Home Solar Panel Installation (House: appliances, buyers, luxury)
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What about the $12,000 you spent up front? As I keep saying,
you're ignoring that. You're also ignoring the income it could
have earned or the interest you pay to borrow the money.
The panels aren't free, but you are calculating that they are.
I accounted for that. I just said you spent $12k on solar panels. I did make a mistake though. The electric bill in the other scenario should be paid from cash flow, not the account with $12k in it. So if you have $12k after 10 years you'd have $19k vs the $15.5k if you buy the panels.
I accounted for that. ...after 10 years you'd
have $19k vs the $15.5k if you buy the panels.
Nope.
It might be easier to see it this way:
----------------------------------
Say you start with $100k in cash. Then you spend $12k for the S.P.
Then you earn money for 10 years with the S.P. that totals $15.5k.
How much has your cash changed?
The bonds are the "machine" that is used to produce the stream of income.
-- in the other case --
The solar panels are the "machine" that is used to produce the stream of income.
After 10 years, you have $15.5k minus $12k minus
[opportunity cost of not having the use of the $12k] or
[cost of the interest if you borrowed the $12k] plus
the 10-year-old-solar-panels.
If you are going to assume that the 10-year-old solar panels are still worth
$12k then fine. Maybe they are, (*) but you don't have $15.5k in cash.
You have to offset the initial investment. This is accounting 101.
(*) The solar panels actually cost way more than $12k. The after-tax-credit
cost was $12k. Maybe Zoidberg knows if 10-year-old panels have such a
value. Maybe they are worth $1,000. I have no idea.
W-A-A-A-A-Y too many posts in this thread to make specific quotes or references to.
Point of Usage electrical water heating. I spent 3 years in Panama where many
water heaters are PoU (for those homes / apartments that actually HAVE hot water),
and also where the kwh rates are at least 4 times what they are here. Propane heaters
outnumbered electric heaters by zillions to one because the high electric rates
emphasized how inefficient electric heaters are compared to other methods.
Convenient, but a poor ongoing economic choice..
Based on an admittedly limited amount of personal research, it is my understanding
that at least some of the utility "buy-back" plans really do have the capability
of allowing you to be paid for your own usage. My only thoughts as to why these
providers are willing to do that are;
a) they get some sort of direct federal and / or state subsidy as a matter of
general energy policy.
b) they get a tax write-off (not exclusionary to point 'a'; they might get both..)
c) they don't have to invest as much in future infrastructure and they believe that
they will therefore save money (increase profits) in the long run.
d) they screwed up. (Don't dismiss that possibility.. I spent much of my career
in the telecom business and even the airlines couldn't shoot themselves in the foot
as often as telecom companies did...why think power generating utilities are immune?)
Poncho and I disagree about a number of things, but for once, I find myself in his
camp in that I would avoid a solar generating house like the plague.
Why? How many times have YOU seen "qualified" engineers and workmen screw
the pooch? Ever had a troublesome a/c unit? Or a stove or fridge that didn't
work as advertised and umpty ump service calls later you're told "it meets specs"..
or, worse yet, "they don't make those anymore so I kain't get no parts.."..
"well, yez, thay did have a 20 year warranty, but they done got bought out
by someone else and they doan exist no moh..."
Thank, you, I don't need that in something so critical, expensive, sensitive and instantly
outdated..
To me, AT THIS TIME, projects like these are best suited for users in areas where
the power is unreliable, hyper expensive or completely unavailable. In those cases,
normal economics go by the boards and you do whatever it is that is going to
get you the required result.
As far as cost projections and ROI go, do the names Morgan and Stanly ring
any bells with anyone? Numbers are a fluid medium...
Having said that, I think 99% of solar water heating installations work pretty well
even if they are usually ugly as sin and look like a high school science project
gone bad.
You could take $12,000 and put it in an account at 5% compounded monthly. Each month, you withdraw $100 to pay your electric bill. At the end of 10 years you have $4300 or so.
You could take that $12,000 and buy solar panels. Each month that you don't pay an electric bill you deposit $100 you save into a savings account earning 5% compounded monthly. At the end of 10 years you have $15,500 or so.
Well, whichever way you want to look at it, the cash flow difference between having solar panels and not having them is $1,200 per year.
Yes the difference is 1,200.
Look at your math. If you pay $100 a month out of your bank account your short $1200 a year. If you put $100 a month into a savings account your account will have $1200.
$1200 vs -$1200 = $2400 difference, you are counting the "savings" twice in your calculations. You either do the calculations assuming you PAY $100 a month or that you SAVE $100 a month. I know when you write it out in English it sounds like you are doing both by buying solar panels, but you aren't. When you do the calculations you have choose one or the other or you are double counting the savings.
