Let's talk Solar Panels

7,685 Views | 58 Replies | Last: 4 yr ago by ChoppinDs40
ChoppinDs40
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4:57p, 6/13/22
AG
X-posted from HI board:

I've now sat through 3 pitches from these guys and while they have a lot of similarities there are definitely some differences.

This last one is the most intriguing. Their strategy is to only put enough panels to cover my usage +15% or so. The plan being that I get a small annual check by selling back into the grid.

They then finance the panels in 5 year increments to where it's close to matching my monthly power bill. Basically, the idea is my out of pocket is about the same every month and I'm paying these suckers off. Part of this is kinda "sale-y" since most people don't live in the house for more than 5 years. You look at the "debt" bucket differently since when you go to pay it off, your additional equity in the house should more than off-set the remaining payment on the panels. And a new buyer has basically $0 electricity costs.

They warranty all the work AND the roof since they're running conduit through the decking. 25 years parts and labor. We live in North Texas and their panels aren't getting damage by hail (so he says, in less words).

This is a larger company, not fly-by-nighter roofing company throwing up panels.

I'm not an idiot when it comes to numbers... so spare me on the "what's the total cost, time value of money, what's the payback period"

I'm more looking for "what are the pitfalls here?" who's gotten Solar and wishes they hadn't?

with power prices doubling this year... investments like these make more and more sense.

what say ye, texags?
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1939
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5:00p, 6/13/22
AG
I didn't do it because I don't want panels on the front of my house, but the panels need to face south the get the most production.
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ChoppinDs40
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In reply to 1939 • 5:03p, 6/13/22
AG
mine faces southeast so they'd put them on the west side. Not too terrible looking - wife will hate it though.
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Bird Poo
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In reply to 1939 • 5:07p, 6/13/22
AG
1939 said:
I didn't do it because I don't want panels on the front of my house, but the panels need to face south the get the most production.
My neighbor has them on the south and west sides of his roof. He said the West side produces 80% of the power generated from the system.
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agAngeldad
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5:10p, 6/13/22
Ass ugly!!
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ORAggieFan
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5:31p, 6/13/22
My situation is different as I live in CA. But, I got line about ten years ago and it's one of the best investments I've made. Zero regrets in terms of looks.
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Casey TableTennis
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5:38p, 6/13/22
AG
I believe this is best approached like buying a car. First decide if you would pay cash for the panels/system. If so, proceed. Then, decide if you would actually pay cash or finance.

Even if you can't afford to pay cash, this is still a helpful exercise.

I'm sure some home appraisers around here know what the adjustments are for these owned free and clear on a home. Would be curious to know bang for the buck from that perspective.
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yemtig
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5:42p, 6/13/22
AG
I have a 31 panel array and you'd never know that I have solar panels, that was a big thing to me. If I had to have them on my roof in the front of my house, I wouldn't have done it. I pay about $8.50/month for my meter and that's it. I've been in my house for like 15 years, so yes they are paid off and I'm past the point of breaking even. Never had a problem other than when it snows the few times a year here in NM... Once the snow melts, you are back in business.. I thought they were a gimmick but they work very well. Oh, if you go ahead with the project have them put a border around your entire array to keep out the birds, that can be annoying to have them nest under your panels. Have an enphase system and they make quality stuff. My house is 3400 sq ft and have never paid for electricity since they've been installed other than the monthly 8.50 fee for the meter feeding the power into the grid. Nice when you have a brutally hot summer.
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BCG Disciple
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6:46p, 6/13/22
AG
Who is the company? I'm interested.
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GQaggie
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6:58p, 6/13/22
AG
Do you have the option to have a battery system to store excess energy rather than selling back to the electric company?
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yemtig
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In reply to GQaggie • 7:46p, 6/13/22
AG
GQaggie said:
Do you have the option to have a battery system to store excess energy rather than selling back to the electric company?
No, I do not. I'm not sure if I know the answer to that question. I have thought of adding on per se if that is possible to have a system feed into the grid and that you could switch over to battery storage. I'm sure you could design a system like that, but the battery systems are pretty pricey with the batteries being a lot of the cost. You might look around and ask the professionals on that one.
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Win At Life
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In reply to ChoppinDs40 • 8:06p, 6/13/22
AG
Don't let them stick their big panels where the sun don't shine.
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aco98
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8:29p, 6/13/22
AG
I just had a patio cover put in with solar panels as the roofing. It turned out really nice and with the 26% back from Uncle Sam it was cheaper than putting in a nice tradition cover. The electric savings is just icing
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lead
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8:46p, 6/13/22
A lot can happen in just a few years. Eventually retail electric providers will stop charging (or paying) at a flat rate for the entire month. It's an arrangement that hurts the grid and disproportionately puts more cost on consumers without renewables. Also, to shore up grid stability, pricing may be changed to incentivize dispatchable generation. And if you'll have significant batteries then there could be some incentive for that.

