Goal: Net Zero - Companies Suggesting Widely Varying kW Systems

[brucet9]

For starters, I'd suggest you consider trying to get the proper poster with the proper post. But no matter, the sense of Sensij's post was something I'd largely agree with, which was what the +1 was about.

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I'm so sorry. That was a boneheaded mistake of mine responding to the wrong person.

[Heataholic]

Here is an alternate investment idea. Send me $10,000, and I'll mail you a check for $1000 each year. 10% tax free return, right?

There are some important financial concepts missing here.. compounding, return of principal vs investment return. I understand why the someone might be hesitant to move forward with this contract. How many people even live in the same house long enough to realize anything close to an acceptable return for tying up so much cash?

That isn't at all a like comparison. I'd never suggest an old system should add value to a property but to say a 10% return on PV is the same as only earning back the initial investment is a bit hyperbolic. I purchase and own rental housing and the estimations of returns are near identical. If I spend cash on a rental property I expect to return my initial investment in 7 years then I begin to make additional money over my initial investment amount. Same goes for a PV investment except instead of earning money, and having to deal with all the taxes associated with that, you are saving money. The overly simplistic nature of your example leaves the person with zero in assets and as such nothing to gain from those assets at all after your 10 year period, which we all know isn't how solar PV works.

Lack of compounding is a justified argument but it also ignores rate increases; my utility (APS in AZ) just tried an 8% rate hike (they claim $11 on average but my bills are double their average), though that has been talked down a little bit (now to $6 on average). I think Nevada is a perfect example of the potential risks of going solar but even there the argument is far from over; their POCO may have screwed themselves big time with their bull and hopefully will be seen as a warning to other POCOs if things work out the way it is looking right now (they just passed a new net metering bill AB 405 and a big push to a constitutional amendment is underway).

As for how long people live in the same home the statistics (NAHB 2011) show first time buyers average 11 years and trade up buyers stay in a home for 15 years with the national average hovering around 13 years since the 90s -- data from the 2010 census show a median of 5.9 years. Given the average figures and current solar rates the average person would at the least regain their investment if they went solar in the first 5 years of buying their home, assuming 7 year ROI. Fannie and Freddie have instructions to add value for purchased solar (leased solar is the biggest scam in solar IMO) so there is definitely movement happening for homeowners on this topic so who knows where it will be in another 5-10 years.

Me personally I paid $2,957.83 last year or $246.49 a month on average for electricity. I spent $25,006.80 on my 10.92kw system and will get $7,502.40 back from the feds and $1,000.00 from the state making my out of pocket $16,504.76. After cutting usage some and adding solar my utility bill will be about $25 a month for a monthly savings of about $220 or an annual return of $2,640 for a 6.25 year ROI (on a 5% loan that would be 9.5 years). That is an equal or slightly better return on my capital than most of my rental properties except I don't have to deal with evictions, taxes, or any of the other nonsense tenants bring; and also that is only at current power rates which are most likely going up next month. I am hoping that in about 10 years from now, when the inverter dies, storage will be cost effective so I can add more solar and go off grid but we will see.

[J.P.M.]

If they are anything like SCE, you may be onto something there. State regulators are way too cozy with utility companies, so any claims of losses due to growth of PV, whether true or simply asserted, will have a sympathetic audience.

SCE bungled a multi-million dollar re-tubing project at the San Onofre nuke plant, resulting in multiple massive water leaks and rendering it useless. The cost to safely shut it down will run into multimillions of more dollars, so one might conclude that the stockholders of SCE's parent corporation, Sempra Energy, would be stuck with massive losses. But no, their buddies at the PUC bailed them out by approving a plan for the rate payers to pay for their bungling through huge rate increases.

FWIW: A good part of that San Onofre problem could have been prevented had the POCO got better outside engineering involved at the start. The flow induced vibration that caused the failures was and is obvious to anyone who's familiar with design of shell and tube heat exchangers. They tried to put 10 lbs. of stuff in a 5 lb. bag with about the same external footprint. As a result of a combination of reduced flow area and increased mass flowrates, things got moving too fast and resulting flow induced vibration caused stress cracking and failures at support plates, and collision damage between and among tubes which added to the problem. That it happened so quickly after startup is a flag as to how bad (and maybe how obvious) it was. Easy to spot if you know what to look for. IMO, the POCO's problem was not performing due diligence in the design check.

[DanKegel]

I saw that the power costs in the New England area have gone up pretty high and are now around $0.20/kWh for residential.

I hope that had nothing to do with the increased amount of net generation from solar pv systems ....

