All Forum Posts by: Steve K.

@Dan H. with the invention of micro inverters which carry a minimum 20 year warranty many other inverter manufacturers have bumped up their warranty from 10 years when you bought in 2004 to 20-25 years today in order to stay competitive and also because it’s become cost effective for manufacturers to offer that long of a warranty because inverter related issues are very scarce these days as inverters have improved. 20-25 year bumper to bumper warranties and even lifetime warranties are common these days. Avg. price per watt installed in 2004 was $7.70, today it is hovering around $3 with the bottom around $2.50. Congrats on being an early adopter, your system is paid off and printing cash while others are still calculating their payback period. 

@John Woodrich yes I’ve been installing designing and selling solar for 15 years. I’ve done some work with Xcel in MN but only large utility scale systems, you guys are right that residential is borderline there and still in early adopter phase but that will change soon. In the early stages customers are environmentalists or engineers who like the technology or people with money to burn but today with leasing and financing and much lower pricing in many markets the solar customer is a much broader category. Leasing is not my favorite mechanism for solar and I can confirm what you’re saying regarding the transfer being a hiccup during a home sale. I wouldn’t want to assume a lease, I would make the seller pay it off, additionally leasing companies hold a lien (fixture filing) on the property so there’s that. But not everyone dislikes leasing, leases are transferable in many areas and plenty of people just see it as a lower bill than the electric bill would be without solar so it’s  still considered a selling point for some. But of course for strict resale value cash is king. Probably the most fiscally responsible move is to finance the system if you’re planning to live in the home a few years since interest rates are around 2.99%, you can keep your capital  invest it elsewhere and make more than 3% then pay off the system when you sell the house if the loan isn’t paid off already. Loans come in 5,10,15,20 year terms in order to create cash flow up front you can select the product that works for you. If your loan payment is less than your old electric bill was it’s a no brainer for people and there’s a lot of soft value as well, the environmental benefit for environs but also libertarians get the warm and tinglys of screwing the utility who usually screws the consumer. Sometimes it takes a few years to get positive cash flow but in places like California it’s easy to achieve day one. Financing is gaining market share on leasing, leasing was a popular model a few years ago but today financing is much more common. Cash purchases are exceedingly rare these days, few buyers ask me to calculate payback anymore which is why I find it odd when people get hung up on payback, it’s a throwback to five years ago for me which is an eternity in solar. Most new home construction in my area includes solar, it’s definitely recognized as not only a selling point but almost a necessity among home builders. They all at least offer it as an option.  

@Jim Adrian the payback period in California where the mandate will go into effect in 2020 is often less than seven years already and will be quicker in 2020 possibly half what it is today. It’s not 15 years in that market or any of the more established solar markets, it’s usually less than 10 and shrinking fast.

@John Woodrich I see what you’re saying and agree that payback period is something that people will always want to calculate, I just don’t think we should write off an entire industry because the payback period is longer than one person in Minnesota desires. Leases are transferable and loans can be paid off without prepayment penalties. After 5 years that note will be relatively small. People pay off their mortgages when they sell their houses all the time too it’s not a novel concept and a house having a 30 year payback period doesn’t stop us from buying houses.  Studies have been done by the National Appraisal Institute, the DOE, and the Lawrence Berkeley Lab among others and all determined that homes with solar sell faster and for an average of $20k more for every $1k in annual energy savings than homes without solar so even if the initial investment isn’t recouped through energy savings it will likely be recouped by a higher sales price. Personally I would consider free electricity an added benefit when purchasing a home and sales prices on homes with solar compared to those without prove a majority of people agree. Appraisers in my area consider solar an added value so if you’re looking to force appreciation it’s low hanging fruit.