Just don't put them on the front like my neighbor.
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Kenneth_2003
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9:06p, 6/13/22
AG
Like just mentioned I expect Texas to move in the coming years to allow grid owners to pay reduced rates and not just the negative amount that your REP is charging you to receive power. You're an unpredictable generator and they have to over pay market to move your power.

Also you mentioned the panels not being damaged by hail, but when that hail tears up the rest of your roof... who pays for the panels to be removed and reinstalled?
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ChoppinDs40
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In reply to Kenneth_2003 • 9:17p, 6/13/22
AG
Kenneth_2003 said:
Like just mentioned I expect Texas to move in the coming years to allow grid owners to pay reduced rates and not just the negative amount that your REP is charging you to receive power. You're an unpredictable generator and they have to over pay market to move your power.

Also you mentioned the panels not being damaged by hail, but when that hail tears up the rest of your roof... who pays for the panels to be removed and reinstalled?


Can you explain your first paragraph? Are you saying the power I produce won't be at the same rate I'm paying? I don't follow.

Hail question - they come out, uninstall, sub a new roof contractor, and put them back up. I understand free of charge - need to confirm that.
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ChoppinDs40
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In reply to GQaggie • 9:20p, 6/13/22
AG
GQaggie said:
Do you have the option to have a battery system to store excess energy rather than selling back to the electric company?

I asked about batteries and he said you could, but nickel is super expensive and it's all in Ukraine (fact check?). Why spend an extra 10-15k on batteries when you only need them maybe a few days every 10 years? Just get a generator if the grid fails. Were his words.

A big selling point they're pushing is… most people are only in their homes for 5-7 years. Get the panels, pay in them for 5 years. Payment is less than your energy bill. The equity from having panels free and clear for a new buyer will easily cover your remaining cost on the panels.
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ChoppinDs40
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In reply to BCG Disciple • 9:20p, 6/13/22
AG
BCG Disciple said:
Who is the company? I'm interested.


Blue Raven
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lead
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In reply to ChoppinDs40 • 9:34p, 6/13/22
ChoppinDs40 said:


Can you explain your first paragraph? Are you saying the power I produce won't be at the same rate I'm paying? I don't follow.
.


You followed perfectly. It's only a possibility but from a utilitarian aspect it is necessary. Power generated when margin between supply and demand is low (usually the evening) is more valuable than power generated when that margin is greater. Also, the supply and demand curve have changed over time as more renewables (and eventually storage) come online. So it's hard to say what the future looks like.

For these same reasons, a dispatchable power source is more valuable than a renewable.

https://www.ercot.com/gridmktinfo/dashboards
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texagbeliever
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In reply to ChoppinDs40 • 9:36p, 6/13/22
I think your risk is a recession and interest rate hikes. Both are probable here soon. Recession will cause energy prices to fall lowering the value of having solar panels. Higher interest rates will suppress home prices which will include the value of solar assets. Just something to keep in mind.
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ChoppinDs40
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In reply to texagbeliever • 9:43p, 6/13/22
AG
Yea I've thought about this… but I'm not sure a recession is going to impact utility prices as much as we think.

ESG and globalist green nuts will continue to influence our daily lives, methinks.
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texagbeliever
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In reply to ChoppinDs40 • 9:56p, 6/13/22
High energy prices are all natural gas price driven in Texas (not spot market). If that falls to $3-4 you'd see the energy forwards drop 50-80%. Also Russia ending the war with Ukraine would likely be very bearish news for domestic energy prices.

While it does seem like a 1 way train for ESG, the pendulum could swing violently back and no better way to gain support against then economic costs.
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aunuwyn08
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10:23p, 6/13/22
AG
Let me tell you why I pulled the trigger on them for install next week. I was offered a 20 year .99% interest loan to finance the entire system. With rates on the rise I'll just keep the tax credit and treat it as an extremely low cost cash out refi.

When people offer me next to free money to defray a fixed cost I'll take the deal every time.
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themissinglink
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10:31p, 6/13/22
AG
I can't speak for the specifics of the Texas market, but I've looked into solar on the east coast and it's generally a decent investment over here with payback periods in the 5-8 years (mostly because we pay an arm & leg for electricity). A couple of things to unpack from your post.

