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 dogmaXYZPremium
join:2002-08-15
Boulder City, NV
kudos:1 | reply to itguy05
Re: I've gone and done it ... solar install said by itguy05:Really? The only way it makes any sort of sense is because You and I are footing the bill for the tax credits.
I concur, You and I are also footing the bill for someones mortgage interest tax deduction as well, among countless other tax based incentives. (note to nunya  , does this mean that purchasing a home mortgage with it's associated tax incentives does not bode well for the home ownership?). It is what it is.
Even if there were no tax credits/rebates, there would still be an ROI, just much further down the road.
I further agree that everyone's financial calculations with respect to an investment such as this will be unique. If the OP (as I guesstimated - OP correct me if I am wrong) has a electricity cost of about $144/Month on average, your model [$13,000 / 300 = $43.33 per month in cost] saves him about $100/Month, or [$100 x 300] $30,000.
My point is that a good investment will accrue value over time, but in order to take advantage of the opportunity, we must often allow our money to be oustide of our direct control for a significant period of time. In this case, the OP probably gets an instant rebate from the State, and very important: he must have a Federal tax liability in order to take advantage of the Federal tax credit for Solar. Plus, his out of pocket money up front/cost to borrow.
But lets look at this in pure investment terms:
Assumptions-
The OP invest $13,000 up front.
The OP has an average electricity expense of $140/Month.
The OP's Solar system zero's out his monthly electricity bill.
So his $13,000 up front investment produces a net $140/Month or ($140 x 12) $1680/Year he otherwise would have had to spend. Additionally, the OP would have had to earn about $175/Month in order to pay the $140 as that is a post-tax expense.
That's a 13% IRR (Internal Rate of Return).
If anyone can present any *extremely low risk* investment that kicks off 13% per year, effectively guaranteed for the next 25 years, please let me know. | |
 Jack_in_VAPremium
join:2007-11-26
Mathews, VA
kudos:1 | said by dogma:I concur, You and I are also footing the bill for someones mortgage interest tax deduction as well, among countless other tax based incentives. (note to nunya , does this mean that purchasing a home mortgage with it's associated tax incentives does not bode well for the home ownership?). It is what it is.
Even if there were no tax credits/rebates, there would still be an ROI, just much further down the road. quote:
I further agree that everyone's financial calculations with respect to an investment such as this will be unique. If the OP (as I guesstimated - OP correct me if I am wrong) has a electricity cost of about $144/Month on average, your model [$13,000 / 300 = $43.33 per month in cost] saves him about $100/Month, or [$100 x 300] $30,000.
$144/mo @ 0.11 kWh works out to be about 1300 kWh. His system is 7000 kWh/year so that's 583 kWh/mo from his solar. Not even half of his demand so 583 x 0.11 = $64.00 - $43 (cost) =$21.00/mo savings.
quote:
Assumptions-
The OP invest $13,000 up front.
The OP has an average electricity expense of $140/Month.
The OP's Solar system zero's out his monthly electricity bill.
That's a faulty assumption as the OP's system cannot zero out his monthly bill. He can only achieve 583 kWh from his solar. He will still have more than half of his present bill.
quote:
So his $13,000 up front investment produces a net $140/Month or ($140 x 12) $1680/Year he otherwise would have had to spend. Additionally, the OP would have had to earn about $175/Month in order to pay the $140 as that is a post-tax expense.
OP is not saving $140/month. He's saving $23/Month.
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| reply to dogma
said by dogma:Assumptions-
The OP invest $13,000 up front.
The OP has an average electricity expense of $140/Month.
The OP's Solar system zero's out his monthly electricity bill.
[...] That's a 13% IRR (Internal Rate of Return).
The assumptions are wrong.
OP invests 13,000 upfront.
The system produces 7000kWh/year. Based on a $0.11/kWh current rate that's $770/year. A bit shy of 6% return rate.
Take it even further... Start with a $0.15/kWh rate. It still takes 13 years to offset the initial investment.
If you compound the returns and take into account the real life loss in capacity, it's only a 2.5% annual rate. Add the inflation and it's still roughly between the return rate of treasury bonds and the return rate of an ultra-conservative, low risk portfolio. | |
Jack_in_VAPremium
join:2007-11-26
Mathews, VA
kudos:1 | $770/yr / 12 mo = $64/mo | |
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