I recently reached out to a local installer, and the (rough) estimate they provided for a 5.6kW system is an after-tax-incentives cost of $13,357, an estimated annual production of 7,800 kWh, and an annual savings of $950 for the first 10 years.
That’s about a 7.1% annual return, which is pretty good on its face but not amazing, but I think it’s based on pretty optimistic assumptions. The annual production is based on TSRF of 95%, which I doubt my roof actually has. The annual savings they estimate are based on power costs increasing over time and I bet they are playing fast and loose with the time value of money in that calculation.
I don’t expect current net-metering pricing to last forever, and when it goes away the savings get worse. I don’t know the specifics, but it looks like CA is already moving to increase the cost. I’m in Oregon, but this change is going to be driven by the economic necessity to pay for baseline and winter power. The more people get solar, the less net metering can function properly.
And then there are construction and permitting and maintenance costs.
If you’re looking for the system to pay for itself, I’m not sure solar has ever really gotten there, even with tax incentives.
But most of the people I know have it for other reasons - some combination of improved reliability of power to the home, environmental concerns, financial ROI, etc. You have to judge for yourself how much those things matter to you and what you are willing to pay for them and if it is worth it in the end.
I’m personally considering it, but I’m also in Texas where the PTB have done little to assuage concerns over the reliability of the grid in either extreme heat or extreme (for Texas) cold and where pricing can get interesting sometimes for some customers in those cases. So I wouldn’t be getting rooftop solar solely on the basis of cost vs return. Peace of mind has a cost to be considered. Definitely YMMV.
Contrary to common belief, most household solar systems do not improve the reliability of power, since they can only run when the grid is hot. In order to have a solar system provide backup power you generally need a battery and a transfer switch and some other stuff installed, and unless you foresee the grid becoming really unreliable, it’s generally much cheaper to get a backup generator for that kind of thing.
Indeed so, and the battery and accompanying system generally adds a considerable amount to the cost as well. It’s all part of the calculus to consider.
Around here, at least, it’s a bit of a wash on getting the battery as well vs a backup generator.
The folks I know (battery or not) have not regretted installing rooftop solar but they also went in knowing they were not likely to recoup their investment either. At least with the battery system, they can recoup something. The there’s little chance of recouping a generator’s cost except potentially when the property is sold.
I had solar for 17 years on my last home. Maintenance cost was nearly nothing. As I was moving out we had a wind shear that dropped a large part of a tree on the house and also shorted a rectifier. That would have been pricey but insurance did cover it.
The install cost should have included the construction permitting cost. Seems weird in didn’t.
Does Oregon not have green credit sell back? Part of my pay back was selling a type of green credit. I would have to look up the details. . The energy savings were very good, especially in the summer when we needed it the most. FTR: Our first system paid for itself in about 8 years. But that was with some serious state incentives.
The house we have now is smaller with less energy needs thankfully. Hot water is gas instead of electric for one thing. I did the math and went the route of boosting attic insulation instead of solar panels for this house. Also I’m not sure we’ll be here more than 10 years. How is your attic insulation? You might fine a better and surer payback with R40 insulation over panels.
Adding to the fun decisions, we’re in a pricey period for panels at the moment due to supply chain issues. Most of what I’ve read indicate that prices should drop and maybe significantly in 2 years.
Last thing to consider, how old is your roof? Getting your roof replaced will probably cost an extra $3000 for the system you described or are you doing ground mounted?
If you want to pick my brain on this, I’m willing to arrange a phone call. I’ve was an early adopter and pretty knowledgeable on most aspects and gotchas on Panels.
Besides being harder/more expensive to replace the roof, the other thing to consider is the potential of a house fire (not necessarily from the solar, just a house fire in general). One of the first things firefighters do is cut a hole in the roof to vent it; they ain’t touching a roof with solar on it until they have confirmation from the electric co that power is turned off. W/o being able to vent, fighting the fire from inside the house is more dangerous. They may elect to do a safer, more defensive, exterior only fire suppression which will cause you to lose even more of your possessions.
Sorry, I meant the hassle, not the dollar cost. I believe the permits are included in the estimate/quote from the installer. In my mind I’m comparing this to just leaving the money in an index fund, which doesn’t require me to, for example, go five rounds of paperwork with the HOA.
That seems like a great rate of return. This one is going to pay for itself in… 14 or 15 maybe, which is much less exciting.
The second set of panels was working out to 11-13 years for the pay off. So we didn’t actually break even on those.