@John Woodrich panel prices have come down by about half in the last few years, so if you looked into it a few years ago your info is outdated. You should absolutely factor in rate increases to any payback analysis, in Minnesota Xcel raised rates 7% in 2017, so it’s not insignificant. Energy prices are not static they’re increasing. Also there is no maintenance expense to factor in that would offset rate increases, as systems come with 20-25 year bumper to bumper warranties and there are no moving parts to break anyway. Maintenance consists of hosing them off occasionally if you choose to but it’s not necessary, rain will clean them off sufficiently if you don’t want to clean them (I don’t clean mine except very occasionally during droughts if I notice them getting really dusty). Once again payback periods aren’t as important anyway now that low interest financing is available, most folks are more interested in positive cash flow than payback period which is a somewhat new development over the last few years. Also we should keep in mind the thread topic is California where the economics are much different than MN due to higher electricity costs, cheaper solar, and more sunny days. The economics will vary drastically depending on a lot of factors including roof pitch, location and orientation, local incentives, price per kWh from the the grid, and local installation pricing. MN has a growing solar market but it doesn’t compare at all to CA where the market has been huge for a long time and is now mature, competition combined with increased operational efficiencies and economies of scale has driven installation pricing way down in CA compared to other markets. The payback period will be much shorter in CA in 2020 (panel prices are expected to drop to less than 40 cents per watt by 2020) when this mandate is enacted and a majority of systems will be financed or leased so payback period isn’t a huge factor anyway. 

@Jordan Moorhead Minnesota and California are quite different markets when it comes to solar. CA has a higher price per kilowatt hour for electricity (MN 11cents/kWh avg., CA closer to 16), so your payback period will be reduced by 30% in CA. And of course generally CA gets a lot more sunshine than MN. Also when calculating a payback period you should use a projected rate increase because energy prices aren't static they increase over time. So that savings of $633 in the first year will increase by a certain percentage each year due to the increase in price of electricity offset, decreasing the payback period. 

Payback is a moot point anyway seeing as most people finance or lease their systems. The key is having your monthly loan/lease payment be less than you would be paying without solar. In some areas on some roofs that's possible and other times not. It depends on how much electricity you use, how much you pay for that electricity, and if your roof is big enough to support a system to offset your usage 100%. In California it is pretty typical to have positive cash flow immediately with a leased or financed system because of high electricity prices, cheap solar from lots of competition, and plenty of sun. MN is borderline now but as panel prices drop and electricity prices go up you'll see more solar there too.  

 Regarding your buddy's system that is not meeting production estimates, that's unfortunate. Reputable companies design systems properly and have power production guarantees to back up their work. Most solar contractors under promise, over deliver, but not all. Like any industry there are unscrupulous and inept players. Trust but verify: there are websites like PVwatts.nrel.gov where you can enter in your address and roof information and calculate system production yourself so you don't have to take a salesperson's word for it. I recommend getting multiple bids from several different installers and doing your own due diligence just like any transaction.

I agree with you regarding being told what to do with your houses. Taken at face value the California mandate does seem like a bit too much government overreach. I have to do some more research before finalizing my opinion on it but I don't see how it would make sense for every new residential building to have solar. Some will have too much shade, face the wrong direction, have an unsuitable roof surface or not enough room on the roof, etc. It seems a bit idealistic to expect every new residential building to have solar but that's California for ya. Solar is often an emotional buy, and people get equally emotional about not wanting to buy it, so a mandate may have some serious negative backlash.  

@Timmi Ryerson The way solar works is the utility totals up energy consumed vs. energy produced on an annual basis, so any snowy days when the panels produce less than the home consumes would be offset by sunny summertime days when the panels produce more energy than the home consumes. There are valid reasons not to like the California mandate, but the technology itself is sound and proven. 

@BJ Dante @Tanya F. I've sold, designed and installed thousands of systems. My customers are both liberal and conservative. It's sound technology that has been proven for decades. The solar industry is growing extremely fast and increased competition plus economies of scale is driving costs down quickly, making it more and more competitive in price compared to other forms of energy, and rapidly making arguments against it outdated, as evidenced in this thread. All forms of energy are subsidized. Solar is unique in that it will not need subsidies in the future, while legacy forms of energy based on non-renewable resources will in fact need increased subsidies to remain competitive as supplies are exhausted making them more precious and expensive to extract. As long as the sun shines the fuel for solar panels will be free. 

That said, I'm not sure I agree with California's mandate, simply due to practical concerns such as not every roof being that great for solar (what about the shaded roofs?), I also don't like anything that is required fundamentally, even though I like the technology itself. I'll have to look into how the mandate addresses issues such as shaded roofs before forming my opinion, however solar technology itself is sound, lots of people around the world save money installing panels and have for many years, and prices are dropping drastically making it more and more cost effective every day let's get up to speed it's 2018 people.  

@Nathan Gesner I just had to weigh in on your comment and so called "hard truths" which turn out to be entirely false. I've responded to each of your points respectfully because I've had a different experience with solar than what you describe.  

