30-Yr Projected Electricity Costs

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lp613
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30-Yr Projected Electricity Costs

Post by lp613 »

I'm looking into Solar Panels. A main factor in my calculation of whether its worth it economically is whether future electricity costs will be more or less than now. Can someone point me to a good source (or two) on that? I found this so far: https://www.statista.com/statistics/630 ... 0by%202050.

That source seems to show that Electricity costs will stay the same or decrease very little from where they are now over the long term. Assuming that is the case, I end up breaking even, and at 30 years! The only reason to get them is IF they will continue to work after 30 years, which is a possibility, but not guaranteed. Plus there are other risks.

I am kinda wishing to see some reliable projection that electricity costs will go up and up (the salesman says its gonna be 4.5% a year on average, making it very worthwhile!) which will make buying Solar worth it. Besides, aint it cool...?! :happy
exodusNH
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Re: 30-Yr Projected Electricity Costs

Post by exodusNH »

lp613 wrote: Thu Jun 23, 2022 2:23 pm I'm looking into Solar Panels. A main factor in my calculation of whether its worth it economically is whether future electricity costs will be more or less than now. Can someone point me to a good source (or two) on that? I found this so far: https://www.statista.com/statistics/630 ... 0by%202050.

That source seems to show that Electricity costs will stay the same or decrease very little from where they are now over the long term. Assuming that is the case, I end up breaking even, and at 30 years! The only reason to get them is IF they will continue to work after 30 years, which is a possibility, but not guaranteed. Plus there are other risks.

I am kinda wishing to see some reliable projection that electricity costs will go up and up (the salesman says its gonna be 4.5% a year on average, making it very worthwhile!) which will make buying Solar worth it. Besides, aint it cool...?! :happy
In NH, which typically has had high electricity costs, they increase about 2% per year, but that's only over the last 14 years:

https://www.puc.nh.gov/sustainable%20en ... 0Info.html

This has corresponded with the use of formerly cheap natural gas. (Maybe cheap again after the Ukraine invasion is resolved?)

With that said, our electrical generation rates are about to double, which will increase bills by about 50%. (To $0.226/kwh, with $0.10-$0.15 in distribution charges.) This will definitely last 6 months. They will be revaluated in Jan/Feb for the following 6 months. I expect them to stay high at least for the next 12 months. After that, who knows?

I was able to lock at $0.1279 for 30 months, though they reserve the right to kick me off if it's unprofitable. At least for the next 6 months, I'll make out. I expect to be OK for the following 6. Rates would have to drop A LOT to make it a worse deal for me.

I, too, am looking at solar. Payback at the current rate is about 9 years.
exodusNH
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Re: 30-Yr Projected Electricity Costs

Post by exodusNH »

lp613 wrote: Thu Jun 23, 2022 2:23 pm I'm looking into Solar Panels. A main factor in my calculation of whether its worth it economically is whether future electricity costs will be more or less than now. Can someone point me to a good source (or two) on that? I found this so far: https://www.statista.com/statistics/630 ... 0by%202050.

That source seems to show that Electricity costs will stay the same or decrease very little from where they are now over the long term. Assuming that is the case, I end up breaking even, and at 30 years! The only reason to get them is IF they will continue to work after 30 years, which is a possibility, but not guaranteed. Plus there are other risks.

I am kinda wishing to see some reliable projection that electricity costs will go up and up (the salesman says its gonna be 4.5% a year on average, making it very worthwhile!) which will make buying Solar worth it. Besides, aint it cool...?! :happy
My personal thread on that is here.
viewtopic.php?t=380462&sid=802d5198c035 ... c302fac877
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snackdog
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Re: 30-Yr Projected Electricity Costs

Post by snackdog »

“Prediction is very difficult, especially if it's about the future!”