We started with about 6700 watts and 9 years later added another 2300 watts. This got us down to a near 0 electric bill. But we moved before the second set of panels broke even.
As I mentioned, this time I went with 40+r attic insulation through a great deal from the gas company and NJ.
BTW, the first panel set was actually a lot more expensive but at the time we got a 70% incentive from a NJ program. That is why the payoff was so quick.
Not exactly true but this may be up to the fire department SOP’s, but generally they are not going near the panels themselves. We are even trained to black out the panels if we need to. They may vent in other areas of the roof. Also they will look for other methods such as venting via the side of the roof.
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Though that has been the trend anyway. A fairly recent test (w/i the last 10 years or so) by FDNY on Governor’s Island IIRC found that interior attacks were not much better than exterior and many times safer. They also proved that it is not possible to practically ‘push back’ a fire which was a prime reason given for interior attack. As such our training has shifted to more exterior for knocking down the fire.
FYI, here is a link to a New York Times article (it’s a gift link that should be accessible by anyone) about how some people in California are choosing to get solar panels and batteries and go off-grid. Some don’t like what PG&E (the local utility) has been doing or not doing to address climate change. Some don’t like that it will cut off power to homes and businesses if they believe there is a fire danger. And some are going off-grid because their homes are not on the grid and it might be cheaper to go off-grid than to pay the $50-100,000 to get the grid extended to their homes.
Yeah, 6 years is probably not long enough for his off-grid system to start having stuff break. I wonder how long his home will be without power when something does eventually go wrong.
And of course the calculus is very different if you have to pay $x0,000 to get a grid hookup in the first place. My house is already connected, so I’m not saving anything there.
In my case, there was an added factor; I live in South Florida, where power outages due to storms are a thing one needs to be prepared for. Yes, there is a chance that my solar panels get damaged in a storm, but at that point I figure I’m looking at significant roof damage, and I probably won’t be living in my home for a while anyway. I’m thinking of situations more like Hurricane Irma, where we had no damage to the home at all, but were without power for 5 or 6 days. My panels plus batteries and transfer switch will keep all of the essential systems running, plus some extra comforts.
I still doubt that the system will entirely pay for itself, no matter how long we live here. But, when I started pricing out an appropriately sized generator, and then figured in maintenance and fuel costs on it, solar became a lot more attractive. Next time our power is out for an extended period of time, and I can sleep in air-conditioned comfort, I’ll be glad I have them.
The energy production of these solar system tends to degrade over time, so the “return” gets smaller and smaller each year.
The systems themselves have a maximum lifespan, which is not known with a high degree of confidence since they’re relatively new. In light of that, it’s a mistake to look at the annual savings as the ROI, since some (unknown percentage) of what you’re getting back is the principal itself, since it will eventually be gone.
The time value of money is something others have already mentioned. I would just note that this may now be a bigger factor than previously, with inflation at much higher levels and interest rates expected to follow.
As others have noted, replacing a roof will cost a lot more with solar panels on it. So a decision about solar should reflect the age of the roof and likely replacement timeline.
1 & 2. The systems degrade slowly over 20-25 year life.
4. Depends on the number of panels. A 5kw system would probably add $3,000. I’m not sure if I would qualify that as a lot more.
This is based on actual experience and a lot of reading and having a successful solar installer as a friend.
As far as 3, panels aren’t typically a great investment. You would make more in an index fund on average over 20-25 years. The Index fund moves with you, the panels do not. I’m very pro-solar and this time went with a massive and fairly inexpensive attic insulation improvement instead along with a super efficient water heater. My electric bill cut a significant amount and it cut my gas bill as a nice bonus.
What is the power rating on those batteries? Are you charging batteries and using an inverter to feed 110v AC to your whole house? I would love to do that, but it must be very expensive and take up a lot of room.
The various Solar Wall/Power Wall type battery systems are slowly getting cheaper. Tesla and Generac seem to be the two biggest players.
When I looked into it around 2011 it would have been about $11,000 and I seriously thought about it as that house didn’t have Natural Gas available. This was a system using lead acid batteries with a 10-12 year life. It still wasn’t whole house but enough to handle the water heater and fridge and selected other stuff.
I know the cost has come down, but I’m not sure how much.
ETA: Those power walls are expensive. Still better off with a lead battery solution if you have the room for it. It looks like a reasonable system from Tesla or Generac is another $15,000 to $18,000.