Author Topic: Going Solar  (Read 8210 times)

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Offline Jeremy's Sea

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Re: Going Solar
« Reply #135 on: November 05, 2019, 01:53:19 pm »
A $3.1k reduction in total bills per year means a tick over 4 year payback period.
4 years is amazing. I must have been overcharged on my system. I figure it's going to take me a little over ten years to break even. I was also over-promised and under-delivered on mine. Oh well, in the long term it's an asset and it eventually drives the overall price of the utility down.

It depends a lot on where you are. Domestic solar PV in Australia today is very cost competitive*, and the returns do vary depending on where you live and the available retail plans you have to choose from.

* it's one of the very few technologies which are cheaper here than in the US.
I think I got in a few years too early. We've been putting together some small camping inverter/panels out in the desert and it's pretty cheap and efficient now. I do live in Los Angeles, so I get plenty of sun production most of the year, but the company I used was a bit scammy (better sales than construction abilities it seems) and went out of business shortly after my install, though I didn't experience the horror stories others did and I received my federal tax credit and all that.
I look forward to more homes getting to a 5 year break even point, then it becomes a total no brainer.
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Offline Alex Simmons

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Re: Going Solar
« Reply #136 on: November 05, 2019, 03:34:32 pm »
I look forward to more homes getting to a 5 year break even point, then it becomes a total no brainer.

Across large chunks of Australia, the payback period for domestic solar PV is typically in the 4-7 year range*. It's lower the more of your solar PV output you self consume, higher if you export a large proportion (because grid import and export tariffs are asymmetric). Obviously the retailer tariffs in your local region play a big part in this.

A PV system here costs ~A$0.80 -A$1.20 per W (of peak solar PV capacity). It can be as low as A$0.50/W in locations with additional state govt incentives. An Aussie dollar is roughly worth ~66-70 US cents.

The most popular size at present is a 6.6kW system with a 5kW inverter as a large chunk of homes are on networks where 5kW is a regulated limit that can be installed without extensive approvals being required (still requires approval). People are able to install such systems for ~A$5k, and in some locations where additional state incentives apply, for as low as A$2.5k. Depending on location and orientation such a system will produce 7-10MWh per year.

The rationale for purchasing a home battery in Australia is neither financial nor environmental, rather it's mostly about having the latest tech.

That's because in Australia:
a) A home battery is a $10,000-$15,000 bucket which can store $2 worth of electricity.
Hence batteries here have payback periods here in the order of decades (well beyond their anticipated working life, certainly well beyond their performance warranty period). For them to make financial sense the installed cost of batteries needs to be well under A$200/kWh of battery storage capacity. Currently they are >> A$1,000/kWh. For me, to break even over 10 years, a home battery would need to cost ~$150/kWh, or nearly 1/10th of the current installed cost.

b) Use of domestic battery storage results in an overall increase in CO2 emissions because i. we can export our excess solar PV production which offsets daytime fossil fuel generation and ii. the round trip efficiency losses of the battery (15% give or take). Home batteries won't provide an environmental benefit here unless and until domestic PV export is significantly restricted and/or the daytime grid becomes dominated by renewable energy (daytime is still ~70% coal). So we are talking many many years from now.

In Daniel's case I don't think he can export solar PV production in excess of his home demand and his night time grid is dominated by fossil fuel production, so it makes perfect sense to store it for later use. That's definitely an environmental win as overall it reduces the use of fossil fuel generated electricity from the grid and because of the export losses and probably pretty high import tariffs the financial equation for a battery is not nearly as bad as for Australia.



* Which is why more than 20% of all homes in Australia now have solar PV system, and the rate of installation is still growing strongly.


Offline daniel1948

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Re: Going Solar
« Reply #137 on: November 05, 2019, 07:56:43 pm »
Batteries also get you through a power outage. I once had a 4-day power outage in North Dakota after an ice storm followed by a blizzard. That was not fun. I was on a well so I had no running water. Fortunately I had a gas stove and a gas non-electric parlor heater, so I had heat and could cook food. I had plenty of drinking water but could not flush the toilet.

When I was house-hunting here I looked at and considered houses that already had solar and were on net-metering. But none of them suited me, for other reasons. So the advantage of being too late to get on net-metering is that I had to get batteries, and that gives me power when there's an outage.
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Offline Alex Simmons

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Re: Going Solar
« Reply #138 on: November 05, 2019, 08:30:15 pm »
Batteries also get you through a power outage.