If the cost per kWh has been stable in your area for 30 years then that is your best info. Nothing we can say will help. In my area it is 6%.
BH Consumer FAQ: | Car? Used Toyota, Lexus or Miata. | House? 20% down and 3x salary. | Vacation house? No. | Umbrella? $1 million. | Goods? Costco.
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lp613
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Re: 30-Yr Projected Electricity Costs

Post by lp613 »

I'm located in suburb of Kansas City Metro. What's best source for me?
Valuethinker
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Re: 30-Yr Projected Electricity Costs

Post by Valuethinker »

lp613 wrote: Thu Jun 23, 2022 2:23 pm I'm looking into Solar Panels. A main factor in my calculation of whether its worth it economically is whether future electricity costs will be more or less than now. Can someone point me to a good source (or two) on that? I found this so far: https://www.statista.com/statistics/630 ... 0by%202050.

That source seems to show that Electricity costs will stay the same or decrease very little from where they are now over the long term. Assuming that is the case, I end up breaking even, and at 30 years! The only reason to get them is IF they will continue to work after 30 years, which is a possibility, but not guaranteed. Plus there are other risks.

I am kinda wishing to see some reliable projection that electricity costs will go up and up (the salesman says its gonna be 4.5% a year on average, making it very worthwhile!) which will make buying Solar worth it. Besides, aint it cool...?! :happy
Projections are very often not accurate.

If we are talking in nominal terms, then it's reasonable to assume electricity prices rise with inflation (say 3% long term pa) ie constant in real terms (real return = nominal return - inflation is the approximate formula).

In real terms this would equate to 0% real, which is a fairly conservative assumption.

One problem is that due to the more widespread use of renewables, most places will move towards what in California is already called "the Duck Curve". Electricity prices are low 12-4pm when solar production is high. Towards sunset & until about 10 pm they shoot up as demand goes up (everybody is at home, cooking, watching TV, running AC etc).

Eventually only those with battery capacity (either in their home, or "rented" from a centralised site) will be able to make solar economics work. Generate in the day, then draw on storage in the evening.

Also these are wholesale prices per kwhr, and grid charges will remain in place - your bill breaks them down (it should) but probably at least 50% is grid charges.

Bottom line is if on 0% real growth/ 3% nominal growth you cannot get a payback in less than 10 years it is almost certainly not worth doing. 10 years is the minimum and 7-8 is really where you should be looking (or less - people here are reporting paybacks around 5 years).

That's also true if you plan to move before the system has paid itself back OR you need to lease finance to install panels. The latter I am allergic too because I can see too many issues if your lease is sold on, if you sell your house w leased panels etc.

The National Renewable Energy Lab has a calculator where you can work out your likely yield in kwhr depending on your (US) location. Don't use a salesman's forecast, check out the NREL calculator (it has been posted on several solar threads here).

(On terminology. kw or "peak kw" is the capacity of your system. What you care about though is kwhr ie kws x hrs of generation. It's kwhrs that your utility company is billing you for using).

If you need to borrow to install panels then consider using home equity loans. Make sure your return is at least a couple of % pa higher than the cost of the loan. And don't sacrifice opportunities to invest in your diversified retirement portfolio of stock and bond funds eg accounts like 401ks that have tax advantages and annual limits-- you must use those first before any solar investment.

TBH it really feels like the salesman is pushing something with very marginal economics for you. If you live in an area of low power prices, like the US South or Pacific NW, say, it's quite hard to make solar panels pay, I would imagine.
MathWizard
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Re: 30-Yr Projected Electricity Costs

Post by MathWizard »

The solar salesman stated the my solar install would break even in just under 10 yrs.

My calculations based on current performance is between 18 and 19 years, assuming no electrical rate increase and not taking time value of money into account.

I would bet that electric rates would rise, my other utility rates have, and fuel is not getter cheaper, but whether than is more of an effect than the time value of money (after taxes), would be a harder calculation.
exodusNH
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Re: 30-Yr Projected Electricity Costs

Post by exodusNH »

MathWizard wrote: Thu Jun 23, 2022 10:10 pm The solar salesman stated the my solar install would break even in just under 10 yrs.

My calculations based on current performance is between 18 and 19 years, assuming no electrical rate increase and not taking time value of money into account.

