Hucksters Pitching Bad Solar Investments

Most people wouldn’t buy a magic elixir from a traveling pitchman, but they may be an easy mark for a PV rooftop solar installation, pitched over the Internet or by the media.

There’s an abundance of misinformation circulating on the net and in the media about PV rooftop solar. So much so, that everyone should be careful.

Many Internet sites have information on PV rooftop solar installations. Some offer to provide a free estimate of the savings people can achieve with a PV rooftop solar system, and some have an online calculator allowing the viewer to determine possible savings.

Just be careful, the calculator can distort the payback in at least two ways.

One calculator uses the amount of money required from an investment, such as a CD, as being comparable to the amount that will be saved from a PV rooftop solar system. (Note that the return from the investment may be taxable.)

The return from the investment is larger than the actual savings from the PV rooftop solar installation, and the calculator determines your payback based on this higher, misleading value.

In another ploy to inflate the value of the investment, the calculator adds the cost of the PV rooftop solar system to the value of your home when calculating the payback in years.

But a PV rooftop solar system is probably like a swimming pool. You rarely recover the cost when selling the home.

In addition, the calculator deducts the federal 30% tax credit from the investment, so the payback is determined using the net cost after the tax credit.

If PV rooftop systems are so good, why do the sellers of these systems have to distort their true value?

The answer is simple.

  • In most locations, PV rooftop solar systems aren’t a good investment.
  • They require a subsidy to make a bad investment appear good.

The online calculator also uses a variable to reflect your location. The variable is likely the insolation value for where you live.

Insolation values are determined for locations around the world, and show how much sunlight falls on the Earth at that location. It’s frequently expressed as kWh/square meter/day.

Solar Radiation Map for US. From NREL
Solar Radiation Map for US. From NREL

These values vary widely. For example:

  • Central Australia = 5.89 kWh/m2/day
  • Helsinki, Finland = 2.41 kWh/m2/day

And in the United States:

  • Phoenix, Arizona = 5.38 kWh/m2/day
  • Minneapolis, Minnesota = 3.68 kWh/m2/day

For insolation levels at other locations, go to http://sunintersolar.com/wp-content/uploads/2012/04/Insolation.pdf

But the calculators on the Internet may not take into consideration the number of cloudy days that occur at any location.

This can turn a payback of 12 years in Albany, New York, into a much longer payback.

The 12-year payback is abysmal, even if cloud cover is included in the calculation.

The payback assumes the PV rooftop solar panes face due south. If they face to the east or west, it requires an additional 2 or more years to recover the investment.

Paybacks at other locations could also be much longer than shown by a calculator on the Internet if cloud cover isn’t taken into consideration by the calculator.

Here are a sampling of paybacks periods as determined by the calculator:

  • Atlanta, GA, 15 years
  • Lincoln, NE, 17 years
  • Pittsburgh, PA, 21 years
  • Spokane, WA, 22 years
  • Tampa, FL, 11 years
  • Tucson, AZ, 10 years

It’s obvious there are few places in the United States where paybacks without subsidies are reasonable, say less than 5 years.

And PV rooftop solar panels are only expected to last 20 years, so in many locations the panels would be scrapped before they had paid for themselves.

Because of the question about cloud cover, anyone enticed into buying a PV rooftop solar system should insist on a warranty, where, if the savings over a year aren’t achieved, the company making the installation would rebate a proportionate portion of the installation cost.

For example, if the saving were 10% less than guaranteed, there would be a rebate equal to 10% of the installed cost.

This only makes good business sense.

The cost of PV rooftop solar will probably come down a little over the next decade. But even if they were 50% less, so the panels cost half of what they do today, PV rooftop solar would still be a bad investment throughout nearly all the United States.

PV rooftop solar is a bad investment for two reasons:

  1. The paybacks are abysmal.
  2. PV rooftop solar can destroy the grid. See, Rooftop Solar is Harmful, Part 1 and Part 2.

Beware of hucksters promoting PV rooftop solar.

 
PS: You can verify the paybacks by using the calculator at http://bit.ly/1IZyozw

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0 thoughts on “Hucksters Pitching Bad Solar Investments

  1. Donn,
    Another excellent article.
    One question I have, If I add a central air conditioner to my house, my taxes go up.
    If I install solar panels on the roof, do my real estate taxes increase?
    If not why not?

