Follow up on the Solar discussion from an Installer

[Mr Rex]

Wow, with such tremendous savings and a sales pitch like that, its amazing that there isn't a veritable tsunami of solar systems being installed. Why, with such savings leading to increased sales volumes, then the prices may continue to drop until the typical buyer might bite:new_smile-l:

 

[Randolph Kinney]

Some excellent information here, but allow me to build on one or two things please. Studies have shown that political sway plays little into the decision to go solar. In a 2006 study of homeowners who had solar, 53% of the people purchased it to save money and only 15% because of the environment. Many states do not have electricity prices even close to what we have here in CA. It might be helpful for some of Y'all to understand where CA stands in terms of rates (and where your state might soon be).

We work on a Tier system (all rates at Per kWh).
Tier 1 (Base line) .12
Tier 2 (100 -130% of Baseline) .15
Tier 3 (131 - 200% of Baseline) .24
Tier 4 (201 - 300% of Baseline) .27
Tier 5 (over 300% of Baseline) .31

And we can be charged even more for using electricity at peak times of the day.

Now think of these rates with an 8% increase annually for the next 5 years (or even the average of 6.5% every year forever). I know some other states only pay .04 or .08 but we get sucked dry. Even Texas is starting in the direction of solar but it is slow, not because it is mostly a Conservative state, but because it is rapidly becoming very expensive there as well.

Spartacus, my bold.

Those rate increases translates into less disposable income for individuals since their incomes have not risen any where near 5%, let alone 8%. That means less spending for other things.

California has a false economy that is driven by ideology. Those rates are artificially established. As you know, the law requires all utilities to purchase and supply 1/3 of the electricity from green renewable sources. Solar and wind are more expensive than conventional power (nuclear and carbon).

With AB 32, more businesses are moving out of state as well as wealthy people. Households earning more than $200,000 accounts for fully 93% of the decline in total tax revenues from 2007-08. In fact, California's rapid growth came to an end 20 years ago. California lost more than one million residents to other states in each of the past two decades. Several cities have defaulted on their bonds and face bankruptcy. Kern county is facing bankruptcy. San Diego and Los Angeles are also facing bankruptcy.

Solar panels are not going to provide the average worker any relief from rising costs. At 12.4% unemployment, there really is not going to be the demand for home solar panels with out a substantial tax credit and subsidies. Just like cash for clunkers and other similar programs, once the subsidy is removed, the demand will fall.

I cannot imagine paying $20,000 for solar panels. If electricity gets that expensive, I will move away from California to some other area that is more affordable.

 

[Randolph Kinney]

I don't do off grid systems and it would take a lot for me to install batteries in an on grid system (they just are not good and they are expensive for the homeowner ... don't get me wrong, I'd do it if money were no thought to the buyer and they understood the expense, but I don't recommend it.) But to answer your question in a slightly different way .....

Every home is different and every homeowner uses electricity differently (please add fine print as necessary here ... this is not a guaranteed price for your situation, your rate and total may vary. every situation is different please call for a personalized quote ... yada yada yada .....)there are a number of assumptions here including tax rates, no tile roof, one story and the way the house faces and angles of roof, but some of my basic numbers are....

Gross System price to offset 12000kWh/year in So Cal $40,392
Current State incentive $10,314
Current Federal Tax Credit $ 9,174
Total to the consumer $21,405

This will offset 100% of the bill (including night use) and could very easily return money from the electric company but I did not figure that in here.

Original average monthly bill $218/ month
30 Years at 5% Financing $116/ month
Added Tax benefit from mtg write off annually $47.52/ month
Bringing the total monthly savings to $163.52/month

Over the course of 25 years with an average annual electricity price increase of 6.5% (historically accurate for SoCal) this system could save the homeowner (or homeowners) $214,931.

Spartacus,

During the early 1980s, I sat through a number of tax shelter pitches to investors. They all included tax write-offs as part of their total return. They all had projected income and residuals over a 10 year period.

I sat through pitches on real estate investments during the 2000s with the same characteristics.

In both timeframes, the end was not pretty. Wall Street made the most money. The investors lost money or never realized a return over what a U.S. Treasury bond returned.

Unless you are a homeowner with that sort of income to make use of the tax credits and tax deductions, that investment calculation does not represent reality.

What do you suppose will happen to your solar panel business if the government adopts the tax code changes where deductions are eliminated in exchange for lower marginal rates?

What do you suppose will happen if the current state and federal tax credits are reduced or eliminated?

How many people in SoCal have an extra $40,000 cash laying around? You do realize that home values are falling now and they don't know how low they will go or how long this will last.