I would bet that electric rates would rise, my other utility rates have, and fuel is not getter cheaper, but whether than is more of an effect than the time value of money (after taxes), would be a harder calculation.
NH's solar electric market is trash because if people don't bother registering their solar systems, the utilities get to sweep them for free.

In markets where this isn't allowed, you can sell your SRECs and make a bit of money.

How are you calculating 18 years? That seems wrong. If it's actually true, a reputable solar company wouldn't recommend you install.

Were they factoring in a battery? If so, that payback period is much longer. They don't make economic sense for most people, if your grid is otherwise reliable OR you don't have time-of-use charges. I'm not looking at batteries for both of those reasons.

However, any modern system can have them added later. More manufacturers are releasing them; prices should continue to drop.
MathWizard
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Re: 30-Yr Projected Electricity Costs

Post by MathWizard »

exodusNH wrote: Thu Jun 23, 2022 10:24 pm
MathWizard wrote: Thu Jun 23, 2022 10:10 pm The solar salesman stated the my solar install would break even in just under 10 yrs.

My calculations based on current performance is between 18 and 19 years, assuming no electrical rate increase and not taking time value of money into account.

I would bet that electric rates would rise, my other utility rates have, and fuel is not getter cheaper, but whether than is more of an effect than the time value of money (after taxes), would be a harder calculation.
NH's solar electric market is trash because if people don't bother registering their solar systems, the utilities get to sweep them for free.

In markets where this isn't allowed, you can sell your SRECs and make a bit of money.

How are you calculating 18 years? That seems wrong. If it's actually true, a reputable solar company wouldn't recommend you install.

Were they factoring in a battery? If so, that payback period is much longer. They don't make economic sense for most people, if your grid is otherwise reliable OR you don't have time-of-use charges. I'm not looking at batteries for both of those reasons.

However, any modern system can have them added later. More manufacturers are releasing them; prices should continue to drop.
No batteries.
I installed panels which generate 75% of my electricity cost through the year, but the net metering is set up so that any electricity I push into the grid is at a wholesale price, not what I pay when I use it. Approx electric cost when I take all this into effect is about 10 cents/KwH. This is lower than residential rates, but is a blended average of my residential rate and wholesale rate .
I would have purchased enough for 100% but did not have enough optimal roof space.

The calculation is based on a $15K install minus the 26% federal tax
and a $600/ year savings . That comes out to 18.5 years but I rounded down.
seawolf21
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Re: 30-Yr Projected Electricity Costs

Post by seawolf21 »

snackdog wrote: Thu Jun 23, 2022 2:40 pm “Prediction is very difficult, especially if it's about the future!”

If the cost per kWh has been stable in your area for 30 years then that is your best info. Nothing we can say will help. In my area it is 6%.
+1

If one is accurate with predictions they would make a killing on the market.

Who knows where fusion is in 30 years. Could still be vapor ware or reality.
exodusNH
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Re: 30-Yr Projected Electricity Costs

Post by exodusNH »

MathWizard wrote: Fri Jun 24, 2022 9:09 am
exodusNH wrote: Thu Jun 23, 2022 10:24 pm
MathWizard wrote: Thu Jun 23, 2022 10:10 pm The solar salesman stated the my solar install would break even in just under 10 yrs.

My calculations based on current performance is between 18 and 19 years, assuming no electrical rate increase and not taking time value of money into account.

I would bet that electric rates would rise, my other utility rates have, and fuel is not getter cheaper, but whether than is more of an effect than the time value of money (after taxes), would be a harder calculation.
NH's solar electric market is trash because if people don't bother registering their solar systems, the utilities get to sweep them for free.

In markets where this isn't allowed, you can sell your SRECs and make a bit of money.

How are you calculating 18 years? That seems wrong. If it's actually true, a reputable solar company wouldn't recommend you install.

Were they factoring in a battery? If so, that payback period is much longer. They don't make economic sense for most people, if your grid is otherwise reliable OR you don't have time-of-use charges. I'm not looking at batteries for both of those reasons.