1. The payback period for solar hasn't been 20 years in 20 years. In many areas such as California the current average payback period is 5-8 years on a cash purchase. A 20 year payback period like you describe is not impossible but it would be rare with today's prices. You'd have to drastically overpay or detail your panels with gold trim to have such a long payback period. The panels on my roof were paid off in less than a year. I bought them at wholesale price and installed them myself, so it depends on how good a deal you get, how good your roof orientation and pitch is, how many sunny days you get in your region, how good your local incentives are, how much local competition there is among solar installers, etc.  However calculating payback periods is uncommon these days anyway as the cash purchaser is rare. Just like real estate most people finance their systems, so what matters is cash flow. Typically loan payments are less than a normal utility bill, so people with solar pay less per month for electricity than those without, that's why people do it, because they like saving money. 

2. Solar is indeed "green energy". What you are referring to is called embodied energy or energy return on energy invested (EROI). It is easily calculated including resource extraction, manufacture, shipping, and installation. Solar panels take 1 to 4 years to offset their embodied energy with electricity production, depending on the brand. The standard warranty is 20-25 years, so they pay back the energy it takes to produce themselves several times over during just the warranty period, and average life expectancy is 30-50 years as evidenced by the panels produced in the 70's that are still making electricity today.   

3. Yes there are tax subsidies for solar. Please find me a form of energy that is not subsidized. Nuclear for example is the most subsidized form of energy, it would not exist without government subsidy because nobody would insure a nuclear power plant. Tax dollars insure nuclear plants, clean up disasters and also store the waste indefinitely. 43% of coal is mined on public lands, then it is shipped on railways built with tax dollars and burned in power plants built with tax dollars. Oil would be insanely expensive today if not for the Intangible Drilling Cost tax deduction of 1916, the Oil Depletion Allowance Act of 1926, the Domestic Manufacturing Deduction of 2004, etc. Energy is about the farthest thing from a free market you'll ever find, so why single solar out for getting government support when all forms of energy do? Many conservatives and libertarians actually love solar, it's not just liberals who love saving money! In fact the Solar Investment Tax Credit, the 30% tax credit which is driving the growth of the solar market, is from the Energy Policy Act of 2005, which if you recall was during the presidency of George W. Bush. That tax credit was recently extended by another Republican president. 

4. Batteries are either a luxury add on for those who prefer a battery bank over a generator for backup power, or a necessary component for a backwoods cabin that is off the grid. 99% of modern solar electric systems don't even use batteries. They use what's called net metering which doesn't require batteries. As far as circuits burning out I'm not sure what you're referring to there, that's completely made up.

5. What panels use those hazardous materials? None that I've ever seen. Cadmium was used very briefly and on a small scale years ago but that type of panel is obsolete. Modern solar panels are made from silicon wafers. Silicon is the eight most common element in the universe. It is not hazardous and is easily recycled. 

6. Every solar system I've worked on has produced more energy than forecasted. Somebody may have messed up an energy forecast at some point, but it is not standard industry practice or lawyers would really love solar. As far as birds burning up, that has happened in a few isolated incidents with concentrated solar farms in the Mojave desert, which is a completely different technology than rooftop solar. It's not a factor with the types of panels you find on residential rooftops like California now requires. Also birds get killed by semi-trucks every day but that doesn't mean we're going to halt the trucking industry does it?

There is a lot of bad/outdated information about solar out there, I didn't want it to be propagated here. I'm not sure I agree with California's mandate, and I'm not sure how it will be implemented when many homes aren't suitable for solar, however I hate to see solar categorized as liberal/bad technology when it's actually great technology that benefits everyone regardless of political affiliation. 

Typically your monthly lease payments with solar are less than the electricity bill would be without solar, so it’s a selling point and benefit for your renters (who doesn’t like reduced utility bills)? However if you don’t want to assume the lease you can ask the seller to prepay the remainder of the lease payments/ buy the system from the leasing company before transfer of ownership. One thing to consider is that some solar leasing companies include a “fixture filing” in the lease contract, which some lenders may consider a lien. You should read the lease contract, see how much the monthly payments are compared to what the electricity bills were before solar at the property, look for a fixture filing or lien in the contract, and go from there. Typical solar leases are 20 year agreements, so also check how many years are left on the contract, which will effect the buy out price.