Well, let's see.
newenglandcouncil.com/assets/NEC-Energy-Report-October-2016-FINAL-Single-Page-Format.pdf has a whole lot of info that probably explains it... one factoid there is that New England has very little solar installed, so I doubt that is affecting things too much.

masslive.com/business-news/index.ssf/2017/01/federal_government_electicty_price_here.html and
bizjournals.com/boston/news/2017/02/27/new-england-s-wholesale-electricity-prices-hit-13.html both
say that wholesale electricity prices in that area are very dependent on natural gas supply and demand.

[SunEagle]

If they are anything like SCE, you may be onto something there. State regulators are way too cozy with utility companies, so any claims of losses due to growth of PV, whether true or simply asserted, will have a sympathetic audience.

SCE bungled a multi-million dollar re-tubing project at the San Onofre nuke plant, resulting in multiple massive water leaks and rendering it useless. The cost to safely shut it down will run into multimillions of more dollars, so one might conclude that the stockholders of SCE's parent corporation, Sempra Energy, would be stuck with massive losses. But no, their buddies at the PUC bailed them out by approving a plan for the rate payers to pay for their bungling through huge rate increases.

We have similar issues here in FL. I am paying every month for 2 nuclear power stations. One that will never be built and the other damaged due to cutting corners and stupidity. I must pay because the PUC says the POCO needs to reclaim it's losses so it falls to the customers to pick up the tab.

The only good thing is that my rates are low (~$0.11/kWh) and have been for about 10 years. I can't say the same for New England and the West Coast which have gone up to crazy high costs.

[brucet9]

I saw that the power costs in the New England area have gone up pretty high and are now around $0.20/kWh for residential.

I hope that had nothing to do with the increased amount of net generation from solar pv systems increasing 16.7% from 2016 to 2017.

If they are anything like SCE, you may be onto something there. State regulators are way too cozy with utility companies, so any claims of losses due to growth of PV, whether true or simply asserted, will have a sympathetic audience.

SCE bungled a multi-million dollar re-tubing project at the San Onofre nuke plant, resulting in multiple massive water leaks and rendering it useless. The cost to safely shut it down will run into multimillions of more dollars, so one might conclude that the stockholders of SCE's parent corporation, Sempra Energy, would be stuck with massive losses. But no, their buddies at the PUC bailed them out by approving a plan for the rate payers to pay for their bungling through huge rate increases.

[SunEagle]

Yeah, Los Angeles's power is about 25% more expensive than Florida's, I think. Could be worse. Connecticut's a lot higher.

eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a

I saw that the power costs in the New England area have gone up pretty high and are now around $0.20/kWh for residential.

I hope that had nothing to do with the increased amount of net generation from solar pv systems increasing 16.7% from 2016 to 2017.

[DanKegel]

It has been pretty low here in Florida for over 10 years. I can't say the same for CA rates.

Yeah, Los Angeles's power is about 25% more expensive than Florida's, I think. Could be worse. Connecticut's a lot higher.

eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a

[Ward L]

It's good to see happy case once in a while . If you don't mind me asking- could you provide few more details: size of your system in kW and your annual electricity consumption in kWh? It's hard to appreciate the deal without knowing few essential details. It sounds though you missed (this is easily fixable) the first most efficient way of savings on electricity- analyze and reduce your current consumption. Good news if EV is in the near future then you could utilize excess of power I'm sure you'll get from optimizing your current consumption.

My system is a 10kW and my annual household electricity consumption is about 15,222 kWh. As far as reducing my current consumption, except for the crazy pool, I think I do a pretty good job of considering ways to save electricity. My Dad used to brow beat my sister and I to turn off light switches back in the 1960s. You don't grow up with that and not consider how much power is being used for what purpose.

[SunEagle]

[B]...... Studies have shown that houses with solar generally sell today for a premium roughly equal to the system's cost. If Grid electric rates keep climbing as they are predicted to do, the return on PV will increase at higher than inflation rates and the demonstrable return for the next buyer of the property will be greater, justifying a greater premium.

I disagree with that statement. A solar pv system is actually a liability to the sale of homes in a lot of states. Maybe it is valued in CA but in Florida the agents I know indicated a solar pv system does not add any value to the home. Sad but true.

[sensij]

"Here is an alternate investment idea. Send me $10,000, and I'll mail you a check for $1000 each year. 10% tax free return, right?"
Well, JPM, you could at least TRY to make your arguments sensible. At the end of 7 years of solar, OP will have his money back and still own a valuable, income producing asset.

