I like case studies and at the link above I was interested in... '...We installed an 8kW PV system, a large 48V 1200Ah Battery (2V cells for long life) and top-of-the-range German made, SMA inverters, for about $60k...'
I say there's a lot of dairy farms with $70k/year power bills - capital investment of PV may have a 2 year pay-back one day.
And my own comments.... The electricity wholesale price will drop so the feed-in price will continue dropping. I think it will go back to the NZ 1995 price of 4.5 c/kWh eventually but I'm not sure if this is in 5 years or 10 years or 15. And in the long term the electricity price for many counties will become only 2.5 c/kWh or less, but not NZ as the price will become even more political. Wind and PV industrial scale power production is becoming so cheap - more so than hydro or nuclear.
Another response to all the hoohaa form me. We have various commentators telling us how much a kWh "costs" if produced by Solar PV.. I think they are mainly full of it. A little model I have done here - assumptions are pretty conservative on initial output/installed kWh, then I have dropped 1% per year output. Our local String Inverters should last 10 years, then are a very easy swap out. Decent modules are set & forget for up to 30yrs.. so it looks a bit like this..
freemark: Another response to all the hoohaa form me. We have various commentators telling us how much a kWh "costs" if produced by Solar PV.. I think they are mainly full of it. A little model I have done here - assumptions are pretty conservative on initial output/installed kWh, then I have dropped 1% per year output. Our local String Inverters should last 10 years, then are a very easy swap out. Decent modules are set & forget for up to 30yrs.. so it looks a bit like this..
Shouldn't you have a cost of capital in there somewhere,
"Shouldn't you have a cost of capital in there somewhere"
No I don't really think so. We're talking about a residential power saving device ultimately. If it was for Commercial purposes & attracting depreciation I probably would - but then again what would you suggest as a cost of capital - bank deposit rates, mortgage rates, credit card rates? No-one really considers COC & depreciation IMHO - otherwise no-one would buy pools, new cars, boats & other toys. Why then should the PV Industry when we speak of self-gen?
I like that you've factored in the decline in output and part replacements. The difficulty with not counting the cost of capital is that it looks incomplete or disingenuous if you don't, especially to those looking to find holes in your argument.
People who buy pools aren't sold them based on how well they pay back/ROI, and when I buy a car I like to know how much it's going to cost - and that includes factors such as depreciation, potential lower maintenance costs vs an older vehicle etc. An average consumer rationalises the net monetary costs with the perceived net subjective returns associated with owning the newer car *how does it make me feel* and buys it when it is perceived to be positive. I'm happy for you to calculate the monetary half (as the second side is subjective and individual) but it's hard to use the subjective half as reason for excluding certain factors...
The other factor is that capital costs are factored into wholesale power prices - such as those large hydro dams - as is inflation in your model. So by inference you're comparing apples to oranges. Or 2014 apples with 2034 apples?
I don't intend to look like I'm taking a dig, as I find the whole economics of solar PV fascinating - just trained in my professional capacity to encourage good modelling so it's kinda hard not to bite.
freemark: "Shouldn't you have a cost of capital in there somewhere" No-one really considers COC & depreciation IMHO - otherwise no-one would buy pools, new cars, boats & other toys. Why then should the PV Industry when we speak of self-gen?
Those things give enjoyment, Other than the geek bragging factor you get zero enjoyment from a rooftop photovoltaic install when all it does is replace grid power for your other toys. Whereas a pool is fun and an endless moneypit.
freemark: Another response to all the hoohaa form me. We have various commentators telling us how much a kWh "costs" if produced by Solar PV.. I think they are mainly full of it. A little model I have done here - assumptions are pretty conservative on initial output/installed kWh, then I have dropped 1% per year output. Our local String Inverters should last 10 years, then are a very easy swap out. Decent modules are set & forget for up to 30yrs.. so it looks a bit like this..
I don't follow how you can compare the per kwhr cost of solar vs the cost per kwhr off the grid? They are not in the slightest bit equal. How are you going to use your solar panels to watch TV or cook your dinner after the sun goes down? You are not comparing apples with apples.
freemark: Another response to all the hoohaa form me. We have various commentators telling us how much a kWh "costs" if produced by Solar PV.. I think they are mainly full of it. A little model I have done here - assumptions are pretty conservative on initial output/installed kWh, then I have dropped 1% per year output. Our local String Inverters should last 10 years, then are a very easy swap out. Decent modules are set & forget for up to 30yrs.. so it looks a bit like this..
I don't follow how you can compare the per kwhr cost of solar vs the cost per kwhr off the grid? They are not in the slightest bit equal. How are you going to use your solar panels to watch TV or cook your dinner after the sun goes down? You are not comparing apples with apples.
I would struggle to separate the cost of funds from most any purchase including cars, boats, pools and solar panels. My own calculations included the cost of borrowing and the eventual capital investment of repaying $12k versus saving $12k over the same period and socking it into the bank.
I do think you can compare the per kWh value of solar PV power directly with the cost of imported kWh power provided you can use most all of it while its being generated. Recent announcements of impending reduced rates for exported power are a concern, but if you can size your PV generation to match your usage then you become less dependant on the vagaries of power retailers. Sure it will not power this PC at 9pm at night, but today my PV generated 14kWh (shocking weather today but at least my rain water harvesting benefited). 4kWh was used to heat the HWC and the remainder used by the house base load and those activities I have time shifted to daylight hours such as the washing machine and dishwasher. Now 14kWh is just $3.92 at $0.28 per kWh on the low usage plan I am on, so no-one saving big money here. But over a year that all adds up to help pay for technology I'm interested in that also provides a small environmental gain. Its a win win for me, but not for everyone I agree.