However, any modern system can have them added later. More manufacturers are releasing them; prices should continue to drop.
No batteries.
I installed panels which generate 75% of my electricity cost through the year, but the net metering is set up so that any electricity I push into the grid is at a wholesale price, not what I pay when I use it. Approx electric cost when I take all this into effect is about 10 cents/KwH. This is lower than residential rates, but is a blended average of my residential rate and wholesale rate .
I would have purchased enough for 100% but did not have enough optimal roof space.

The calculation is based on a $15K install minus the 26% federal tax
and a $600/ year savings . That comes out to 18.5 years but I rounded down.
You must have had a really small power bill if your savings are only $600/yr. Solar didn't make sense financially for you, but there are societal benefits. Plus, you're mostly insulated from electric rises now. Panels will get better. Since you have had the hard part done, you may find that in 7 years you can sell your existing panels and replace them with ones that generate more power in the same space.

I spent $2800 on electricity last year.
exodusNH
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Re: 30-Yr Projected Electricity Costs

Post by exodusNH »

seawolf21 wrote: Fri Jun 24, 2022 9:21 am
snackdog wrote: Thu Jun 23, 2022 2:40 pm “Prediction is very difficult, especially if it's about the future!”

If the cost per kWh has been stable in your area for 30 years then that is your best info. Nothing we can say will help. In my area it is 6%.
+1

If one is accurate with predictions they would make a killing on the market.

Who knows where fusion is in 30 years. Could still be vapor ware or reality.
Fusion will be 25 years away in 30 years. ;)
Mr. Rumples
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Re: 30-Yr Projected Electricity Costs

Post by Mr. Rumples »

In VA, much of the electricity is provided by Dominion Energy. In May, they told the State Corporation Commission (SCC) which regulates prices that they expect customer's bills to go up "substantially" (their term) to cover fuel costs. I'm not sure if they already factored in the cost of burying tens of thousands of miles of wires - which has already started.

Perhaps if the OP's state has a similar regulatory entity, they might be able to provide some insight.

Note on the link, page 3 which gives the SCC's cost history which was done in 2021 for several of the previous years. It will be done again for presentation to the Governor and the General Assembly.

https://scc.virginia.gov/getattachment/ ... 1-VEUR.pdf
"History is the memory of time, the life of the dead and the happiness of the living." Captain John Smith 1580-1631
exodusNH
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Re: 30-Yr Projected Electricity Costs

Post by exodusNH »

Mr. Rumples wrote: Fri Jun 24, 2022 9:39 am In VA, much of the electricity is provided by Dominion Energy. In May, they told the State Corporation Commission (SCC) which regulates prices that they expect customer's bills to go up "substantially" (their term) to cover fuel costs. I'm not sure if they already factored in the cost of burying tens of thousands of miles of wires - which has already started.

Perhaps if the OP's state has a similar regulatory entity, they might be able to provide some insight.

Note on the link, page 3 which gives the SCC's cost history which was done in 2021 for several of the previous years. It will be done again for presentation to the Governor and the General Assembly.

https://scc.virginia.gov/getattachment/ ... 1-VEUR.pdf
In NH, supply is separated from distribution. In your example above, the cable line work would fall into the latter category.

Our supply costs are doubling since the majority of our electricity comes from natural gas. We would have had more Canadian hydropower, but there was fierce resistance and it was ultimately dropped.

Supply is roughly half of the bill, so the supply doubling means about a 50% increase in electricity.
quietseas
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Re: 30-Yr Projected Electricity Costs

Post by quietseas »

If you don't use a lot of electricity (e.g. gas car) and you live in an area with low rates, the ROI on solar is probably not there other than a personal preference which is fine.

