Mythical $3.50/watt installation?

[bcroe]

Like many others (including myself at one time), you are under the misimpression that solar will be "free" once you pay the initial costs. But it's not free, your just paying for the power upfront.

I fail to see ANY difference, between paying upfront, and "free" once you pay the initial costs.

If you overbuild your system, you may be paying more than if
you didn't have solar at all.

This will be very important to those putting financial considerations at the pinnacle of their
decision making process. it also assumes that all aspects of the future, esp financial, can
actually be predicted with extreme accuracy and certainty. Some do not do this. Bruce Roe

[lkstaack]

I just got quoted $3.30 for an 11.4kW system. Unfortunately I don't know actual consumption since I don't move in until Mid-June. At that point PSEG-LI will tell me what the previous family used over the last 12 months.

I'm inclined to go higher since all of a sudden an electric dryer or electric radiant heat in bathrooms is not such a big deal. I doubt I could get a second set of rebates and credits if I wanted to expand the system so it seems to make sense to get it over with up front, once and for all.

Thoughts anyone?

Like many others (including myself at one time), you are under the misimpression that solar will be "free" once you pay the initial costs. But it's not free, your just paying for the power upfront. If you overbuild your system, you may be paying more than if you didn't have solar at all.

[gugy]

I don't think prices will come down sharply. I think installers will at first try to "split the difference" of the 30% loss with their prospective customers. For customers anticipating a price rise, that may work for awhile. But in a stable, competitive market, the more installers make in 2017, the more competition they will draw in. There are not large barriers to entry in the solar install biz, so prices fall to where sole proprietor owners are making an electricians wage.

I imagine there are already electricians in markets like coastal California who will install solar at a day rate or $400-500. So say an electrician and his apprentice for two days. With permits, say $2-3000 total. The owner buys the equipment. So lets say $8K for a 5K system by 2019. Particularly if permitting is streamlined.

Solar is an house integrated appliance. As I said earlier, I think the profitability and business methodology will be similiar to replacing HVAC equipment. That does not involve sending a moderately skilled crew out to do the install and billing them at thousands of dollars per hour. Well, actually it does now, but that won't last.

Buy or wait is a tough decision.

Yeah, I am on the fence literally.
I can se the draw for me paying off the system in 5 years and then have most of my electricity free after that initial investment. Doing my crude calculations, I would pay an additional $60p/month than my regular current SDGE bill in these 5 years after the tax break. That's not too bad BUT, I feel after my initial experience dealing with three different salesmen that this solar thing is just like buying a car on a dealership. You can haggle and all but you always have the feeling you are being on a losing end of a negotiation. They all promise a great investment and price but coming here I figure out that wasn't so true.
On the other hand I wonder if I should not to miss the boat with so many tax incentives happening right now. Decisions, decisions....

[racerfern]

I just got quoted $3.30 for an 11.4kW system. Unfortunately I don't know actual consumption since I don't move in until Mid-June. At that point PSEG-LI will tell me what the previous family used over the last 12 months.

I'm inclined to go higher since all of a sudden an electric dryer or electric radiant heat in bathrooms is not such a big deal. I doubt I could get a second set of rebates and credits if I wanted to expand the system so it seems to make sense to get it over with up front, once and for all.

Thoughts anyone?

[donald]

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.

I don't think prices will come down sharply. I think installers will at first try to "split the difference" of the 30% loss with their prospective customers. For customers anticipating a price rise, that may work for awhile. But in a stable, competitive market, the more installers make in 2017, the more competition they will draw in. There are not large barriers to entry in the solar install biz, so prices fall to where sole proprietor owners are making an electricians wage.

I imagine there are already electricians in markets like coastal California who will install solar at a day rate or $400-500. So say an electrician and his apprentice for two days. With permits, say $2-3000 total. The owner buys the equipment. So lets say $8K for a 5K system by 2019. Particularly if permitting is streamlined.

Solar is an house integrated appliance. As I said earlier, I think the profitability and business methodology will be similiar to replacing HVAC equipment. That does not involve sending a moderately skilled crew out to do the install and billing them at thousands of dollars per hour. Well, actually it does now, but that won't last.

Buy or wait is a tough decision.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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 ?