  2. I don’t understand exactly the point of criticizing payback calculations while using any or all of the available incentives. It would seem that whatever the net out of pocket expense may be is valid in determining the break even point. Of course, any financing costs should be included, too. Should a car buyer not consider rebates for one model over another when evaluating their options for example?

    I agree that the use of online calculators is not only misleading but dangerous. If someone is serious about investing, they need to ask for a detailed analysis from whoever is selling, specific to location and system design. They should ask for comparable data from nearby installations, too. Too much deception out there.

    And then there are those who will lease. Just as some lease cars in order to upgrade to the better model and simply enter into the car-rotation cycle, so some are willing to simply buy power from a nearly anonymous source who puts panels on their house. If they save a few bucks and feel good about themselves, it’s all they want. Never mind who comes out way ahead, financially.

    • A rebate comes from the manufacturer. A subsidy comes from ordinary people by using their taxes to pay the subsidy.
      Ordinary people shouldn’t pay for someone else’s purchase, that’s why the payback period calculations exclude the subsidy. The same is true with leases when the lessor benefits from using tax payer money in the form of subsidies.

  3. With 30 years of experience in the electric utility service the one thing I keep seeing lacking in all of these analysis is MAINTENANCE. A PV panel on your roof is not an buy-it-forget-it investment.

    First, just like your home windows, it gets dirty. And they get dirty faster than your home windows. The dirt acts like a diffuser and small amounts have more of an effect on energy recovery than the same amount of dirt on your living room window has on looking at the scenery. Various sites show that in SOCAL you need to wash them more than 4 times a year and will lose more than 25% if only done once a year. Who is going to do this? How much will you pay? How many accidents? It costs $50-100 for a simple semi annual HVAC check, and more if it is on a roof.

    Second: there is the matter of parts failure. I have worked at brand new power plants, and even the best equipment has failures. Every furnace, AC, or water heater, Dishwasher, refrigerator, etc. I have owned has had a failure well before the “lifetime” requiring a replacement of parts and a service charge. Just today I got stuck with a bill for almost $1000 for the replacement of two parts (one is precautionary as it has not failed but will soon) Each cost less than $100, however labor pushes the cost to $875 (two workers at $100 per hour labor for 3.5 hours. Two years ago a simple condenser fan replacement was almost $700. And both of these cost me an additional $99 “Diagnostic Service” fee before they would even tell me what the problem was. No HVAC service in the state will fix an AC/furnace with out collecting this non-refundable fee, which does not count toward the final repair cost. The rest of the appliances also have a fee like this, but at least some of them will count it towards the final bill. What are the PV technicians going to charge? Keep in mind that the workers are on a roof which means Two workers, OSHA requirements, (harnesses, fall protection, etc. etc.) $$$

    Third: There is a very high probability that before the system reaches 3/4s of the stated lifetime of the unit (15 years), a part will fail that you will not be able to purchase. This will require a major workaround and a good possibility that you need a total system replacement. I have had to replace two AC units and a furnace because of unavailable (manufacturer out of business, etc.,) major parts. The track record for PV system manufactures assures me this will be a very high probability.

    Fourth. Your insurance will go up and even more if you apply “replacement” cost. Soon, insurance companies will discover that the accepted firefighting procedures are not conducive for homes with solar panels on the roof and insurance costs will go up again. [It is not easy to “vent” an attic when the roof is covered with an electric solar panel. Some firefighters will not go on a roof that has them, however the newer systems are supposed to have protections for firefighters.]

    Since 1973 I have calculated the real cost of investing in a solar panel on my roof large enough (delivered capacity) to supply my home, and recalculated it every few years. I use a simple plan. Invest what I would have paid for the system into a conservative investment mutual fund. Then add just 5% of that amount every year (maintenance and repair cost) into that fund. Every time I make these calculations I always end up with more than enough money to pay for my electric bill from the accrued funds for the rest of my life. [Note from 73 through 83 it was for just a solar domestic hot water heater that would replace the electricity used to heat the water.] Even when you get paid for your excess electricity you still are losing money by not investing that money.

    • Thanks. Great comments. I haven’t mentioned maintenance before because I don’t have any actual expenses that people have incurred. But, there will be maintenance. And it will cost a lot of money.

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