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stevehull · 10-14-16, 05:33 AM

Roostre,

There is more to the equation than you have written - and when you see it you will be quite pleased.

Like you, I put in a similar sized system. Mine is 12.9 kW and I looked hard at the "return on investment".

First, go to Renvu.com (link below) and look at Enphase systems. I just installed a 10 kW system of Hanwa 265 W panels and Enphase M215 microinverters (with roof racking) for a delivered materials price at $1.02 per watt. This is an ideal system for a self install.

Secondly, the two estimates you got ($32K and $36 K for a 10 kW system) are in line with what I charge ($3/watt; materials and labor). Assume you do a 10 kW self install system with materials cost of $10K. Your true value in the home is double that ($20 k labor "fee") as you have improved your home value by $30 k ($10k+$20k). There is a lot of data out there showing that homes with PV sell for more than the installed cost of the system. You cannot deduct your labor or get the tax credit for it, but in reality, you have substantially improved your home value. But for now, let's assume your home is improved by some 200% more than your materials cost.

Thirdly, your self installed system ($10K materials cost) will get you an immediate 30% residential tax credit. On a $10K materials purchase, this will be $3K from the Feds. Looks like you have an additional state credit of 15% so that will be another $1.5k for a total of 4.5 K. Your actual basis is now $5.5 k looking forward (not $10K).

Now it gets interesting. You utility structure has you in a bind being in the expensive high tier ($0.14/kWhr).

The savings of $135/month you see from neighbors may or may not be correct. You can go to PVWATTS and find out how many yearly kWhrs you should expect. Beware that the assumptions in this program (defaults) are VERY conservative and are out of date. For example, PVWATTS assumes a system efficiency of 86% where the Enphase inverter efficiency is 97%. But with good inputs it will get you close. I have found that even with good inputs, my Enphase systems produce about 10-12% more monthly/yearly kWhrs than PVWATTS predicts.

Let's assume you save what you have seen - $135 a month ($1620/year). On the simplest of return calculations your basis is $5.5 k and you save $1.62 K per year. This is a 3.4 year return on investment (ROI). Using the rule of 72, this is a 21% ROI.

But it actually gets better . . . . In reality the $1620 you save per year go to other financial perspectives and this "saves" you some 2% per year (lost opportunity cost). The 2% figure is conservative, but it gets you there. Then assume the cost of electricity will increase significantly above inflation for many years. Choose your percentage (let's use 5%). Adding 2 and 5% together give you a 7% figure on savings per year. You can now do a reverse amortization to figure your ROI, but lets use the "rule of 72".

This gives you the time to double an investment given a percent return. 72/7 = about 10 years. So just the savings on your system give you a doubling of investment (basis) in 10 years.

The bottom line of all this is that the internal rate of return on a self installed solar system is on the order of 20-30%. And doing it yourself only adds to the savings.

Another way to look at it is to add the tax credit ROI (21%) with production situation (7%) for a total of 28%. Again the rule of 72 gives you a payback of ~ 2.6 years. But you are also saving on electricity, so the actual ROI is even better.

No - the return is NOT 8 years but certainly less than 3, maybe 2 or so.

The negatives . . . . Climbing on the roof is not easy, but on a self install, you are "making a lot of $", so it is well worth your time (~ $500 per hour). A self installed system of 10 kW (~ 40 265 W panels) is about 40 or so total one person hours ($20,000 divided by 40 hours = $500 per hour). Maybe it takes you 80 hours - heck that is still a lot of cash you are saving.

You may need some basic tools. Socket wrench, cordless drill, measuring tape, ladder, etc. Nothing out of the ordinary.

You may (or may not) need a electrical permit to do the final hookup. I am an engineer, not an electrician, but you can hire an electrician to help or to go over everything at the end.

My prices are current as I just ordered from Renvu this week (Hanwa 265 w panels at $0.51/watt and Enphase microinverters at $90 each). To get prices, you need to register, but that is easy.

renvu.com | Search By

Hope this gets the wheels turning . . . . . .