I've seen solar panels sold in 3 different ways (ranked in order of typical ROI of the project)

1) Owned - You own the panels outright and can take advantage of the tax credit. You can get a secured or unsecured loan to purchase the panels. Higher upfront costs to the homeowner but almost always the better return.
2) Leased - You don't own the panels but might as well given the expected lifespan of solar panels are ~20-25 years. The owner of the panels is responsible for maintenance and gets the tax credit. Sometimes it's a Rent-A-Center style lease-to-own and you get the panels at the end. The advantage is typically no upfront payment and fixed costs (typically with annual escalators) over the life of the lease which matches your projected electricity costs.
3) Power purchase arrangement - You agree to let a company put solar panels on your home and you purchase the electricity generated from the panels. The company has a lien on your property and if you sell your home, the buyer needs to either take over the agreement or you need to pay an astronomical fee to get out of the arrangement. These are largely a scam but at least you get to smugly tell your neighbors you are saving the world by using solar energy.

I don't know anything about the company you mentioned. I would get the numbers from them and calculate the APR of the loan and compare it to financing it yourself with a home equity loan or HELOC. The concern being that your being sold solar panels from a bank disguised as a solar company.

Regarding your comment on using the arrangement to install the panels to build home equity, I wouldn't think of it like that. Some of the research I've seen show the additional equity you get for installing solar panels is typically 25-50% the cost of the project (higher in blue states where buyers give a **** about it).
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MRB10
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10:33p, 6/13/22
AG
Get a quote from your agent on the increase in homeowners insurance as you're doing your math. Just fyi.
“There is no red.
There is no blue.
There is the state.
And there is you.”

“As government expands, Liberty contracts” - R. Reagan
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ChoppinDs40
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In reply to MRB10 • 7:33a, 6/14/22
AG
NTXAg10 said:
Get a quote from your agent on the increase in homeowners insurance as you're doing your math. Just fyi.


Hadn't thought about that. Why would it increase outside of just overall value increase?

Assumed roof replacement would be higher?
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ChoppinDs40
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In reply to themissinglink • 9:14a, 6/14/22
AG
themissinglink said:
I can't speak for the specifics of the Texas market, but I've looked into solar on the east coast and it's generally a decent investment over here with payback periods in the 5-8 years (mostly because we pay an arm & leg for electricity). A couple of things to unpack from your post.

I've seen solar panels sold in 3 different ways (ranked in order of typical ROI of the project)

1) Owned - You own the panels outright and can take advantage of the tax credit. You can get a secured or unsecured loan to purchase the panels. Higher upfront costs to the homeowner but almost always the better return.
2) Leased - You don't own the panels but might as well given the expected lifespan of solar panels are ~20-25 years. The owner of the panels is responsible for maintenance and gets the tax credit. Sometimes it's a Rent-A-Center style lease-to-own and you get the panels at the end. The advantage is typically no upfront payment and fixed costs (typically with annual escalators) over the life of the lease which matches your projected electricity costs.
3) Power purchase arrangement - You agree to let a company put solar panels on your home and you purchase the electricity generated from the panels. The company has a lien on your property and if you sell your home, the buyer needs to either take over the agreement or you need to pay an astronomical fee to get out of the arrangement. These are largely a scam but at least you get to smugly tell your neighbors you are saving the world by using solar energy.

I don't know anything about the company you mentioned. I would get the numbers from them and calculate the APR of the loan and compare it to financing it yourself with a home equity loan or HELOC. The concern being that your being sold solar panels from a bank disguised as a solar company.

Regarding your comment on using the arrangement to install the panels to build home equity, I wouldn't think of it like that. Some of the research I've seen show the additional equity you get for installing solar panels is typically 25-50% the cost of the project (higher in blue states where buyers give a **** about it).
I would be going the owned route.

on the equity piece, I agree but that's probably changing with the expected continual increase in power. That damn winter storm changed the landscape here forever, I think. And the world's reliance on natural gas going forward.

I would argue the value increase is something like... what the annual electricity savings (or monthly) converts into 30yr loan at mortgage rates at the time.. i.e., how much more house does this savings let you buy? obviously wouldn't be a 1 to 1 (and there's degradation and life of the asset/maintenance to consider...), BUT, ~$200/month (and potentially higher as prices increase), can easily convert to $30/35k of equity which should cover the remaining cost of the panels... assuming my original example holds true...