Even where I live, which has some of the highest rates in the US, our annual bill is about $1200 in part because we have a gas furnace and water heater. The pay back on that is just too long.
MathWizard
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Re: 30-Yr Projected Electricity Costs

Post by MathWizard »

exodusNH wrote: Fri Jun 24, 2022 9:22 am
MathWizard wrote: Fri Jun 24, 2022 9:09 am
exodusNH wrote: Thu Jun 23, 2022 10:24 pm
MathWizard wrote: Thu Jun 23, 2022 10:10 pm The solar salesman stated the my solar install would break even in just under 10 yrs.

My calculations based on current performance is between 18 and 19 years, assuming no electrical rate increase and not taking time value of money into account.

I would bet that electric rates would rise, my other utility rates have, and fuel is not getter cheaper, but whether than is more of an effect than the time value of money (after taxes), would be a harder calculation.
NH's solar electric market is trash because if people don't bother registering their solar systems, the utilities get to sweep them for free.

In markets where this isn't allowed, you can sell your SRECs and make a bit of money.

How are you calculating 18 years? That seems wrong. If it's actually true, a reputable solar company wouldn't recommend you install.

Were they factoring in a battery? If so, that payback period is much longer. They don't make economic sense for most people, if your grid is otherwise reliable OR you don't have time-of-use charges. I'm not looking at batteries for both of those reasons.

However, any modern system can have them added later. More manufacturers are releasing them; prices should continue to drop.
No batteries.
I installed panels which generate 75% of my electricity cost through the year, but the net metering is set up so that any electricity I push into the grid is at a wholesale price, not what I pay when I use it. Approx electric cost when I take all this into effect is about 10 cents/KwH. This is lower than residential rates, but is a blended average of my residential rate and wholesale rate .
I would have purchased enough for 100% but did not have enough optimal roof space.

The calculation is based on a $15K install minus the 26% federal tax
and a $600/ year savings . That comes out to 18.5 years but I rounded down.
You must have had a really small power bill if your savings are only $600/yr. Solar didn't make sense financially for you, but there are societal benefits. Plus, you're mostly insulated from electric rises now. Panels will get better. Since you have had the hard part done, you may find that in 7 years you can sell your existing panels and replace them with ones that generate more power in the same space.

I spent $2800 on electricity last year.
Yes, it is just over $1000 including the base charges just to be hooked up to the grid.

I'm big on energy efficiency.

All lights are LEDs, TVs are LEDs. Our appliances all have a high energy start rating. Furnace and water heater are Nat Gas,
so that could make a difference. Considering an air source heat pump when the HVAC needs replacement, which would
shift costs from Nat gas to Electricity. Nat gas is about $1000/yr as well. Our house is about 1200 sq ft main floor,
800 sq ft finished in the basement, so being smaller might be a help on utilities.

We don't have plugin hybrids or electric vehicles. The biggest power hog is my 14 SEER Central Air.
We both grew up without A/C so my wife keeps it even warmer than I would. We did just get a battery electric mower.

An energy audit of our house surprised us, they actually said our house did not leak air enough, and recommended an
air exchanger.
JackoC
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Re: 30-Yr Projected Electricity Costs

Post by JackoC »

seawolf21 wrote: Fri Jun 24, 2022 9:21 am
snackdog wrote: Thu Jun 23, 2022 2:40 pm “Prediction is very difficult, especially if it's about the future!”

If the cost per kWh has been stable in your area for 30 years then that is your best info. Nothing we can say will help. In my area it is 6%.
+1

If one is accurate with predictions they would make a killing on the market.

Who knows where fusion is in 30 years. Could still be vapor ware or reality.
True and analyzing long term home solar economics is a few steps harder. On the electric utility side you have to consider the possibility, it's true fairly few places in the US so far, that electricity rates will vary by time of day. And if solar (central station or home) is a bigger input into the grid you can figure rates will be more expensive when the sun isn't shining when your panels aren't producing either (this was brought up before, solar plus battery might be the baseline workable arrangement eventually). Second current policies that basically subsidize home solar by making utilities effectively pay retail for the power (net metering) may continue or there could be a backlash against the green transition that undoes policies like that, which do at the margin raise prices for people who don't have home solar. We don't argue policies here but you have to be aware they aren't carved in stone just because they aren't debated here. :happy

