how much does a system depreicate in 5 years?

[torbotek]

I was wondering how much is the going depreciation rate for a home system per year (5 years from now)? I am thinking of buying my system then or going the pre paid route be a better option?. THank you so much

[Ian S]

I was wondering how much is the going depreciation rate for a home system per year (5 years from now)? I am thinking of buying my system then or going the pre paid route be a better option?. THank you so much

I would not bet on the rate of price decline over the next five years keeping up with the pace of the last five. Then there's the little problem of the tax credits going away after next year. Maybe if, after the next election, Nancy Pelosi is House Speaker, Elizabeth Warren is Senate Majority Leader, and Bernie Sanders is President, the tax credits will survive but I won't hold my breath. Furthermore, utilities are changing their rate structures to make solar customers pay more. If you jump now, there is the possibility that you could be grandfathered into the older more generous rates. If you wait until the rates are changed, you're out of luck.

If it were me and I still wanted solar after running the numbers, I wouldn't wait for five years with the hope that it might be cheaper because I think the odds of that are vanishingly low.

[torbotek]

I would not bet on the rate of price decline over the next five years keeping up with the pace of the last five. Then there's the little problem of the tax credits going away after next year. Maybe if, after the next election, Nancy Pelosi is House Speaker, Elizabeth Warren is Senate Majority Leader, and Bernie Sanders is President, the tax credits will survive but I won't hold my breath. Furthermore, utilities are changing their rate structures to make solar customers pay more. If you jump now, there is the possibility that you could be grandfathered into the older more generous rates. If you wait until the rates are changed, you're out of luck.

If it were me and I still wanted solar after running the numbers, I wouldn't wait for five years with the hope that it might be cheaper because I think the odds of that are vanishingly low.

Thanks. I would like to clarify if I bought the system now, how much would it lose its value in 5 years? What is the rate of depreciation or fair market value of a system in 5 years?

[solarix]

The "fair market value" is not very appropriate as used solar systems are not too sellable. Most utilities require interconnected equipment to be new so the used market is pretty useless.
If you mean how much does a system degrade? - not very much. The array loses maybe 0.8% per year - hardly noticable. After 5 years, the array is virtually new. The inverters life is somewhere between 10 and 25 years depending on who you believe - so 5 years will depreciate it quite a lot.
Assessors value solar systems at the cumulative value of 20 years worth of savings - probably more than you paid for the system (after tax credits).
The IRS says you can depreciate solar at the accelerated double-declining 5 year rate. That means 40% the 1st year, 40% of the remainder the next year and so on. Really helps the payback time for businesses that can do this.
My advice. Buy now.

[J.P.M.]

Thanks. I would like to clarify if I bought the system now, how much would it lose its value in 5 years? What is the rate of depreciation or fair market value of a system in 5 years?

It's not so much, if anything, to do with the system depreciation - Not likely you'll sell it to someone and remove it from your property.

Perhaps a better question may be to ask what the solar generator does to the value of a property at some future point in time.

Seeing as how a property is worth exactly what someone is willing to pay for it and no more, and given the uncertainty surrounding what the future value will be of the power a system provides, my guess is it's a crap shoot.

I assume zero salvage value (or any enhancement in property value) and hope it's not negative due to quantum advances in solar technology, or utility pricing or policies that would (will ?) have a negative impact on system revenue and thus system value as it affects property values.