As we say, over & over again, Solar is not for everyone. Unfortunately there are a few around who swear black & blue that due to their concepts of what is worthwhile, rewarding, a "good investment" etc Solar is no good for anyone. I'll show you a few happy customers who disagree. The above figures are a real customer solution - they will very easily self-consume over 90% of the PV they are making. They will on average be saving $140 or so every month on their Electricity bills - and that for many people is pretty good reward. System is being paid for by free cash in the bank getting -I don't know, maybe 3%? Their effective "dividend" on their PV Plant investment will be around 12% PA, sure they can't sell their "shares" but it just may add value to their house/property. In 10 years or so instead of replacing the Inverter it is highly likely they will be able to purchase some good storage - they will by then have a (paid for) strong Power plant on the roof and off grid a real possibility. Anyway, if you don't want one it's easy - just don't buy one. But also accept that for many it stacks up...
I second this - while its certainly not for everyone, when you do your numbers and research for your own situation , the numbers can stack up. In my case, with a new build in the country where we are largely at home during the day ( home office ) and timeshifting power usage as much as possible into the daytime then the numbers work (though I doubt we can consume 90%, though will try) . I can certainly accept that others have different situation and requirements, but that why you do the research after all.
And the thought about cheaper storage in a few years did not occur to me, but it makes sense, so thanks for that!
freemark: As we say, over & over again, Solar is not for everyone. Unfortunately there are a few around who swear black & blue that due to their concepts of what is worthwhile, rewarding, a "good investment" etc Solar is no good for anyone. I'll show you a few happy customers who disagree. The above figures are a real customer solution - they will very easily self-consume over 90% of the PV they are making. They will on average be saving $140 or so every month on their Electricity bills - and that for many people is pretty good reward. System is being paid for by free cash in the bank getting -I don't know, maybe 3%? Their effective "dividend" on their PV Plant investment will be around 12% PA, sure they can't sell their "shares" but it just may add value to their house/property. In 10 years or so instead of replacing the Inverter it is highly likely they will be able to purchase some good storage - they will by then have a (paid for) strong Power plant on the roof and off grid a real possibility. Anyway, if you don't want one it's easy - just don't buy one. But also accept that for many it stacks up...
Please don't take my comment as an attack or being "anti solar". If there was a way I could make it work I would be into solar in a flash, but your analysis is misleading at best.
For a start you most definitely should be putting at least a 6% cost of capital on the project from the outset. In many cases people will be sacrificing paying off their mortgage one way or another to pay for the up front install cost. If they are mortgage free then you could reduce that to 4% (after tax return from investment/stock market). Secondly, your model assumes all power is used at home (none injected to the grid) which is very unlikely. How many people have usage of 5.3kw in the middle of a summers day? If you resize the array to a more modest 2-3kw size I would say most people would still only be consuming 70-80% of the solar power generated. With this the numbers skew massively against. This takes it from a no brainer (what your numbers tend to indicate) to totally uneconomic.
For anyone wanting to put in a solar system that knows all of the numbers up front then go for it and I have no issue with that. But I get quite annoyed at salesman only telling half the story and misleading people. Which in this case I think you are doing.
Work for a generator/retailer/lines Co do you? Or maybe Solar Hot Water? ?
Middle of Summer? How much do you think a spa pool, swimming pool pump & air conditioning use?
I have another customer who has just put in 10kW on their roof. Their lowest daily consumption (sunrise to sunset) throughout the whole year is 58kWh. We will produce for them on an exceptional cold sunny day about 70kWh.
But I give up..
freemark: Work for a generator/retailer/lines Co do you? Or maybe Solar Hot Water? ? Middle of Summer? How much do you think a spa pool, swimming pool pump & air conditioning use? I have another customer who has just put in 10kW on their roof. Their lowest daily consumption (sunrise to sunset) throughout the whole year is 58kWh. We will produce for them on an exceptional cold sunny day about 70kWh. But I give up..
I work in the electricity industry. With an electrical engineering background. I have run the numbers every which way to try and get away from paying my regular power bill and just cannot make it work without significant lifestyle changes (even then it would be marginal). To be honest I'd love to get into that industry because I think my NZ electricity market knowledge could be put to good use to try and scheme the best way to make distributed generation work for consumers. The change is coming in the next 10-20 years and I find the technology very interesting.
As I said in my post, there are people out there that will most definitely make use of solar to save some $$ (your example is one of them) but they are a very very small minority. I took exception to your analysis because you presented it with no qualifying statements and basically just said that installing a 5.3kw solar array is a black and white no brainer.
For me (and pretty much any business person), 30 years is way way too long a payback period. The whole premise of the analysis you have done is that electricity prices will rise 2% pa for the next 30 years. Who in their right mind would use that as an investment decision? I'd start considering it if the number came down to 5-10 years and I think that is where Joe public will be too.
Just don't get into the industry anywhere near sales :)
Any industry in fact..imagine telling the guy who wants a new Porsche what he should be doing with his money instead.
But some people just want Solar PV, whatever the equation. Good on them.
Btw I have qualified my model here from the start IMO.
And I'm interested in why you don't think 2% per year increase in retail electricity prices is in any way out of order. Some PV crowds use a figure of 3%, and a possibly more accurate .5% annual output drop...
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