Then nothing to do with policy, there's limited information about long time reliability and maintenance costs of home solar. OTOH many people approach this as some combination of $ savings, promoting the greater good as they see it, and just an interesting thing to do if it doesn't surely *lose* money. For them it doesn't have to be a sure $ saver.
Morik
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Re: 30-Yr Projected Electricity Costs

Post by Morik »

I think it also depends on what incentive programs are available to you.
We got solar with a $62k loan (31 panels, price includes financing charges/etc), no down payment. $17k in rebates from federal/state incentive programs, 10 years of payments for generated solar (MA SMART program), though this amounts to something like 7 cents per kwh (still its something like $50-$100 per month).
I'll have to see how things shake out after a full year on solar in terms of savings, but so far:
- During feb/march we didn't see much reduction in the electric bill.
- April, May, June our electric bill has been $0 and we've got credits on our account now. (We can't sell the electricity if we generate more than we use, but we get a credit on our account.)
- For the next 10 years we get that monthly check from MA SMART program.

The way I see it--we got $17k cash in hand, our monthly outflows were a little higher in feb/march due to low solar generation, but over the course of a year I expect it to lower our net electricity payments--and thats not counting the monthly check from MA SMART. Overall it seems like we got a decent chunk of cash in hand and save money every month on top of that.

We get free maintenance on the panels for 25 years, so no ongoing costs to us there. I know the panel efficiency drops over time--it could be that in 10, 15, 20 years we shift to actually paying more per month than we would have without solar. I'll have to see.
Valuethinker
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Re: 30-Yr Projected Electricity Costs

Post by Valuethinker »

MathWizard wrote: Thu Jun 23, 2022 10:10 pm The solar salesman stated the my solar install would break even in just under 10 yrs.

My calculations based on current performance is between 18 and 19 years, assuming no electrical rate increase and not taking time value of money into account.

I would bet that electric rates would rise, my other utility rates have, and fuel is not getter cheaper, but whether than is more of an effect than the time value of money (after taxes), would be a harder calculation.
Was that no increase in nominal or in real terms?

If nominal then that's in effect assuming a *fall* in real electricity prices of at least 3% pa. Halving every 24 years. Right now it would be closer to -8% pa (given high CPI inflation)?

That seems like an extreme assumption? It's useful to have that as a downside case, but the cost of maintaining & upgrading the grid is likely to at least rise with inflation?

Wholesale Electricity is more complex because the time of day factor is likely to become very important -- solar will become pervasive (except perhaps in areas of very low electricity prices) and that means that noon-4pm prices will be very low. OTOH as nuclear power plants are retired, that's a lot of very cheap kwhr that will disappear -- the capital cost of most nuclear plants was written off 30 years ago (they were commissioned in the 70s & early 80s and the rate case was typically 30 year life, then).

I would recommend doing an IRR calculation as well. Money does have a time value and an IRR can be compared to borrowing rates & expected returns on low risk investments. If in nominal terms then assume 2-3% rise pa in electricity rates.

Or it's easier to do it in real terms and assume no rise in rates.

One can take that over 25 years and assume a terminal value (final cash flow) of 0, ie scrap. If you one wants to run it over a shorter time period (say 12 years) just assume TV = one half of cost (probably for that, if using real cash flows, one should discount that amount by 3% pa). That's a fairly conservative assumption. One will need to include the cost of replacing the inverters every 10-12 years.
jharkin
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Re: 30-Yr Projected Electricity Costs

Post by jharkin »

30 break even isn’t worth it, the equipment will need replacing by then. Your locale must have very cheap electricity and little to no incentives.

I installed last summer and even if prices stay flat my breakeven is under 7 years. The way electric rates shot up this year I m on track now to breakeven in 5.
Valuethinker
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Re: 30-Yr Projected Electricity Costs

Post by Valuethinker »

jharkin wrote: Sat Jun 25, 2022 4:58 am 30 break even isn’t worth it, the equipment will need replacing by then. Your locale must have very cheap electricity and little to no incentives.

