End Of Life Solar

[hastalavista]

This scenario re-confirms to me why I believe:
1. Better to value these things on the expected holding period for a homeowner within that market rather than the full expected life of the system. If the holding period is 8 years, there is still the chance if the system failed prior to that, the results would be wrong (wrong in outcome, not wrong in the reasonableness of the assumption). But if this system was valued that way on day one through 2010, then shorter-than-expected useful life wouldn't have affected the valuation-analysis of that component based on the assumptions.
2. Reversion value of the system on a re-sale should not be part of the equation if there is expected remaining life after the holding period. Failure of the system prior to the end of its total useful life is a real possibility as well as the risk of the system, even if working, being economically obsolete.

 

[George Hatch]

The pace of the development of the technology makes "economically obsolete" a distinct possibility.

 

[Mr Rex]

The pace of the development of the technology makes "economically obsolete" a distinct possibility.

That was my initial instinct. Per the solar experts, a certain level of output per square inch of panel is the requirement for feasibility. So the entity claiming the system is shot, may well be referring to the aged panels limited output in relation to currently available technology from an accounting or DCF standpoint. It might still be producing, but kinda like an old oil well, down to a trickle that barely pays the cost of production. I dunno.

 

[techbiker]

That was my initial instinct. Per the solar experts, a certain level of output per square inch of panel is the requirement for feasibility. So the entity claiming the system is shot, may well be referring to the aged panels limited output in relation to currently available technology from an accounting or DCF standpoint. It might still be producing, but kinda like an old oil well, down to a trickle that barely pays the cost of production. I dunno.

That makes sense for an oil well that is producing only a fraction of its original output decades later. Is output degradation the problem with the OP's solar system though? Apparently output degradation might be less than .5% per year:

https://www.engineering.com/Electro...75/What-Is-the-Lifespan-of-a-Solar-Panel.aspx

At 15 years, the OP's panels should be producing 94%+ of their original power. Shouldn't the panels still be generating far more than their operating cost?

It sounds like some major component has simply failed.

 

[Meandering]

That makes sense for an oil well that is producing only a fraction of its original output decades later. Is output degradation the problem with the OP's solar system though? Apparently output degradation might be less than .5% per year:

https://www.engineering.com/Electro...75/What-Is-the-Lifespan-of-a-Solar-Panel.aspx

At 15 years, the OP's panels should be producing 94%+ of their original power. Shouldn't the panels still be generating far more than their operating cost?

It sounds like some major component has simply failed.

Oh, that one is an interesting article for sure.

The article posted in 2014, provides the degradation rates
The National Renewable Energy Laboratory (NREL) performed a meta-analysis of studies that examined the long term degradation rates of various PV panels.

Merriam Webster defines meta-analysis as:

: a quantitative statistical analysis of several separate but similar experiments or studies in order to test the pooled data for statistical significance

Pretty much, that article is all magic math, because

The solar panel push, came about in the American Recovery and Reinvestment Act of 2009,

So at best, if, someone bought solar panels the day after the Feds announced "the plan" and did not wait for all the other "announcements" of net metering in an area, state incentives, blah, blah, blah, then, the oldest panels for use in the "statistics" would have been about 5 years old if the statistics were produced the day the article was published.



And if we take the rate of growth from infant to 5 years old, most appraisers should be 17 feet tall + by now.




Many "oh well"(s) on the way.

The
American Recovery and Reinvestment Act of 2009,

will only be 9 years old this year.



Appraisers better figure out the value impact of dead solar panel systems shortly.


.

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[Dan123]

conventional purchase assignment

2004 build home with solar installed by the builder.

Estimated economic life of 20 years

Per buyers agent, solar is shot, 30k to replace.

Panels are not visible from the street and only evidence of system is an inverted in the garage.

How do you handle this? Never seen this issue and spoke with many agents who have never had this come up.

How do you account for the non functional equipment? Still waiting on the cost to remove. I couldn’t imagine the impact being as much as the cost to remove (since you cannot even see the system, why remove it?).

Thoughts and ideas are welcome!!

It is highly unlikely that the solar is shot, or that it takes 30K to replace it. The solar panels themselves rarely fail, they degrade over time. The most likely point of failure for the whole system is the inverter, and it costs $2-3K to replace. Even if you have to replace the inverter and all of the panels, that's probably going to cost $10,000 - $15,000 tops. The major part of the $30,000 that they paid in 2004 was for permitting, electrical, installing mounting brackets, etc. That doesn't have to be redone.

 

[Renee Healion]

Yes, much of the appraiser outcry is based on objections to policy or politics not on study of the systems or market behavior. That is fine when appraisers practice in areas with low acceptance of these systems, but where they are prevalent on properties we will end up appraising, it is important to learn more about them. That is the case in my state because we have the second-highest electric rates on the mainland. And then, after learning at least the basics, it is really important to keep up with policy changes which can shift under our feet. Here, the state just turned on a dime from terms that benefited individuals ("rooftop solar") in favor of large scale solar farms. It will be goodbye net-metering, except for the grandfathered, if it unfolds as now planned.

We are skeptical, probably by nature, certainly by hard experience. I know some of the resistance is because it is just another thing and we are always blamed for everything, and I agree. But failing to learn about what is here, a part of our subjects, and some tools to address it, is not going to work out well, either.

 

[Terrel L. Shields]

Must be cheap inverter. I've used inverters on drill rigs that were well over 20 years old. Or maybe lightning?
Drill rig generators surge terribly when large motors are turned on. Our inverters converted 110 v AC to 110 DC then back to 110 v stable at 60 Hz.

 

[Renee Healion]

The warranties are shorter on inverters than on the modules which suggests they go bad sooner. Or it is anticipated that they may.

 

[KYLECODY]

So would a typical buyer care or account for non working panels in their offer? Or care if they were removed if they're not visible. I'm guessing reasonable buyers wouldn't care or notice or factor it in their offer if they loved the house.

There is a whole older section of homes here where they thought it would be a great idea to do solar just for the water heaters. This was in the 80s or 90s when the tech was huge and not good..Ive not seen one that worked and the panels are always on the roof still until the roofs get done, too much damage, not cost efficient to pull them. Never effects price with them still up there wasting space.