You can crunch the numbers yourself, but in general, it would be highly unlikely you would have a 4-5 year payback. You might hear that in a sales pitch, but I wouldn't accept it at face value.

Unfortunately, at this point, solar power is not a cost efficient way to meet their energy needs for most people. Even with heavy government subsidies, the numbers just don't work unless you live in the same home for many years. If you happen to be one of the lucky few where the numbers work out in your favor, congrats.

Thanks billl.
When I crunch the numbers, it seems like a 5 - 6 year payback is well within reach - assuming I can really sell SREC's?

Say it's 40k to put in a system. After incentives, that's around 28k? Say that system produces 1 Megawatt per month, that would generate 1 SREC per month. From what I understand, the minimum price for those is $280? That's a total savings of around $430 per month (my electric bill averages $150/month) or about $5k per year.

If those numbers are realistic, then it would take about 6 years for payback.

The major assumptions:
- for $40k you can put in a system that produces 1 MW per month - is that even realistic?
- You can count on selling SREC's for the entire payback period, and that their minimum price is $280 (right now they sell for over $500 in MA).
- Not counting the cost of replacing anything that breaks (inverter, etc)

I'm just trying to see where my math is flawed. I really appreciate the feedback - especially before ANY decision has been made!!!

Your calculations must be off. I live in a state where I can get 70-80% paid for by state and fed subsidies. I expect a 10-12 year payback. Are you calculating based on the expected annual production or the peak capacity of the system?

If you have not visited a web site like PVWATTS, do youself a favor and do so. Hot water is usually a much more economic investment than PV. Be sure to put that as the primary consideration in the mix.

Hi ionized. Thanks for taking the time to respond.
Are you selling SRECs from your system?

I went on to PVWATTS and found this for my location

Year
Avg 4.61 kWh/m2/day
AC Power 4975 kWh
Energy Value: 587.05

So, for a 1 square meter panel I will get 587.05 /yr in savings. I use about 1 MW per month, so i need about 3 square meters of panels? to cover my electric needs for the year (net sum of 0).

That's just in electric cost, right?
But that system will produce (conservatively) 12 SREC's per year. Which you can sell for $500 each right now in MA = $6k per year! Even if you assume 1/2 of that (the floor is set at $285/SREC) that's $3k per year.

So, I don't know how this changes my calculation. I'm still getting $5k / yr from the system which pays for itself in under 6 years.

So, what am I doing wrong here? If I didn't calculate selling the SRECs, sure, it would take 15 years to pay back. But from what I understand, the money is in selling the SRECs.

Am i right that I would only need 3 square meters? That sounds really small...

1MW = 1,000 KW. If you generate 4.61 kwh per day per m2, that is 1,682 kwh per year or 1.682 mwh per year. You would need about 7 square meters of panel to meet your current needs.

Also, the SREC's rules can be changed at any time. This is a government created market and a new administration could just eliminate the requirement and the market. I personally wouldn't be counting on that for the life of the system, but, of course, I don't have a crystal ball.

Thanks! I thought there were some laws in place regarding the SRECs - like for the next 8 years? I suppose those laws could be changed over time, so I agree that you can't count on it for the life of your system, but sounds like you can count on it to pay back your system.

I really appreciate the feedback. Really helps in making an informed decision.

I just saw this and admit to some confusion on the calculations.

I have 32 solar panels and a solar water system, so my water uses no electricity at all.

My system was roughly $52K in 2006. I got $13,000 back from the state of Maryland.

I get about $2K back each year from my SRECs. I also net meter, so my meter runs backwards much of the year, even in the winter. I am the first and largest, Teir 1, licensed Residential Solar Power Plant in the state of MD.

I also live alone, so the average "family of 4" means nothing to me.

I'm figuring since my power bills in July are $7.00 to $15.00, and I average with BG&E for larger winter bills, I'm doing well.

Oh - add in the home equity interest that I also deduct, and it's working out pretty well.

I wouldn't change a thing other than affording more solar panels on my barn.

Good luck!
C.

dcipher, i came to this forum to ask the EXACT same question (and you even worded it similar to mine).

I've crunched lots of numbers, used various websites like the California Solar Initiative (we currently get from 33-35% back in incentives) and there is a 3% no-limits, no-credit check loan, available.

