in the $4.5 to $4.9/W range. At those prices I'm not sure it makes financial sense to move forward.

Thanks,

TJ

[J.P.M.]

UKiwis, I'm also in San Diego area. Can you advise provider/installer you used or pm me. So far with the bids I've received (4.8-5.4kw system) the bids are in the $4.5 to $4.9/W range. At those prices I'm not sure it makes financial sense to move forward.

Thanks,

TJ

Sunpower ?

[donald]

UKiwis, I'm also in San Diego area. Can you advise provider/installer you used or pm me. So far with the bids I've received (4.8-5.4kw system) the bids are in the $4.5 to $4.9/W range. At those prices I'm not sure it makes financial sense to move forward.

Thanks,

TJ

In 2017, the after tax incentive cost of solar will likely be in the higher $2 W range. If many people leave the biz, maybe not until 2018. The only reason to install solar at high prices would be getting in on the last of net metering in some areas. But even that might be a "stretch" and require hopeful guessing on future rates.

If you estimate costs, you would be paying ~$20K for a crew to work less than a day at your house. Unless that is a crew of hookers with blow, that seems very expensive.

[Riverside Solar]

Is it reasonable

Is it reasonable to consider the cost of your monthly electric bill prior to going solar as a cost of waiting? Unless of course we out live or stay in the home longer than the operating life of the solar? Also if the price now is $3.50 and you get a 30% tax credit wouldn't the price need to be in the mid to low $2 range to make waiting until 2017 a good financial move? Not to mention missing out on NEM. Am I missing something? Probably.

[jlovinger]

In 2017, the after tax incentive cost of solar will likely be in the higher $2 W range. If many people leave the biz, maybe not until 2018. The only reason to install solar at high prices would be getting in on the last of net metering in some areas. But even that might be a "stretch" and require hopeful guessing on future rates.

If you estimate costs, you would be paying ~$20K for a crew to work less than a day at your house. Unless that is a crew of hookers with blow, that seems very expensive.

I think you might be stretching a little on market distortion due to credit+NEM expiration. I'm looking to install and have been gathering quotes which ranged from $3.70/watt to $5.20/watt. The big players with brand names and marketing/sales budgets to match are at the high end and definitely seem to be benefiting from that distortion (SolarCity, SunPower, etc). But the smaller/local installers? I've seen a pretty wide range of quotes and flexibility on pricing which suggests market competition to drive down prices. I don't expect those low-end prices will be affected quite so severely when industry goes through a correction.

But what do I know? Not much hard data in either direction. Purchase a system if the ROI is right and grab popcorn to watch the fallout come 2017.

[jlovinger]

Is it reasonable to consider the cost of your monthly electric bill prior to going solar as a cost of waiting? Unless of course we out live or stay in the home longer than the operating life of the solar? Also if the price now is $3.50 and you get a 30% tax credit wouldn't the price need to be in the mid to low $2 range to make waiting until 2017 a good financial move? Not to mention missing out on NEM. Am I missing something? Probably.

Maybe a little, but you also have to consider the lost utility of that money when paid towards solar. If you just took $20K and put it towards a 30-year treasury, hopefully a similar life span to your solar array, you'd be yielding ~3% with minimal risk. That's $600/year with no maintenance to worry about, no one poking holes in the roof, etc. Riskier long-term investments such as a stock market fund historically yield ~8% over long periods for $1600/year. Or you might just be keeping your money in a checking account at 0% yield. Or planning to finance at a 6% interest rate. Or ...?

It gets kind of complicated. The amount "lost" by waiting entirely depends on expected solar ROI and individual situation. I'd just focus on the expected ROI right now and move forward if that's compelling. Ignore 30% credit or NEM except for how that affects the ROI.

The credit also isn't going away, just dropping to 10%. So $3.5/watt now compares to $2.72/watt in 2017 for the same after credit price of $2.45/watt.

[J.P.M.]

Maybe a little, but you also have to consider the lost utility of that money when paid towards solar. If you just took $20K and put it towards a 30-year treasury, hopefully a similar life span to your solar array, you'd be yielding ~3% with minimal risk. That's $600/year with no maintenance to worry about, no one poking holes in the roof, etc. Riskier long-term investments such as a stock market fund historically yield ~8% over long periods for $1600/year. Or you might just be keeping your money in a checking account at 0% yield. Or planning to finance at a 6% interest rate. Or ...?

It gets kind of complicated. The amount "lost" by waiting entirely depends on expected solar ROI and individual situation. I'd just focus on the expected ROI right now and move forward if that's compelling. Ignore 30% credit or NEM except for how that affects the ROI.

The credit also isn't going away, just dropping to 10%. So $3.5/watt now compares to $2.72/watt in 2017 for the same after credit price of $2.45/watt.

This is the stuff of something called process economics, or life cycle costing, or financial analysis, or any number of other things, all mostly dealing with the idea of making the best financial choices as you see them over a period of time that's as long as appropriate.

Intelligently done, it usually involves more than dividing first cost by annual estimated savings or annual projected/estimated return on investment.

As used in the post, I'd add that at the end of the 30 yr. treasury, or most any decent risk investment, that's a fair likelihood of getting all of your original $20K back. That needs to be considered in any comparison of alternatives.

Also, as I was corrected recently, unless you're talking about commercial applications, the 30% fed. tax credit will not drop to 10%. The residential tax credit will expire and therefore be zero.

[Riverside Solar]

Fed Tax Credit

My understanding of the Federal Tax Credit is that it will drop to zero for residential and 10% for commercial in 2016. I'm not sure I could ignore paying $7,000 less in Federal Taxes or missing out on the current NEM for the next watered down version.

[jlovinger]

This is the stuff of something called process economics, or life cycle costing, or financial analysis, or any number of other things, all mostly dealing with the idea of making the best financial choices as you see them over a period of time that's as long as appropriate.

Intelligently done, it usually involves more than dividing first cost by annual estimated savings or annual projected/estimated return on investment.

As used in the post, I'd add that at the end of the 30 yr. treasury, or most any decent risk investment, that's a fair likelihood of getting all of your original $20K back. That needs to be considered in any comparison of alternatives.

Also, as I was corrected recently, unless you're talking about commercial applications, the 30% fed. tax credit will not drop to 10%. The residential tax credit will expire and therefore be zero.

Agreed on all counts. I definitely glossed over many details to get the idea across that you need to look at more than just dollars saved per year. Which might be a little ironic...

Thanks for update on 10% only for commercial. Probably should have known that before I started spouting off.

[gugy]

UKiwis, I'm also in San Diego area. Can you advise provider/installer you used or pm me. So far with the bids I've received (4.8-5.4kw system) the bids are in the $4.5 to $4.9/W range. At those prices I'm not sure it makes financial sense to move forward.

Thanks,

TJ

That is high. I received bids around $3.9 and $4.1 and I think they are overpriced. I am in SD too.

[gugy]

In 2017, the after tax incentive cost of solar will likely be in the higher $2 W range. If many people leave the biz, maybe not until 2018. The only reason to install solar at high prices would be getting in on the last of net metering in some areas. But even that might be a "stretch" and require hopeful guessing on future rates.

If you estimate costs, you would be paying ~$20K for a crew to work less than a day at your house. Unless that is a crew of hookers with blow, that seems very expensive.

I wonder sometimes if after the tax incentive ends prices will come down sharply due the lack of demand. Salespeople have been very agressive and harassing me to do it now because of the Net Metering expiration by end of the year. I have been a bit reluctant to jump in.
My bids are on the $18k to $19k range for a 4.6KW system before tax break. If I can get down to $16k for a reliable brand and installer I might jump in.