That's true (provided the battery is set up to do that, because not all of them are or can) but it's not the only solution. I'll be installing generator backup. Way cheaper and very reliable solution and without the time use limitation a battery has. It will also double as a pump power source in case I need to deal with bush fire protection (with the pool being the water reservoir).

Offline brilligtove

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Re: Going Solar
« Reply #139 on: November 10, 2019, 10:24:39 am »
One of my friends is building his cottage over the next three years. This year was getting core infrastructure in place: the driveway, the septic system, solar panels, battery, and utility shed to house the battery. Next year the shed will hold a bunch of other utility stuff, such as the fresh-water treatment system (he can draw from the lake instead of having to make a well). I think the generator will go in there too (I think it's going to be gas, but I can't remember his first choice for fuel.)

The workshop will go in next year, which will be the bootstrap phase for building the house the year after.

He'll be off 100% grid, but his solar will have to be supplemented with carbon fuel for peak power use (such as when the shop is running full tilt).

My plan for the summer had been to spend a lot of time up at his land, helping to build, but health challenges prevented my participation. I'm looking forward to learning a lot more about how the solar power system works when I do.
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Offline Alex Simmons

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Re: Going Solar
« Reply #140 on: November 21, 2019, 12:54:00 am »
Full year of Solar PV data, here's the impact financially:

What we would have paid without Solar PV, what we did pay, and the impact had we added a battery of Tesla Powerwall 2 specification.



It's the solar PV doing the heavy financial lifting. Adding a battery doesn't provide much value in our market. A payback of 45+ years.

Online arthwollipot

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Re: Going Solar
« Reply #141 on: November 21, 2019, 01:04:56 am »
I've grabbed a copy of that, if that's okay with you, to show to my dad, who until we spoke to someone recently was convinced that solar without battery was not worth the expense.

My place has a perfect north-facing roof, and I'm really keen to install solar PV, but my dad actually owns the place, so he's the one I need to convince. He's also the one who's going to pay for it. :)
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Offline Alex Simmons

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Re: Going Solar
« Reply #142 on: November 21, 2019, 04:55:47 am »
I've grabbed a copy of that, if that's okay with you, to show to my dad, who until we spoke to someone recently was convinced that solar without battery was not worth the expense.

My place has a perfect north-facing roof, and I'm really keen to install solar PV, but my dad actually owns the place, so he's the one I need to convince. He's also the one who's going to pay for it. :)

The economics of a battery depend very much on local market / regulatory conditions. The above is specific to the retail electricity plans we have available.

In Australia a battery (at current costs) will only be financially viable under relatively rare circumstances. For the vast bulk of the market here they make no financial sense.

Which is why even in South Australia which has the biggest difference between import and export tariffs (a bigger difference makes battery economics better), and a $6,000 government grant for home batteries, the uptake of those grants has been most underwhelming (way undersubscribed). Even such a generous subsidy doesn't make them financially sensible.

Solar PV on the other hand is a no-brainer in Australia, especially if you have suitable rooftop real estate to use. There are very few investments with such good return. Of course there are some small pockets where it's not but they are few and far between. Which would explain why over 2 million Aussie homes (more than 1 house in 5) have a solar PV system and less than 50,000 have batteries.

Offline daniel1948

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Re: Going Solar
« Reply #143 on: November 21, 2019, 09:26:55 am »
Full year of Solar PV data, here's the impact financially:

What we would have paid without Solar PV, what we did pay, and the impact had we added a battery of Tesla Powerwall 2 specification.



It's the solar PV doing the heavy financial lifting. Adding a battery doesn't provide much value in our market. A payback of 45+ years.

So the difference with or without batteries at your location is AUD$300 per year. I think the installed cost of a Powerwall 2 in Australia is around AUD$10,800. That is an ROI of 2.8%. If you could get a 2.8% loan it's a break-even. If you have to sell investments yielding more than 2.8% you're financially better off not doing it.

OTOH, say you sell investments presently yielding 3.5% (I think this is a reasonable guess for safe, conservative investments in mutual funds here in the U.S.) and you save $300/year on your electric bill, you're only losing (spending) $78/year to reduce your carbon footprint a bit more.

If you have to borrow at 10% (I have no idea what loan rates are there) then it would be costing you $780/year.