Except when purchasing too many (or too few panels) every option shows in the black from the FIRST year of installation. I use about 13,000 kwh per year and considering units from 2.5kw - 5kw AC. I live in CA where that 13k translates to about $3600/yr in electricity alone. We have a family of 5. Units range from $10k to $40k depending on watts, vendor and product manufacturer.

These numbers show me making money, without considering equity value in the home, AND considering the loan repayments and interest. All my estimates are targeting to NOT over-produce, since CA is horrible on buying back electricity from us (they have yet to pay anyone a dime, owing people from like a dozen years back) even tho they've charged up to .50cent per kwh in the highest tier.

Unless I get a very high interest rate loan or try to repay it back in a very short time (like 5 years), the numbers always show me in the black from the first year forward. Full break-even being anywhere from 6 to 8 years.

I should've done this when i moved in here 10 YEARS ago. Even if the incentives weren't that great back then, I've already spent at least $35,000 in electricity charges since I moved in.

As a follow up to my original post, i went ahead and had a 5.5KW system installed. The electrical inspector came out yesterday and now it's in the hand of the utility co. to come out and swap my meter, then I can start producing electricity (given Irene coming thru a few days ago, that may take them awhile!)

I'll report back on how it works out...

Thanks, looking forward to it.

Your situation is very different from mine, but in CA for family's whose electric bill is above $200/mo there is little reason to not purchase solar. Even if it's just a small 2KW system. The loans for them are fairly easy to get, run about 6% for 15 yr, and the various websites out there (I used the www.gosolarcalifornia.org) produce excellent graphs and breakdowns that are very good at confirming accuracy of a sales pitch.

Once I break even, I consider the rest of the benefit my contribution to the environment, even when I move out.

For someone who has seen a lot of smart math done on the long payback for PV, I must say thank you to cebury for that last line of thought. Its the Hidden Costs of Dirty Energy that never get accounted for in these payback calculations.

The "hidden costs of dirty energy" aren't included in the payback calculations for solar because you still have to pay all those "hidden" costs in addition to the cost of the solar system. It isn't like putting in a solar system is going to suddenly cure your kids asthma. It's great if your are willing to pay a little extra to know you aren't contributing to the pollution, but you still have to deal with the consequences of the overall pollution levels.

But there is the payback from knowing you are helping the environment.
I've had a couple of arguments now with people about the payback - some people are non-believers - there are also people out there that think the world is flat...

My system has been operational for a little over 2 weeks now. It is performing exactly as promised with peak production at exactly at what PVWatts said it would be. Coupled with our much improved energy efficiency (new led lighting, energy star appliances, shutting off things that weren't really needed, consolidating equipment), we're doing much better than expected.

Looking forward to receiving payment for my first SREC soon.

solar and wind energy is the new clean energy ,i prefer solar,there is sunshine everywhere.
good news :Solar panel and battery on sale now ,the price of the panel and battery drooped in the last few months,it is more cheaper to choose clean energy, learn more profeesional advice when choose it .it is expensive to change or repair your solar system.

My meter started running backwards the minute it was switched on in 2006. About 3 years later BG&E came out to "switch my meter". My small electrical costs sky rocketed. I question this darned "switch my meter" thing.

NOnetheless, I got another $2000 for my SRECs last year and am looking forward to this year. The $$ has gone down, but still, it's free money.

Christine
5.6 kWh system.

I did the calculations over and over again for my home here in eastern PA with a perfect southern exposure and PVWatts is telling me a 10Kw system will produce about $1000 per year of electricity at my current utility price of 8.4 cents per KWh. So I played with the idea some more since prices have come down, but just the materials alone for a grid tie system is around $25,000 plus installation which I am going to guess is at least $10,000. So the gross price of solar is still $35,000+. Now knock off the 30% federal rebate and that price drops to $24,500, PA has no more rebate program...SREC are a whole $35 yes you heard me $35 so they are essentially worthless...so in the end the payback still worked out to be 20 years which low and behold is the same amount of time the systems typically have as a warranty. I didn't include the cost of inflation in electricity prices but in 10 years they have gone up about 1-2% per year, but if I took the $24,500 and bought treasury bills instead I would have made about 1-2% return so all in all the 20 year payback is still true. If you are in a state where SREC are worth 10 times as much as they are in PA then you could see an under 10 year payback. But PA SREC credits used to be worth a whole lot more and now they are worthless so just a reminder that whats valuable today may not be tomorrow.

I've tried to make the numbers work and I can even DIY it. But living in a state with cheap electricity and no SREC market the numbers don't make sense.