Look at your example, we put $12,000 in a back account. We pay our electric bill out of that $12,000. Now if we instead buy a solar panel with that $12,000, we don't get $100 a month. We just don't pay anything for electricity (in your example). You can't say we are saving $100 a month because we aren't saving $100/month, what we are doing is no longer paying $100 a month which we have already factored in (by not subtracting 100/month form our 0 bank account balance).
I hope this makes it clear. If you still don't believe me try and find a friend who is an engineer or accountant or mathy person. Tell them you found a way to take $12,000, turn it into $15,000 some solar panels and not spend $6000 on electricity and show them your spreadsheet. Hopefully they can explain the problem (if he/she doesn't ask them to go in halfys with you and you can get the $100 a month you are not paying for electricity and he can get the $100 a month you save ),
By the way, how long does it take to "make your money back" when you send it to the electric company?
Well heck if thats the way you like to think about things go ahead and send me $100,000 and I'll pay your Electric/Gas/Water/Garbage and heck I'll throw in Comcast into the deal.
I mean if you average $150 a month in electric and gas and $50 for water and garbage, and we will get your the deluxe premium cable for $200, thats $400 a month.
Your loosing $4800 a year on that. Instead you could be saving $4800 a year. That is 9600 a year. 10 to 11 years you will have your initial investment paid off and never have to worry about it ever again.
But really if you do nothing you are just going to pay that money to those companies the rest of your life like a sucker!
Ralthor's Bill Management System - We do the math so you don't have to!
It might be easier to see it this way:
----------------------------------
Say you start with $100k in cash. Then you spend $12k for the S.P.
Then you earn money for 10 years with the S.P. that totals $15.5k.
How much has your cash changed?
The bonds are the "machine" that is used to produce the stream of income.
-- in the other case --
The solar panels are the "machine" that is used to produce the stream of income.
After 10 years, you have $15.5k minus $12k minus
[opportunity cost of not having the use of the $12k] or
[cost of the interest if you borrowed the $12k] plus
the 10-year-old-solar-panels.
You're not following me.
Two cases: you start with $12k.
Case 1: you spend all of that $12k on solar panels. You take $100/mo out of your monthly budget and stick it in a savings account.
Case 2: you keep your $12k in a savings account. You pay your $100/mo electric bill out of your monthly budget.
Savings accounts in both cases earn 5% compounded monthly. Case 1 you have $15.5k after 10 years. Case 2 you have $19k after 10 years. I took care of the cost of the solar panels at the beginning. The opportunity cost is also figured into the calculation. I'm not assuming anything about the final value of the solar panels.
If you don't buy the panels, after 10 years you have $19k. If you do buy the panels after 10 years you have $15.5k and solar panels. The "opportunity cost" would be $3.5k
Quote:
If you are going to assume that the 10-year-old solar panels are still worth
$12k then fine. Maybe they are, (*) but you don't have $15.5k in cash.
You have to offset the initial investment. This is accounting 101.
Again, you're not following. Why do you think that I need to account for the $12k twice?
Quote:
Originally Posted by ralthor
Yes the difference is 1,200.
Look at your math. If you pay $100 a month out of your bank account your short $1200 a year. If you put $100 a month into a savings account your account will have $1200.
$1200 vs -$1200 = $2400 difference, you are counting the "savings" twice in your calculations. You either do the calculations assuming you PAY $100 a month or that you SAVE $100 a month. I know when you write it out in English it sounds like you are doing both by buying solar panels, but you aren't. When you do the calculations you have choose one or the other or you are double counting the savings.
Look at your example, we put $12,000 in a back account. We pay our electric bill out of that $12,000. Now if we instead buy a solar panel with that $12,000, we don't get $100 a month. We just don't pay anything for electricity (in your example). You can't say we are saving $100 a month because we aren't saving $100/month, what we are doing is no longer paying $100 a month which we have already factored in (by not subtracting 100/month form our 0 bank account balance).
I hope this makes it clear. If you still don't believe me try and find a friend who is an engineer or accountant or mathy person. Tell them you found a way to take $12,000, turn it into $15,000 some solar panels and not spend $6000 on electricity and show them your spreadsheet. Hopefully they can explain the problem (if he/she doesn't ask them to go in halfys with you and you can get the $100 a month you are not paying for electricity and he can get the $100 a month you save ),
I already admitted what mistake I made in a previous post, you can take your math snobbery elsewhere.
Case 1: you spend all of that $12k on solar panels.
... Case 1 you have $15.5k after 10 years.
You are promising me that I'll have $15.5k after only
10 years by making the investment you propose.
The only catch is that in order to get that $15.5k,
I have to spend $12k today, but according
to you, it doesn't count in the equation. -- I followed it just fine.
You are promising me that I'll have $15.5k after only
10 years by making the investment you propose.
The only catch is that in order to get that $15.5k,
I have to spend $12k today, but according
to you, it doesn't count in the equation. -- I followed it just fine.
Yes, you have to spend $12k today. I said that many times.
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