Just saying a smarter thing to do is sell your house and rent or move to another state. Adding solar panels means, according to your calculations, you plan to own and live in your house for the next 30 years.

 

[Vermonter]

I don't blame you, I simply don't understand how something that so very obviously saves significant amounts of money for a homeowner is not given any weight in an appraisal.

First let me say, I'm a big fan of solar and bet my area has a better market reaction to it than most northern states. That being said, if the savings was as obvious as you claim you wouldn't need to convince us, the market would have already done it.

You're preaching to the wrong group. We write history and so far it hasn't been as favorable to your industry as you think it should be. This is no different than many other players on the supply side of the housing industry.

Buyers write the future and your efforts are most likely better spent on sellers, builders and realtors.

 

[Elliott]

You want statistics? You want to save on gasoline?

Much better deal,

"IMPROVE MILEAGE AND SAVE GAS WITH THE VORTEC CYCLONE!

HOW MUCH WILL I GAIN? – Over the years we have received many testimonials from customers who have increased their mileage by 3 or even 4 miles per gallon or more. The average customer will see an increase of 1-2 MPG. Here are a few real world examples:

BASE MPG MPG W/VORTEC % GAIN
’06 Ford F150 17.2 MPG 19.8 MPG 15%
’05 Chrysler Van 20.2 MPG 23.1 MPG 14%
’94 Bonneville 19.0 MPG 22.0 MPG 16%
’04 Caravan 21.1 MPG 23.5 MPG 11%
’00 Ford Ranger 18.0 MPG 24.0 MPG 33%
’02 Mustang GT 19.5 MPG 24.2 MPG 24%
’00 Camry 25.2 MPG 26.7 MPG 6%"

And it only cost $39.95, not $40,000.

 

[Spartacus]

Spartacus, my bold.

Those rate increases translates into less disposable income for individuals since their incomes have not risen any where near 5%, let alone 8%. That means less spending for other things.

California has a false economy that is driven by ideology. Those rates are artificially established. As you know, the law requires all utilities to purchase and supply 1/3 of the electricity from green renewable sources. Solar and wind are more expensive than conventional power (nuclear and carbon).

With AB 32, more businesses are moving out of state as well as wealthy people. Households earning more than $200,000 accounts for fully 93% of the decline in total tax revenues from 2007-08. In fact, California's rapid growth came to an end 20 years ago. California lost more than one million residents to other states in each of the past two decades. Several cities have defaulted on their bonds and face bankruptcy. Kern county is facing bankruptcy. San Diego and Los Angeles are also facing bankruptcy.

Solar panels are not going to provide the average worker any relief from rising costs. At 12.4% unemployment, there really is not going to be the demand for home solar panels with out a substantial tax credit and subsidies. Just like cash for clunkers and other similar programs, once the subsidy is removed, the demand will fall.

I cannot imagine paying $20,000 for solar panels. If electricity gets that expensive, I will move away from California to some other area that is more affordable.

Randolph,

So long as you continue to focus on the over all number the panels cost you will never understand how solar saves. You seem to contend that solar is an up front cost that needs to paid up front and that is not the case.

Over the next 25 years I GUARANTEE you will pay significantly more that $20,000 for your electricity (not knowing your age or any of that but assuming you are around in 25 years). You will not be paying it all up front you will be paying it monthly.

Without solar the the homeowner will never stop paying for electricity .... without solar the homeowner will always face rate increases ....
without solar we will continue to subject to the electric companies whim of raising prices on us and us being forced to pay whatever they want.

As a solar owner, when financed correctly, you can save right away ... the first month. If you wish to continue to falsely focus on an up front investment of $20,000 be my guest, but you are missing the big picture.

 

[Spartacus]

Spartacus,

During the early 1980s, I sat through a number of tax shelter pitches to investors. They all included tax write-offs as part of their total return. They all had projected income and residuals over a 10 year period.

I sat through pitches on real estate investments during the 2000s with the same characteristics.

In both timeframes, the end was not pretty. Wall Street made the most money. The investors lost money or never realized a return over what a U.S. Treasury bond returned.

Unless you are a homeowner with that sort of income to make use of the tax credits and tax deductions, that investment calculation does not represent reality.

What do you suppose will happen to your solar panel business if the government adopts the tax code changes where deductions are eliminated in exchange for lower marginal rates?

What do you suppose will happen if the current state and federal tax credits are reduced or eliminated?

How many people in SoCal have an extra $40,000 cash laying around? You do realize that home values are falling now and they don't know how low they will go or how long this will last.

Just saying a smarter thing to do is sell your house and rent or move to another state. Adding solar panels means, according to your calculations, you plan to own and live in your house for the next 30 years.