I installed last summer and even if prices stay flat my breakeven is under 7 years. The way electric rates shot up this year I m on track now to breakeven in 5.
Agree that breakeven of 10 years or less needs to be the case (and 7 is appropriately conservative).

10 year breakeven approximately = IRR of 7%. 7 year breakeven approximately 10% (this depends upon assumption re Terminal Value - see my assumptions above. I think for 10 years an assumption of 60% of book cost is conservative or 50% after 12.5 years (ie straight line depreciation over 25 years to 0 residual value; in real terms a fall in residual value of 2-3% pa)
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EricaInvestPink
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Re: 30-Yr Projected Electricity Costs

Post by EricaInvestPink »

How do you factor in electric car into this? Maybe the payback period goes down a year or two??
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Watty
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Re: 30-Yr Projected Electricity Costs

Post by Watty »

lp613 wrote: Thu Jun 23, 2022 2:23 pm I am kinda wishing to see some reliable projection that electricity costs will go up and up (the salesman says its gonna be 4.5% a year on average, making it very worthwhile!) which will make buying Solar worth it.
So right now the cost is going up less than the inflation rate so in real terms they are expecting the cost to go down at least in the short term?

Keep in mind that an even more critical, and even more unknowable, projection is what inflation and interest rates will do.
lp613 wrote: Thu Jun 23, 2022 2:23 pm The only reason to get them is IF they will continue to work after 30 years, which is a possibility, but not guaranteed. Plus there are other risks.
I am curious, what happens with the solar panels if your roof needs to be replaced within 30 years? Even if you put on a new roof at the same time the roof might not last 30 years.
itmaybejj
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Re: 30-Yr Projected Electricity Costs

Post by itmaybejj »

I am curious, what happens with the solar panels if your roof needs to be replaced within 30 years?
You have solar installers pull the panels and stack them in your lawn, and then put them back on when the roofers are done. Adds a few $k in labor from what I've heard, but is apparently becoming routine as panels become more common. For repairs they only pull a panel or two as needed.

A lot of the solar companies around here have started forming relationships with roofers so you have a single point of contact for repairs and replacement for anything, and their roofers are used to working near panels.

Although after 30 years your panels might be shot too.
mervinj7
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Re: 30-Yr Projected Electricity Costs

Post by mervinj7 »

Watty wrote: Sat Jun 25, 2022 10:05 am I am curious, what happens with the solar panels if your roof needs to be replaced within 30 years? Even if you put on a new roof at the same time the roof might not last 30 years.
We got quoted $2300 to pull off 22 panels and put them back on but that was back in 2018. It's becoming quite common here. After all, there are over 1.5 million solar systems installed in CA. At some point, folks need to get their roofs replaced.
Last edited by mervinj7 on Sat Jun 25, 2022 2:01 pm, edited 1 time in total.
Caliscotsman
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Re: 30-Yr Projected Electricity Costs

Post by Caliscotsman »

FWIW

Solar panels start to degrade as soon as they're installed.
exodusNH
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Re: 30-Yr Projected Electricity Costs

Post by exodusNH »

Caliscotsman wrote: Sat Jun 25, 2022 1:39 pm FWIW

Solar panels start to degrade as soon as they're installed.
That's basically true of everything; it's not an argument against solar.

All reputable manufacturers have guarantees as to the level of operation and will replace them if they perform worse than expected.
mervinj7
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Re: 30-Yr Projected Electricity Costs

Post by mervinj7 »

Caliscotsman wrote: Sat Jun 25, 2022 1:39 pm FWIW

Solar panels start to degrade as soon as they're installed.
Yep, it's well known and can be accounted for in ones production calculations. For example, for my own panels:
Panasonic home solar panels are backed by our industry-leading parts and performance warranty that guarantees minimum power output of 90.76% after 25 years.
https://na.panasonic.com/us/energy-solu ... odule-hitr
Diluted Waters
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Re: 30-Yr Projected Electricity Costs

