The issue is more the local utility arrangements than subsidies per se?I like the idea of solar for the fun factor if you really want to save on energy costs it’s energy efficiency. Which is boring and not fun to talk about with your friends. That this isn’t a slam dunk with all of the government subsidies in the system tells you all you need to know about ROI etc. But again I get the fun factor and the potential to have power while power is out in your neighborhood makes it easier to rationalize.
US domestic solar PV costs are really inflated - Australia, a similar high wage country w high domestic electricity prices, has cost/kw about half. One third of Australian homes (perhaps "detached homes"?) have solar PV. Part of the US disadvantage is market fragmentation, another part may be subsidy capture. Certainly the profusion of lease financing suggests there's a lot of commission and inefficiency there (and in fact, there is, from papers I have seen).
What matters is what net metering rate you get, also your own electricity consumption & what you would pay for that electricity? For homes with EV chargers, and increasingly heat pumps, the economics can be much more attractive -- if you can consume in those peak hours.
My own sense is that the rewards for solar PV in peak production hours will increasingly be falling. In California you have the "Duck Curve" which pushes wholesale prices towards zero at peak hours (Texas, the number 2 solar state, may be following suit). So it's going to be about the battery: whether home battery or EV battery. Which will allow time shifting of when you draw from the grid.
Avoiding usage in that period of say 5-10pm, or even selling back to the grid, is just going to be increasingly valuable.
Traditional utilities are fighting "behind the meter" generation every step of the way.
For the Original Poster, if it's 10 year payback or less, it's worth considering. Beyond 10 years, I would be more cautious. Payback calculated properly, as a number of posters have noted ie years to pay back = cost of system/ annual cost savings. In the case where you are considering inflation, so savings grow every year, you can still work out how many years this will be, on spreadsheet (just highlight the row with the initial outflow and annual inflows, until its sum=0. Then see how many years that is).
For a more precise estimate, calculate NPV. Also do an IRR calculation (IRR is just a special case of NPV). Remember to include the cash outflow at time 0 as a negative (ie system construction & start). I would use a 25 year life (but 20 would be conservative).
A big unknown is terminal value of the system. I have set that to 0 after 25 years in my NPV & IRR cases above. If the home is sold in the interim, I am assuming the buyer would pay the remaining benefits of the system. That might be an overestimate at 5 years sale of home (buyer pays 20 years of benefit) but an underestimate at say 15-20 years).
One particular issue is overly bullish forecasts of savings from the companies trying to sell panels. Assuming retail electricity prices will rise with inflation seems a fairly conservative assumption. (Notwithstanding what I say above).
Statistics: Posted by Valuethinker — Wed Jun 19, 2024 6:10 am — Replies 11 — Views 800