You are right here in many aspects. I have stated that Cali is a terrible place to live and do business .... but it is what it is and we have to deal with the situation as it is. Either we do what we can to overcome the regulations and change things or we should willingly bend over and say, "thank you sir may I have another."

Anyone can suppose anything .... suppose a meteor lands and wipes half of SoCal out .... suppose we turn into a socialist country and the govt takes over all solar panels and their out put and charges us anyway ... suppose Gov. Moonbeam gets his way and raises taxes on us until no one except the unions are able to even afford a house .....

Solar allows you to take control and give the finger to So Cal Edison.

 

[Spartacus]

First let me say, I'm a big fan of solar and bet my area has a better market reaction to it than most northern states. That being said, if the savings was as obvious as you claim you wouldn't need to convince us, the market would have already done it.

You're preaching to the wrong group. We write history and so far it hasn't been as favorable to your industry as you think it should be. This is no different than many other players on the supply side of the housing industry.

Buyers write the future and your efforts are most likely better spent on sellers, builders and realtors.

I am not trying to sell anyone her anything (y'all around the country and I couldn't do business with you if I wanted to for solar or appraisals). I am simply trying to understand. Solar has been selling like crazy for the past 4 years (yes the incentives make it affordable) but it is going through the roof. The only place that is not reflected is in the appraisals .... and I am trying to understand why.

Even according to Randolphs numbers of the community in SD in the report I provided with and without Solar the solar homes sold for more .... not the 17% the headline wanted to indicate .... but still more. Yet no one here is willing to say that they would increase the amount of their appraisal because of Solar even a little. I just don't see why.

 

[Randolph Kinney]

The only place that is not reflected is in the appraisals .... and I am trying to understand why.

Even according to Randolphs numbers of the community in SD in the report I provided with and without Solar the solar homes sold for more .... not the 17% the headline wanted to indicate .... but still more. Yet no one here is willing to say that they would increase the amount of their appraisal because of Solar even a little. I just don't see why.

Spartacus, my bold.

You do not understand how buyers operate in the housing market. You do not understand the report that was written and the flaws in the statistics. You don't see a problem with grouping homes into homes with solar panels and homes that do not have solar panels and then attributing a cause and effect that solar panels are responsible for the total price difference between the two groups. That is what the report did and to make matters worse, it did it over several years in a rapidly rising price market. (Prices of the homes in the SheaHomes communities ranged from $437,900 to $840,938. The mean price was $601,984.)

The primary variable that drives the home's value is the GLA. Larger homes sell for more however, they sell for less in a price per square foot bais.

Look at this page in the report. Maybe you will understand.

There are other variables at play that are not isolated. Looking at the 2006 data from the MLS, 5 homes sold with solar panels for a median sold price of $1,130,000. 3 of the 5 homes had swimming pools and ranged from $1,130,000 to $1,395,000 sold price and had GLA sizes of 3,215 to 3,638 square feet GLA.

The 2 homes that sold with out swimming pools ranged from $997,000 to 1,050,000 with GLA size of 2,612 to 3,188 square feet GLA.

Clearly GLA size and swimming pools matter in either case of homes with solar panels. That same correlation shows up in homes with out solar panels.

There are other factors that were not isolated that make more of a difference than solar panels such as location (view) and quality of upgrades.

Let me make a point to you about buyers of million dollar homes. If you have to ask how much are you utility bills, you can't afford the home. That does not enter into the buyer's mind when shopping for a home.

Just for reference, the property taxes on a sale of a million dollar home will be $10,000 a year not county other assessments. Anybody who thinks about utility bills ought to think about property taxes since they will be paying much more every year than their utility bill.

 

[Vermonter]

I am not trying to sell anyone her anything (y'all around the country and I couldn't do business with you if I wanted to for solar or appraisals). I am simply trying to understand. Solar has been selling like crazy for the past 4 years (yes the incentives make it affordable) but it is going through the roof. The only place that is not reflected is in the appraisals .... and I am trying to understand why.

Even according to Randolphs numbers of the community in SD in the report I provided with and without Solar the solar homes sold for more .... not the 17% the headline wanted to indicate .... but still more. Yet no one here is willing to say that they would increase the amount of their appraisal because of Solar even a little. I just don't see why.

That's not true, several of us have told you there is some reaction in some markets.....but you're still not getting it. We don't increase value for any amenity (solar, pool, garage, dog door, etc.), the market does. We interpret and report it.

Solar has been selling like crazy, but how has it been re-selling? You said yourself many people buying pv systems are keeping the homes. Until they start reselling with some frequency and the buyers pay extra for the solar, there will be the continued limited market reaction we've seen so far.