I'm very far from having a year's worth of data, but my situation was different because the utility would not take my excess, so batteries were a requirement for me. The benefit is that I'm protected from power outages. I suspect that the estimated break-even time for my system was very much overly optimistic, but I don't care because overall it's still a good investment and reduces my carbon footprint and I can run the A/C and drive the car guilt-free.
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Offline Alex Simmons

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Re: Going Solar
« Reply #144 on: November 21, 2019, 02:40:09 pm »

So the difference with or without batteries at your location is AUD$300 per year. I think the installed cost of a Powerwall 2 in Australia is around AUD$10,800. That is an ROI of 2.8%. If you could get a 2.8% loan it's a break-even. If you have to sell investments yielding more than 2.8% you're financially better off not doing it.

A PW2 where I am is at least A$14,000 installed.

It would never break even. Not even close. It's a massive loss maker.

Remember a battery is a depreciating (and non-tradable) asset and it's effectively worthless at end of useful life.

In such a case you need an ROI that will return a positive balance over the effective life of the unit. I think 10 years is a reasonable expectation. You might stretch it to 15 years but 10 is what the warranty will cover (assuming Tesla are around in 10-15 years).

So $14,000 / 10 years means the battery needs to return $1,400/year just to break even (not counting time value of money).

IOW if I've forked out $14,000 and after 10 years I've only saved $3000 then I'm still down $11,000 and am left with an asset that's effectively worthless (indeed I'd probably have to pay to have it removed/replaced). Maybe if I'm lucky I squeeze another $1500 out of it over the next 5 years. I won't because of course they degrade over time so by then I might get another $1,000 of savings out of it. So after 15 years I'm still down $10,000.

On the other hand if I did nothing then after 10 years I still have my $14,000 in cash (less inflation, plus any investment income) and paid an $3,000 for the electricity. So I still have $11,000 cash versus a virtually worthless asset.

If I borrowed to get a PW2, the best possible rate would be a home mortgage loan at ~3.1% (a personal loan would be at least 7% +), so now I have debt repayments on the principle of $14,000 plus interest of $2,300 over 10 years, so now I'm down $16,300 for a $3,000 return. IOW I've lost $13,300.

Not to mention the opportunity cost of what $14k could do.

That's about equivalent to burning a $5 bill every day for 10 years.
« Last Edit: November 21, 2019, 02:51:16 pm by Alex Simmons »

Offline daniel1948

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Re: Going Solar
« Reply #145 on: November 21, 2019, 05:41:57 pm »
I think that ten years is an extremely pessimistic estimate for the useful life of a Powerwall. I drove my Tesla Roadster for seven years. It was my daily driver during that time. Before I sold it a prospective buyer asked me to have Tesla test the battery, which they did, and it was at something like 98%. Nissan ran into problems with the first generation Leaf because they didn't have proper battery management for hot climates. Tesla has never had that issue due to aggressive battery management. And most people won't be installing their Powerwalls in extremely hot locations exposed to direct sun.

I expect my Powerwalls to last longer than I do.

But I hear you on the economics, based on your region and the fact that your utility will buy your excess daytime power. As I said, my situation is different because I had to get batteries if I wanted to have solar at all.
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Offline Alex Simmons

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Re: Going Solar
« Reply #146 on: November 21, 2019, 08:29:45 pm »
I agree that we might expect them to have a longer life, the problem is how long it takes before the financials stack up plus it is quite a risk with a product that's been available (in Australia) for just over 2 years. And in my case the payback period is 45+ years.

As to heat, well the biggest installed base of PW2s is in Adelaide. It's still Spring yet this week they've already had 42C day. It will be interesting to see how they cope with the filthy hot (increasingly so) Adelaide summers as the years roll on.

Offline daniel1948

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Re: Going Solar
« Reply #147 on: November 21, 2019, 09:10:54 pm »
Powerwall may have been available for only two years in Australia, but Tesla has been building battery packs for cars for a decade, and they have an excellent track record. And the difference between Powerwall and a car battery is that you don't park a Powerwall outside in the direct sun.

But for all our tropical reputation here, it never reaches 42° C.

My garage always got very hot. Like maybe 36° C. So I started leaving the door between the house and the garage open to cool the garage. Now it's maybe 30 in the garage and the house A/C has no trouble still keeping the house cool with free solar power.

The key is to use some of that free daytime solar power to keep the room with the Powerwalls cool.
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Offline Alex Simmons

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Re: Going Solar
« Reply #148 on: November 21, 2019, 09:40:29 pm »
A typical home battery gets hammered a fair bit more than a car battery. 1,000 battery cycles in a car is 300,000+km of driving and only about 3 years service as a home battery. PW2 warranty is 70% capacity after 10 years.