I may try thermal solar if I can find the right price.

BTW please dfine abbreviations for us newbies SREC? BTW those of you who say like PA doesn't provide incentive enough, need to get the old email and poison penout and start bugging you senatorss and congress men to increase the payback for selling energy back, the energy companies hate this new solar technology, they can't bend some people over the barrel and you know >>>>> them!
Btw how do you sell Dirct current back to the power grid??? Is there an dc inverter to AC?

I watched a program where Ed Begley and his wife went around and helped people pick and chose the best systems and enegry efficint items for them, he actually went to Larry Hagman's house Larry has a three meter kw generating solar array not very big considering the amount of enegry produced. He said his system installed with the conversions to ac with inverters cost him something like $300.000 If I recall he said his electric bill for his estate used to run around $13,000 a year(??) once he turned on system the power companby had to pay him some amount of money each month and his system would be paid for in like 2-3 yrs if I recall correctly, plus he actually ran t power to 8 homes in the valley below him at no cost to the residents, he said one guy was a truck driver with several kids and economy was hitting guy hard so that was his firts free energy install.....nice guy. Wind power on small scale not gonna provide enough power and the huge electric company wind mills are so terrible, eye sores in the woods and mountains and they fail after a few years, all it takes is a big bird strike and there go the 80fot long blades and the system will self destruct from imbalance! and if you live near them the sound has to be extremely annoying whoooosh, whooosh, wooosh hour and hours on end!

I am working on an invention that will revolutionize the solar heated water systems, I will market this and become a billionare in a short time!

Ground source heat pumps are the way to heat and cool without using enormous amounts of electricity, 18" to 24" down 68 degrees F perfect cooling temp in summer and also for heat in winter, (they have auxillary heater in case it dips to below zero) the only electricity is the circulating motor and blower! Up front costs expensive but at reduction from $200 a month down to say $50, that $150 plus the amount for payment will cut repaying loan in half! I am on limited income and do not pay taxes so unfortunately we disabled or older folks that own homes do not get to take the interest deductions(low income no huge portfoilio)or the enegry savings deductions. I sure would install the most energy efficient sytem if they would give us a cash rebate kinda like the first time homebuyers credit! I got that cause that was a direct payment and had to call IRS for them to explain that yes I was qualified even though I don't pay federal or state taxes! I installed new energy efficient windows could not take the $1500 credit, installed new energy efficient french doors to cut down on the wind whipping throught he old doors could not take the $1500 per door tax credit, so I end up paying more in the long run cause not recovering some of the costs of updating!

BTW ground source heat pumps can not only be installed by the 6 loops dug inb your lawn area, but they also can in town house or close quarters be drilled straight down in loops! I am fighting with the rest of the board members on the solar panel ban, systems aren't like the big old pvc pipe systems running all over the roof, they can be mounted on the roof or the sides of houses but they dont want them!

I remeber back in the oil embargo in the 70's the government made the power companies offer low interest loans added to electric bills to upgrade windows and insullation, and cut energy loss from old windows etc, they should do the same thing now make the energy companies allow low cost energy loans to install solar panels, ground source heat pumps, geothermal wind etc.

Just thought I woul add my 2 cents in

We put in 5 kw of solar and we don't have SRECs, but are happy we did and are probably looking at about an 8-10 year payback. But what other appliance do you have that pays you back?

We got a 40% subsidy from the state and then a 30% tax credit off our income taxes so it came out to about $14,000.

We also did geothermal, closed cell insulation, passive solar design, all duct work in conditioned space, woodstove, and tankless hot water heaters. Granted this winter has been a mild one, but our total energy cost...heat, a/c, hot water, lights, appliances, etc. has been about $1,200. In our old house, one fill up of the oil tank alone was over $900. So our annual savings have been substantial.

The other way you save money is by getting a positive cash flow right away. You can do this if the annual savings in electricity cost is less than the capital costs that would be added to your mortgage. So if your mortgage or home equity loan would go up by $50 per month but your electricity cost goes down by $70 per month, on a cash flow basis, you are making money right away.

The other alternative is to look into leasing solar panels where again the lease costs are less than the electricity savings.

BTW, I did not include the cost of the more expensive shingles. We built new and didn't want to have the roof need replacing before the solar panels did as that gets very expensive, so we went with a 50 year roofing material...we like the look and probably would've done that anyway.