Post by Diluted Waters »

We installed grid-tied solar, without batteries, a year ago February, in the high desert southwest US. I calculated about a 10-year payback using our (comparing to many other states) ridiculously low electric rates. (For example, our first monthly tier of electricity, 450kwh, is $0.12/kwh.) Our system covers 85% of our annual usage and covers the top two of the three tiers of pricing during our highest-usage months when the a/c heat pump is running in the summer. The payback period does not consider any electric rate inflation. My criteria for getting solar was a 10-year payback period and an ROI that would meet or exceed my investment portfolio for the same money, not considering inflation.

A 30-year payback period seems to have something wrong with it.

Our panels are guaranteed to produce the mid-90% of new electrical output at 30 years.

I checked with our solar installer recently about adding three more panels to our existing system, and they estimated it would be $10K. At our current electric rates, it would take 55 years to pay off that added investment. I declined to do it.

My suspicion is that the costs are dramatically higher than a year ago February and panel and component availability is constrained too. Our panels came from Singapore, but they're almost all made somewhere in the far east, where supply chains are still broken.

If we hit a big recession, I might contact our solar company again and see if the cost has dropped when and if demand drops due to a loss of disposable income in their customer base. We'll see. There's a ton of government solar demand right now because it looks like they're "doing something" so they may be crowding out residential customers.

I hope my experience includes some helpful information. YMMV.

PS: I would add that it is far more economical, in general, to reduce demand first before getting solar. Replace almost all lighting with LED. Get high efficiency appliances. Etc. Otherwise, you're paying dollars per kwh to generate with solar that you could be spending cents per kwh avoiding by getting your home efficiency increased first. Ex: Almost all our lighting is LED. It probably cut 15% off our electricity usage. We got a new fridge and it probably cut about 20% off our electricity usage. Do those kinds of things first.
MathWizard
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Re: 30-Yr Projected Electricity Costs

Post by MathWizard »

Valuethinker wrote: Sat Jun 25, 2022 4:08 am
MathWizard wrote: Thu Jun 23, 2022 10:10 pm The solar salesman stated the my solar install would break even in just under 10 yrs.

My calculations based on current performance is between 18 and 19 years, assuming no electrical rate increase and not taking time value of money into account.

I would bet that electric rates would rise, my other utility rates have, and fuel is not getter cheaper, but whether than is more of an effect than the time value of money (after taxes), would be a harder calculation.
Was that no increase in nominal or in real terms?

If nominal then that's in effect assuming a *fall* in real electricity prices of at least 3% pa. Halving every 24 years. Right now it would be closer to -8% pa (given high CPI inflation)?

That seems like an extreme assumption? It's useful to have that as a downside case, but the cost of maintaining & upgrading the grid is likely to at least rise with inflation?

Wholesale Electricity is more complex because the time of day factor is likely to become very important -- solar will become pervasive (except perhaps in areas of very low electricity prices) and that means that noon-4pm prices will be very low. OTOH as nuclear power plants are retired, that's a lot of very cheap kwhr that will disappear -- the capital cost of most nuclear plants was written off 30 years ago (they were commissioned in the 70s & early 80s and the rate case was typically 30 year life, then).

I would recommend doing an IRR calculation as well. Money does have a time value and an IRR can be compared to borrowing rates & expected returns on low risk investments. If in nominal terms then assume 2-3% rise pa in electricity rates.

Or it's easier to do it in real terms and assume no rise in rates.

One can take that over 25 years and assume a terminal value (final cash flow) of 0, ie scrap. If you one wants to run it over a shorter time period (say 12 years) just assume TV = one half of cost (probably for that, if using real cash flows, one should discount that amount by 3% pa). That's a fairly conservative assumption. One will need to include the cost of replacing the inverters every 10-12 years.
Nominal.

I assumed that the raise in rates and opportunity cost of time value of money balance out.

In any case, I really did it for reasons other than just financial.
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