"There are some important financial concepts missing here.. compounding, return of principal vs investment return."
Principal is returned upon sale - same as with a house. Sure, there is no compounding, but compounding doesn't come close to the value of tax free earnings. And where are you going to find a legal, risk free investment earning more than 14%?

"How many people even live in the same house long enough to realize anything close to an acceptable return for tying up so much cash?"
So, is it your argument that one should not buy a house unless he would live there the rest of his life? Studies have shown that houses with solar generally sell today for a premium roughly equal to the system's cost. If Grid electric rates keep climbing as they are predicted to do, the return on PV will increase at higher than inflation rates and the demonstrable return for the next buyer of the property will be greater, justifying a greater premium.

What a PV system will do for the sale price of any one particular home is completely unknown. Studies that attempt to discern the effect on *average* sale price tend to be weighed down by small sample sizes and high variance. Counting on full recovery of the cost at the time of sale is foolish, in my opinion.

Another way of looking at it is that if $16800 is spent on a system that returns $1800 a year, and assuming a 4% discount rate, after 12 years the NPV of the system is $89.55. Many people carry loans at about that interest rate, which can also be considered a "tax free" return if paid down, but of course, individual circumstance may dictate a different choice. At that rate of return, even tax-free municipal bonds would be competitive.

One problem with planning for very long payback periods to justify the expense (and support the idea that the system will be worth what you paid for it in the future) is that net metering laws can and do change. Without net metering, the value of that system can decrease dramatically. The longer the time horizon used to justify the expense, the more unknowns exist with respect to performance, obsolescence, political, and utility changes.

[J.P.M.]

"Here is an alternate investment idea. Send me $10,000, and I'll mail you a check for $1000 each year. 10% tax free return, right?"
Well, JPM, you could at least TRY to make your arguments sensible. At the end of 7 years of solar, OP will have his money back and still own a valuable, income producing asset.

"There are some important financial concepts missing here.. compounding, return of principal vs investment return."
Principal is returned upon sale - same as with a house. Sure, there is no compounding, but compounding doesn't come close to the value of tax free earnings. And where are you going to find a legal, risk free investment earning more than 14%?

"How many people even live in the same house long enough to realize anything close to an acceptable return for tying up so much cash?"
So, is it your argument that one should not buy a house unless he would live there the rest of his life? Studies have shown that houses with solar generally sell today for a premium roughly equal to the system's cost. If Grid electric rates keep climbing as they are predicted to do, the return on PV will increase at higher than inflation rates and the demonstrable return for the next buyer of the property will be greater, justifying a greater premium.

For starters, I'd suggest you consider trying to get the proper poster with the proper post. But no matter, the sense of Sensij's post was something I'd largely agree with, which was what the +1 was about.

Then, think about this idea: While you may have valid opinions by virtue of everyone having one, others with what is probably more background and experience in these matters (an opinion I've formed from reading your posts) also have opinions that are not only as valid as yours, but probably more informed by virtue of such greater experience and training. IMO, a lot of what you post here so far as it relates to PV and solar process economics has the look of inexperience, and has the look of somewhat simplistic, untrained and incompletely thought through reasoning behind it.

I'd respectfully suggest you post what you want, but I'd just as respectfully suggest you consider that others reading what you post may act on what you write, and that you be prepared to justify your advice or opinions with some logic or facts that are more than simply and only something you heard or read someplace.

[brucet9]

"Here is an alternate investment idea. Send me $10,000, and I'll mail you a check for $1000 each year. 10% tax free return, right?"
Well, JPM, you could at least TRY to make your arguments sensible. At the end of 7 years of solar, OP will have his money back and still own a valuable, income producing asset.

"There are some important financial concepts missing here.. compounding, return of principal vs investment return."
Principal is returned upon sale - same as with a house. Sure, there is no compounding, but compounding doesn't come close to the value of tax free earnings. And where are you going to find a legal, risk free investment earning more than 14%?

"How many people even live in the same house long enough to realize anything close to an acceptable return for tying up so much cash?"
So, is it your argument that one should not buy a house unless he would live there the rest of his life? Studies have shown that houses with solar generally sell today for a premium roughly equal to the system's cost. If Grid electric rates keep climbing as they are predicted to do, the return on PV will increase at higher than inflation rates and the demonstrable return for the next buyer of the property will be greater, justifying a greater premium.

[J.P.M.]

Here is an alternate investment idea. Send me $10,000, and I'll mail you a check for $1000 each year. 10% tax free return, right?

