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Are Solar Panels On Your House Worth It?

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Installing Solar PanelsThis summer, on our trip to Lake Tahoe, we spent a night at my father-in-law’s childhood friend’s house. They had a pool that was heated using a series of black tubes put on top of their lattice patio cover. The tubes gave the patio shade from the sun, the sun heated the tubes, and the water inside the tubes went into the pool to give it a nice bath water temperature. The all powerful sun was used to heat the pool in a most novel of ways (only to me, I’m sure plenty of pools are heated this way, especially in California).

That made me wonder about solar panels and I quickly learned that they were expensive, a pain to keep clean (and maintain their efficiency), and generally more hassle than they were worth. I’m more of a long term planner than a short term one, I’m OK with it taking several years to pay off, so I wanted to calculate how long it would take to pay off the panels.

Solar Breakeven

The math is simple – take the cost of the panels and their installation and subtract any government grants or subsidies (taxes included), that’s how much fixed costs you need to overcome. Now calculate how much energy you anticipate you’ll get out of the panel over the year and divide by the cost of electricity in your area, that’ll give you the “profitability” of your panels. Finally, divide fixed costs by annual profits and you have the number of years you’ll need to break even.

The big question mark in all of this is in how much energy you expect the panel to generate. Fortunately, all it takes is a quick look at the solar calculator, created by solar power advocates and the Department of Energy, to realize that you probably won’t save any money with solar. Like a Prius, it’s an emotionally motivated decision, not a financial one.

I put in my specs and my breakeven point is 24.80 years. I’m a long term planner but nearly 25 years is way too long to recoup an investment of this size (just to breakeven!) and by then new technology will have made my panels badly obsolete. It’s like when today’s more powerful satellites pass those launched twenty years ago in the depths of space.

Solar Water Panels

Another options is to install solar water panels, which are similar to the black tubes used to heat my father-in-law’s friend’s pool. They’re sometimes called solar thermal panels or solar water heaters but they’re usually cheaper to install because the technology is more basic (no electrical connections), but it’s not something we’ve looked into.

Have you considered installing solar panels? What about the ones that just heat water (rather than generate electricity)? It appears to be all the rage in the UK where more generous benefits are provided to those who install them.

(Photo: waynenf)

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39 Responses to “Are Solar Panels On Your House Worth It?”

  1. David says:

    I live in Jerusalem, Israel. Almost every home here has solar panels to heat their water & provide gas for heating. The panel can pay for itself within 3 years.

  2. solarguy says:

    I sell solar in California, and its a great time to go solar! There has never been a better time!!! There are programs that will get you a solar system, free installation, free maintenance, insurance on the system, and they will monitor the system to make sure its running at 100% for free! Instead of spending thousands for the system, they sell you the power it generates at a fixed rate for the life of the system!! The rate less then what the electric company charges you! And as the electric company raises their rates 6% (15% in California) each year, as they have been doing, you will pay the set rate!! in 10 years when everyone is paying some huge rate to PG&E or Edison…you are sitting pretty paying that low rate!! Incentives will not get better, and its unlikely the cost of the system is going to come down to a price many people are hoping anytime soon!! And some people cant even go solar where they live!! Shade, which way their roofs are pointed all matter! A lot of customers I deal with have no idea what the electric companies are charging them for!! Look on page 2 of the electric bill and look at all the costs they rack up against you!! Transportation charge? N Why? Cause they can!! Who else are you going to buy electric from? Its a monopoly my friend!!!

  3. N00b says:

    GREAT THREAD!

    I was thinking that the ROI would be a little better on going all solar but… not quite yet (or so it seems?).

    Don’t forget the ol’ “An ounce of prevention is worth a pound of cure” saying though…

    Or “Don’t throw the baby out with the bath water” Anyways…

    My point is that it is always best to find the CHEAPEST ways to REDUCE the amount of energy that you use, BEFORE going gung-ho on buying a ton of solar panels.

    It kind of reminds me of a YouTube video that I watched of a guy who engeenered an elaborate, emergency wind turbine that was hooked to a car battery. All so he could run one, 100w INCANDESENT light bulb. DOUCH! He could have been running 3 CF bulbs and got 3x the amount of light if he would has just put a tiny bit more thought into it…

    Ideas:

    -A blanket on your hot water heater

    -Double paned windows

    -Better insulation

    -Drought resistant plants

    -Energy saving appliances (and bulbs).

    … The solar powered celing vent is a GREAT idea too. I have also seen solar powered water pumps, and tons of other neat stuff…

    … you get the idea. Sometimes you can cut your usage in half by doing a few smaller, inexpensive things — THEN the solar stuff pays itself off MUCH faster.

    The less money that is wasted, the more goes into your pocket (I made that one up all by myself and yes — I’ll stop now).

  4. Aaron says:

    You need to also account for interest rates – putting that fixed cost in the bank will be worth far more than 8000 in that time period. Mortgage calculation formulas would be more useful to find out the monthly “break even” savings.

  5. Joe says:

    Hmmm. I put solar on my home in 2006. The efficiency is lower than what’s available today, and I paid a premium. But my ROI is 14 years. And that’s based on current electricity rates. The warranty on the system is 25 years. So I’m good. Of course, I also don’t blatantly waste electricity. We use passive solar, we had an energy audit done and increased the efficiency of our home by 7%, and our appliances are energy efficient, all our windows and doors are energy efficient. I guess when combined with an energy efficient home, which really I don’t understand why anyone would WANT to waste energy, the ROI may be better than what the author found.

  6. Vincenzo Casarella says:

    Well said, but we all need to acknowledge that adding Solar on their property is an purchase which will boost the actual worth of their home if / when they choose to sell. With the environment the way it is going we cannot disregard any product that offers totally free power at no cost to both the consumer and more notably the world!

  7. James says:

    You obviously have not done your home work nor have you researched about incentives being offered by the providers in certain states. Take that with the 30% Tax Credit provided by the Govt. Pay back period in most situations is between 5 and 6 years, with double digit ROI’s for almost every single home owner in most states. Some more research and a little more wisdom on investing and you’ll understand.

  8. ScottMBlume says:

    The benefits of residential solar power are obvious. The energy from the sun is endless. It can save people money on their electric bills.


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