Northern Virginia System - $ vs envirommental impact

[herndonfam]

Hi - We are going through a local COOP program (SolarizeNOVA) to get quotes. We received quotes for two different systems:

Sunvia 7 KW - 3.50/watt
SunPower 8.5 KW - 3.98/watt

My calculated rates of return strictly on cash flows are 4.06% and 4.11% (sunvia and sunpower). The system quotes included rates of return based on an increase in the value of the home (10.5% and 11%). That may be true but I don't know how to quantify that amount.

The cash flow returns are better than fixed income but not as good as equities. Which leads me to wonder what value to assign the environmental impact. It seems a lot of questions are about the best deal for a particular system.

I am curious if most people are installing solar for the economic return, environmental impact or combo?

Thanks!

[solar pete]

Hello herndonfam and welcome to Solar Panel Talk.

I think its a combo, different strokes for different folks, all that kind of stuff as well as the cost per kilowatt hour you pay. Those area's where electricity is expensive solar will thrive

[J.P.M.]

There is some increasing opinion that the impact of solar equipment on housing value may be negative, at least in CA. I have assigned a salvage/resale/enhancement value of zero to any solar devices for life cycle costing purposes. That form of conservatism seemed to make sense to me in the past. Time will tell if it is not conservative enough. Since a thing (property) is only worth what someone is willing to pay, and opinions on the (added) value of solar are far from uniform, and given the (perceived) different opinions about the future of energy, the effects of those and other things things may be adding to the increased skepticism about the added value of solar.

[solarix]

The supposed standard in the home assessor's trade is valuing home appreciation due to solar at the present value of 20 years worth of the savings it will provide. Generally, if you take this into account, it makes the investment value of a solar system very attractive. Problem is that few realtors and few buyers really go for this thinking and in some areas look at solar as an impediment to sales. In our area, we are actually turning this around to solar is a real plus and homebuyers are asking "how come it doesn't have solar yet?".
How to value environmental impact? If only we could get utilities to factor that into their rates. I do know there is a study done by the Harvard Medical School that figures the medical costs of burning coal in America at between $300 to 500 Billion. That is like $1000 per person per year. Makes solar look a whole lot more valuable....

[diogenes]

If you assume that your initial investment can always be recovered, then you always get a good roi.

[J.P.M.]

If you assume that your initial investment can always be recovered, then you always get a good roi.

Determining those things is the stuff and purpose of process economics and life cycle costing.

Actually, and maybe closer to reality, calling the process an estimation of economic probabilities (and hoping your right) might be a better description than to imply any hope of certainty to it by calling it a determination.

[Naptown]

I have a hard time justifying solar in NOVA. Energy prices are about .10 KWH no state or local incentives at all
Dominion power is doing every thing they can to stop folks including a $60 a month stand by fee for large systems.
The only avenue to sell SRECS is into Pa and are almost worthless.
ROI will be in the 6-7% range.

[J.P.M.]

I have a hard time justifying solar in NOVA. Energy prices are about .10 KWH no state or local incentives at all
Dominion power is doing every thing they can to stop folks including a $60 a month stand by fee for large systems.
The only avenue to sell SRECS is into Pa and are almost worthless.
ROI will be in the 6-7% range.

Pardon my ignorance. What's NOVA ?

[Naptown]

Northern Virginia
I used to live in same town as the OP

[J.P.M.]

Northern Virginia
I used to live in same town as the OP

Thank you. I thought it might be some cost analysis software.

[tj289]

For me it is an economical decision. The only green I'm concerned about is the type I can spend. The other environmental rational I'll leave to others, I don't accept the premise at this time.

[azdave]

The system quotes included rates of return based on an increase in the value of the home (10.5% and 11%). I am curious if most people are installing solar for the economic return, environmental impact or combo?

Thanks!

I had my home refinanced just 1 month after installing a fully operational and fully paid for 6.63 kW grid tie system (with a 20-year locked-in, transferable contract with the local power company). The appraiser (and his boss) both declined to assign any value to the home when it came to the solar install. I didn't need the extra value to secure the new loan as I had plenty of equity but it was odd to me that they assign no value to a device that saves the owner $1200-$1500 per year in electricity. I don't know if this is true of all appraisers or just this group.

I installed solar as an investment choice. I probably would have spent the $11,000 on another car if I hadn't bought solar panels but then none of my cars generate savings.

[sensij]

My calculated rates of return strictly on cash flows are 4.06% and 4.11% (sunvia and sunpower). The system quotes included rates of return based on an increase in the value of the home (10.5% and 11%). That may be true but I don't know how to quantify that amount.

How are you calculating that rate of return? As I'm sure you are aware, many fixed income instruments will return your principal at the end of the term (absent a default), and equities can generally be sold to recover the capital. A PV system only saves you in the cost avoided for energy you would have bought from the power company.

For me it is an economical decision. The only green I'm concerned about is the type I can spend. The other environmental rational I'll leave to others, I don't accept the premise at this time.

What premise are you talking about?

[J.P.M.]

For me it is an economical decision. The only green I'm concerned about is the type I can spend. The other environmental rational I'll leave to others, I don't accept the premise at this time.

I'll give you points for candor. If I can ask: How do your concerns about color translate to the area of financial decision making ?

[tj289]

To be more clear, my decision to go solar, if I do, is solely based on finances. Environmental reasons related to fossil fuels or global warming are not a consideration, for me. Maybe my $$ are better spent in equities or maybe the home solar is the better ROI for the next 15-20 years. If the Fed tax credit was not part of the equation I probably would not consider solar at all.

TJ