Steve

10-14-16, 05:33 AM	#3
stevehull Steve Hull Join Date: Dec 2012 Location: hilly, tree covered Arcadia, OK USA Posts: 826 Thanks: 241 Thanked 165 Times in 123 Posts	Roostre, There is more to the equation than you have written - and when you see it you will be quite pleased. Like you, I put in a similar sized system. Mine is 12.9 kW and I looked hard at the "return on investment". First, go to Renvu.com (link below) and look at Enphase systems. I just installed a 10 kW system of Hanwa 265 W panels and Enphase M215 microinverters (with roof racking) for a delivered materials price at $1.02 per watt. This is an ideal system for a self install. Secondly, the two estimates you got ($32K and $36 K for a 10 kW system) are in line with what I charge ($3/watt; materials and labor). Assume you do a 10 kW self install system with materials cost of $10K. Your true value in the home is double that ($20 k labor "fee") as you have improved your home value by $30 k ($10k+$20k). There is a lot of data out there showing that homes with PV sell for more than the installed cost of the system. You cannot deduct your labor or get the tax credit for it, but in reality, you have substantially improved your home value. But for now, let's assume your home is improved by some 200% more than your materials cost. Thirdly, your self installed system ($10K materials cost) will get you an immediate 30% residential tax credit. On a $10K materials purchase, this will be $3K from the Feds. Looks like you have an additional state credit of 15% so that will be another $1.5k for a total of 4.5 K. Your actual basis is now $5.5 k looking forward (not $10K). Now it gets interesting. You utility structure has you in a bind being in the expensive high tier ($0.14/kWhr). The savings of $135/month you see from neighbors may or may not be correct. You can go to PVWATTS and find out how many yearly kWhrs you should expect. Beware that the assumptions in this program (defaults) are VERY conservative and are out of date. For example, PVWATTS assumes a system efficiency of 86% where the Enphase inverter efficiency is 97%. But with good inputs it will get you close. I have found that even with good inputs, my Enphase systems produce about 10-12% more monthly/yearly kWhrs than PVWATTS predicts. Let's assume you save what you have seen - $135 a month ($1620/year). On the simplest of return calculations your basis is $5.5 k and you save $1.62 K per year. This is a 3.4 year return on investment (ROI). Using the rule of 72, this is a 21% ROI. But it actually gets better . . . . In reality the $1620 you save per year go to other financial perspectives and this "saves" you some 2% per year (lost opportunity cost). The 2% figure is conservative, but it gets you there. Then assume the cost of electricity will increase significantly above inflation for many years. Choose your percentage (let's use 5%). Adding 2 and 5% together give you a 7% figure on savings per year. You can now do a reverse amortization to figure your ROI, but lets use the "rule of 72". This gives you the time to double an investment given a percent return. 72/7 = about 10 years. So just the savings on your system give you a doubling of investment (basis) in 10 years. The bottom line of all this is that the internal rate of return on a self installed solar system is on the order of 20-30%. And doing it yourself only adds to the savings. Another way to look at it is to add the tax credit ROI (21%) with production situation (7%) for a total of 28%. Again the rule of 72 gives you a payback of ~ 2.6 years. But you are also saving on electricity, so the actual ROI is even better. No - the return is NOT 8 years but certainly less than 3, maybe 2 or so. The negatives . . . . Climbing on the roof is not easy, but on a self install, you are "making a lot of $", so it is well worth your time (~ $500 per hour). A self installed system of 10 kW (~ 40 265 W panels) is about 40 or so total one person hours ($20,000 divided by 40 hours = $500 per hour). Maybe it takes you 80 hours - heck that is still a lot of cash you are saving. You may need some basic tools. Socket wrench, cordless drill, measuring tape, ladder, etc. Nothing out of the ordinary. You may (or may not) need a electrical permit to do the final hookup. I am an engineer, not an electrician, but you can hire an electrician to help or to go over everything at the end. My prices are current as I just ordered from Renvu this week (Hanwa 265 w panels at $0.51/watt and Enphase microinverters at $90 each). To get prices, you need to register, but that is easy. renvu.com \| Search By Hope this gets the wheels turning . . . . . . Steve __________________ consulting on geothermal heating/cooling & rational energy use since 1990 Last edited by stevehull; 10-14-16 at 08:07 AM..