When the Solar Guy comes by

[Dardedar]

DAR
So a solar guy from Sun City Solar Energy came by today. They are located in Springdale. He sells a solar water heater package (and a version that can heat a swimming pool), a grid tied solar panel system and a solar powered attic vent fan.

The water heater package is about $7,200. The attic vent fan is $750 installed. We really don't use enough water to make the water heater useful. The attic fan is a little pricey. I think I can put something together for a lot less, solar or not.

The solar panel choices are a 8 panel 1.4 kw system for about $17,000 and a 12 panel 1.56 kw package for $19,800. That's total price, installed ready to go, tax paid. A $2,000 tax rebate is currently available which would come off of that total.

He claimed the panel package would pay for itself in 22-27 years. I don't see how. According to his numbers in Arkansas we can expect to get a yearly average of 5.5 hours of sunlight per day. That's not bad. This system will make, in the best sunlight 1.56kw and if it does it for 5.5 hours a day that equals about 8.58 kwh per day. Electricity currently costs about .10 cents per kwh so that's a generation of about 85 cents per day worth of electricity. That's $313 per year. If you divide that into $19,800 and don't account for interest on the value of the money, that works out to about 63 years. There are a few details that in fact make it worse than that, but close enough to seriously disqualify this as any kind of sensible financial investment. First of all, the electric company is not going to credit you at 10 cents a kwh, not even close (unless the were forced to provide such a subsidy as is done in Canada and Germany etc.).

If I were to borrow that $20,000 at 9% interest over say 15 years, the monthly payment would be $202.85. Total paid at the end of 15 years is: $36,513. Divide that by the $313 per year generated by my little electricity power plant and break even payback time is now 116 years.

At this point he tried selling the system on a hypothetical projected increase in the cost of electricity. He said electricity had doubled in cost in the last ten years and he expected it to double again in the next five. I didn't think that was right but said I would look into it. Here is what I found:



That chart isn't referenced so it is best to go here: "Average Retail Prices of Electricity, 1960-2006." Here is the html link

So if you look at the "real" average US cost of residential electricity per kwh you get:

In 1960 = 12.4 cents

In 1970 = 8 cents

In 1980 = 10 cents

1990 = 9.6 cents

2000 = 8.2 cents

2006 = 8.96

In fact, in the last 46 years I can only find 15 years in which electricity cost less than it did in 2006. So the fellow's information is not accurate.

I wish them the best. I wish energy did cost more so as to reflect the true value and expense to the planet. I wish solar panels we a lot cheaper. Until this happens I can't say I love solar power enough to make such a terrible investment.

D.

[Doug]

There are a few details that in fact make it worse than that, but close enough to seriously disqualify this as any kind of sensible financial investment. First of all, the electric company is not going to credit you at 10 cents a kwh, not even close (unless the were forced to provide such a subsidy as is done in Canada and Germany etc.).

DOUG
A. I had the guy come over to my house too, and he DID say that he thought that the electric company would pay on a credit basis, with the net metering paying exactly what the electic company charges per kwh. But he didn't have any firm figures.

B. The 5.5 hours of daylight don't take into account the rainy days or very cloudy days. Those can take a considerable chunk out of your annual kw production.

I would love to get a solar system, but I don't think the technology is there yet to pay back the investment. If I were rich, I would do it just to reduce my carbon footprint.

[Dardedar]

DOUG
A. I had the guy come over to my house too, and he DID say that he thought that the electric company would pay on a credit basis, with the net metering paying exactly what the electic company charges per kwh. But he didn't have any firm figures.

DAR
Well, he's wrong. I have my Ozark electric bill in front of me the actual charge per KWH is just a little over 7 cents (remember Arkansas is generally cheaper than the national average, as with other things). Now, if they credit us 1 KWH back for each KWH we generate, this would equal a credit of about 7 cents a Kwh. Other charges, such as taxes and the $14 "customer charge" would still apply.
I think he doesn't have any firm figures because the firm figures add up to a very unworkable and pretty much unsellable product (except for the hobbyist with a lot of extra cash to play with). I think their only hope is to hang on until perhaps some major subsidies come along.

B. The 5.5 hours of daylight don't take into account the rainy days or very cloudy days. Those can take a considerable chunk out of your annual kw production.

DAR
No, I'm quite sure that the 5.5 hours of average sunlight per day does take in to account the rainy and cloudy days. Otherwise the claim wouldn't mean anything.

[Barbara Fitzpatrick]

The 5.5 hours does average in cloudy days as well as winter v. summer. The problem with going solar in AR is exactly what Darrel is talking about - our electricity is cheap. (Subsidized coal - we pay for it through our tax dollars, the same way we pay for cheap corn-fed, feedlot beef and gasoline, both of which actually cost 2 to 3 times what the ticket price is.) In places like CA, where their electricity is approximately twice what ours is, they have longer and hotter summers in the most populated areas, and the rebates are at least twice what we get - in those places, solar is competitive. Not here.

According to my son, if you are a serious DIYer and have the time, you can do it a lot cheaper, although not necessarily cheaper than what we pay SWEPCO now. The inverter will still be an upfront chunk, but you can buy damaged solar panels by the box load, separate the cells and resolder them into a new panel for hundreds rather than thousands of dollars. Since I'm not a serious DIYer, I haven't investigated his claim.