Now, if they come back and say "yeah, it's going to be like $80k for panels"... I'm out.
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YouBet
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11:38a, 6/14/22
AG
I recall reading that power companies had started charging fees back to consumers that negated the benefit of you selling energy back to them? Is that right?
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Bob_Ag
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12:34p, 6/14/22
AG
As a residential appraiser, keep in mind that we can only apply value to solar panels in certain circumstances as per Fannie Mae requirements. The reason I mention this is borrowers will question why the solar panels were or were not given value on an appraisal and its because Fannie Mae has strict guidelines for lenders and appraisers. This is something to keep in mind because if you are going to finance, it very much depends on how you go about that debt.

Fannie Mae Guidelines
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cjsag94
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2:07p, 6/14/22
AG
I'd be very surprised if solar panels moved the needle much on market value of your home, certainly not $30-$35k. I think someone mentioned earlier you get 25-50% of the residual value of of them.

I pay about $2500/year in electricity costs... 3000 sq ft, NW Houston, swimming pool. From what I can tell, it's 12-15 years just to break even on purchasing these. Then there's the home insurance question, maintenance, etc.

I feel like these are just a cool factor that some people want to have. Now, if electricity rates go up and stay up considerably, that changes things... Of course then I'm sure they'll charge more for the panels.
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Comeby!
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In reply to ChoppinDs40 • 3:30p, 6/14/22
AG
Run that 5 year math by me again? 15% of usage but matching your monthly power bill?
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themissinglink
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In reply to ChoppinDs40 • 3:31p, 6/14/22
AG
Quote:
on the equity piece, I agree but that's probably changing with the expected continual increase in power. That damn winter storm changed the landscape here forever, I think. And the world's reliance on natural gas going forward.

I would argue the value increase is something like... what the annual electricity savings (or monthly) converts into 30yr loan at mortgage rates at the time.. i.e., how much more house does this savings let you buy? obviously wouldn't be a 1 to 1 (and there's degradation and life of the asset/maintenance to consider...), BUT, ~$200/month (and potentially higher as prices increase), can easily convert to $30/35k of equity which should cover the remaining cost of the panels... assuming my original example holds true...

Now, if they come back and say "yeah, it's going to be like $80k for panels"... I'm out.
Eh. Your math seems a little high. Saving ~$200/month and assuming $30/35k of equity makes is a return of 6-8% annually without considering repairs replacement costs.

Also, home buyers don't operate rationally on things like cost savings. Solar panels are definitely a plus, but a buyer will care more about the specs/features of the house. They want X number of bedrooms, X number of bathrooms, an updated kitchen, and 0.5 acre all within their allotted budget. Especially when most buyers are using significant leverage to purchase a home.

I've seen a number of deals which make sense, but if your primary reason for doing it is to build equity in a house you plan to sell in 5 years, it is hard for me to see it working out for you.

Personally, I've seriously looked into it and the ROI makes sense in my area if I stay in my home long-term , but my hesitations are 1) I expect to replace my roof in the next 5 years and 2) I'm not confident I'll be in the house longer than 5-10 years.
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AgGrad99
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4:15p, 6/14/22
AG

Quote:
A big selling point they're pushing is… most people are only in their homes for 5-7 years. Get the panels, pay in them for 5 years. Payment is less than your energy bill. The equity from having panels free and clear for a new buyer will easily cover your remaining cost on the panels.
I think it's like adding a pool.

People are shopping for homes based on neighborhood and square footage. It might be a nice selling point, and maybe help sell yours over another one they're considering...but I dont think they are necessarily going to help you sell your house for more.

And like a pool, there are likely some people that dont want to mess with them, and it might be a turn off.

All that to say...my suggestion would be to base your decision on the benefit to you, while in your house; not on a perceived benefit when you sell it.
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Diggity
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In reply to AgGrad99 • 4:25p, 6/14/22
AG
you must not have looked for homes with pools since Covid hit.
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Enrico Pallazzo
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5:05p, 6/14/22
Don't expect to sell back to the grid. Those plans usually jack you on your rate when you do need to buy power, so good chance you net lose compared to just getting a best rate when you use and giving away the excess for free

My in-laws have them, mostly because he is a gadget guy with money to burn who can't handle others having toys that he does not. From what I've seen, the payback is way too extended for my taste, so at least in Texas, I've always considered them more for those motivated by the green types and gadget types, not the financial sense types. But that was also pre-Biden
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