Follow up on the Solar discussion from an Installer

[CANative]

There is an up-front cost issue, but when it is incorporated in the loan for the house that is negated.

$20k at 5% for 30 years is $38,651.16.

 

[Spartacus]

I agree with Randolph that the jury is still out. Using the OP's savings figure of $104/mo after financing approx. $20K (after credits) it would take the home owner roughly 16 years just to recoup the cost which means "real" savings don't start until then.

The $104 does include the interest. I would disagree about the "real savings" without solar the client would be paying for electricity every month ... forever. Solar starts saving as of the first month because instead of paying $218 a month for electricity ... they are instead paying $104. That is a real savings right away every month and that savings escalates every time the electric company raises their rates and the home owner still only pays the same $104.

The Home owner does not have to recoup the cost after 16 years. Someone said that the average homeowner sells every 7 years, if they are able to sell their house for more than homes without solar they retain all their savings over the 7 years plus the extra with increased value. (thus the reason I was looking on this forum .... wondering why appraisers don't give more value to solar homes, which IMO have a very measurable savings and immense value right away.

 

[CANative]

Appraisers don't "give value." The market does and appraisers reflect this in their analysis. So far, there is almost no market evidence that home buyers pay more when the property features a solar power system.

 

[Spartacus]

Agree with nstanbru. Would the typical homebuyer pre-pay the local utility for 25 years of electrical service if they could get it at a discount but then had to pay interest on it? I doubt it.

There is a time value to money. Money now is better than money later.

When the system is incorporated into the loan for the house it is not being prepaid, it is simply being financed out over the same term the homeowner will be in the home (the homeowner would be paying their regular electricity bill over this same peroid anyway). Loan, even with interest, is less than a normal electricity payment. That is real savings right away. Why wouldn't people want that?

 

[Spartacus]

Green baloney at its finest. Drive the cost of carbon fuel and power generation up to extreme levels so that green energy can compete.

California is implementing AB 32, the Global Warming Solutions Act. The CARB (California Air Resources Board) is chartered with its implementation to reduce greenhouse gas emissions from all sources with regulations and market mechanisms to reduce California's greenhouse gas emissions to 1990 levels by 2020, representing a 25% reduction statewide, with mandatory caps beginning in 2012.

Lets sell solar electric to the public with the claim that it increases the resell value of your home and it pays you while you wait. Oh, its mandated goal is to reduce CO2 emissions. Whether or not it makes financial sense is not the goal.

Yup, you are right. It sucks. It is going to drive business out and costs up.

California is the only state with a Cap and Trade system (as of 2011) because of AB32 (other states are talking to CARB about implementing one in their state as well but but they have not implemented it yet). AB32 is the reason DWP said they are going to be increasing rates around 8% annually over the next 5 years. But remember, electricity has gone up 6.5% over the last 30 years anyway without it.

I'm not in this business because it is green, I am in it because it helps the homeowner, the business and it helps me. If it helps to clear the air also ... great.

 

[CANative]

Because public power is just a matter of turning on a switch and paying the bill each month. Very reliable with little risk or difficult math to crunch. They worry about operating and maintaining what they perceive as a complicated and mysterious system. They want that extra $100 a month to buy things they want now instead of the larger amount of money they "may" get later down the road.

Lots of reasons.

 

[Spartacus]

$20k at 5% for 30 years is $38,651.16.

and without solar .... over that same period of time ... even if rates never increased (which will obviously not be the case) the homeowner would have paid $78,480 to the electricity company. that 38k is over the course of 30 years, not up front.

 

[Spartacus]

Because public power is just a matter of turning on a switch and paying the bill each month. Very reliable with little risk or difficult math to crunch. They worry about operating and maintaining what they perceive as a complicated and mysterious system. They want that extra $100 a month to buy things they want now instead of the larger amount of money they "may" get later down the road.

Lots of reasons.

Yup, perception is big. Even with solar they are still connected to the electric company and still just flip the switch ... still very reliable ... little to no maintenance ... but like you said ... perception.

 

[CANative]

It takes longer to recoup the price (in savings) than most people live in their houses. They worry if they have to sell and the next buyer wouldn't pay extra for a system then they would lose their investment.

 

[Spartacus]

Appraisers don't "give value." The market does and appraisers reflect this in their analysis. So far, there is almost no market evidence that home buyers pay more when the property features a solar power system.

Much better way of putting it. Thanks for the correction.

But as I have learned from reading different threads here, there are different ways of making the case for increased value other than just comps, right?