There are some important financial concepts missing here.. compounding, return of principal vs investment return. I understand why the someone might be hesitant to move forward with this contract. How many people even live in the same house long enough to realize anything close to an acceptable return for tying up so much cash?

+1. It's called process economics as related to solar. Or life cycle costing, comparison of alternative analysis, or other names. It's all about making reasonable and educated guesses for financial decision making about the future with some concept of things that can happen to assets over time and why those things happen.

An example of another option for the comparison mix: Invest the assets in a decent corp. bond. The return will be a lot less %age wise, but on the plus side, there's a pretty high (but no guaranteed) likelihood you'll get all of your principal back. Just like the value of a 10 yr. old HVAC system, I doubt the value added to a residence by the presence of a, say, 10 yr. old PV system (called salvage value) will be equal to much of anything close to the original price of the system, and just as difficult to quantify with any hope of accuracy beyond opinion. But that's part of life: no guarantees.

[J.P.M.]

"What I've found strange is that after supplying my power bills, and last 12 months of energy usage, the various solar companies have given me a wide range of suggested builds - anywhere from 8.3 kW to 9.7 kW."

Nethers, I would suggest a little adjustment to your deliberations before deciding which proposal to accept. The nameplate power rating of all panels comes from a test called STC, done at the factory under controlled conditions with just a flash of light, basically for binning of the panels after manufacture. Unfortunately, the STC rated power is never delivered in the real world because of a variety of factors, including:
- Light induce permanent degradation (LID) occurring in the first few days of actual operation permanently reduces output of panels from 0.5% to as much as 5%, depending on the quality of the silicon cells.
- Temperature degradation is temporary, but in Florida will almost always be in play. Panels lose anywhere from 0.25% to 0.8% of power per degree C above 25 degrees (77degF) and panels generally run 20degC above ambient air temp. You will find this in the spec sheets under "temperature coefficient Pmax".
- Annual permanent degradation occurs with all panels, anywhere from 0.26% to 1% per annum is common.

I have noticed that the solar companies - all well regarded locally - that have proposed systems to me use STC values because it is easy, I guess, and they don't seem to take the other important factors into account in calculating output. It could be that some of your proposals do in fact calculate these known losses and have proposed larger systems in order to get your desired production.

Use the PTC wattage rating (it may not be in the spec sheet, but I have found that I can google it for panels I am interested in). PTC is a quasi-real world rating under load, generating power with 1kW/sq meter of sunlight at 68degF ambient temperature at rooftop height with a light breeze. It is a quick way to see which panels lose power from heat generated in use, albeit a little understated for FL where year round average temps are probably higher than 68.

Then check out the spec sheets on the proposed panels for light induced degradation (or google LID for those panels) and deduct the percentage of LID loss from the PTC rated watts. Now multiply by the number of panels proposed. This way you can better compare the power output for each of the proposed systems and the weaker performers should be revealed.

Then look at the "warranted [power] tolerance" on the spec sheet. The best panels will be +5%/-0% or maybe even +10%/-0%, meaning that the panels will deliver at least rated power and as much as the +%more. Lesser quality panels will be rated something like +3%/-3%, meaning that you could get as much as 3% less than rated power out of your system. With 28 to 32 panels in your system, you could safely apply the average of power tolerance figures to adjust output up or down to compare the various brands on an equal footing.

Finally, apply the annual degradation rate into the mix. Multiply that rate by 10 to see power loss in 10 years, by 25 for 25 years. Many companies show cumulative loss in a performance warranty chart on the spec sheet, showing anywhere from 80% to 90% production rate after 25 years. An inexpensive system that loses efficiency rapidly may provide less overall value than a more expensive one that retains its efficiency, sometimes in as little as ten years.

Once you figure out the best panels, look for another reputable dealer for that product and compare his proposed solution and pricing.

OP: Or, get familiar with PVWatts, get your proposed orientations correct and use a 10 % system loss parameter and know that those, or any estimates will be f(weather) and other things with expected long term accuracy of annual output ~ +/- 10 or so.

IMO, there are better ways to estimate annual output than what's in bruce9t's above post, which is generally not how informed folks estimate annual output.

PVWatts, and its big brother SAM, both from NREL will produce reasonable results. Sam takes some getting used to but PVWatts, once the help/info screens are read and understood, will yield estimates of long term average annual output that seem reliable to me and lots of others after about 10 min. or so.

I'd suggest using caution in taking bruce9t's statements without understanding what's being written. STC wattage for comparison is almost, if not a universal, standard for comparison. Using PTC ratings only muddies the water.