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Long Term Viability of Solar Power for Homes

Updated on November 22, 2016

Introduction

Solar energy is one of the renewable energy being encouraged to reduce fossil fuel power plants. The government has instituted various incentives including tax credits for individuals to convert to solar power since 2005. The tax credits is 30% and a significant assistance to help individuals. However, this incentive will be expiring at the end of 2016. The question is will the end of the tax credits put an end to the solar power homes?

-June 2015

Background

My personal interest in solar power goes back quite a few years. I remember the fascination with small solar panels in ornaments and garden lights. All those were more decorative than essential uses. The promise of a renewable energy source based on the sun is very attractive. However, the practice is far from the hype. The cost/efficiency factor has prevented large scale adoptions of solar technology. When the problem of global warming was first proposed, the government began to get involved and started funding research into improving solar technology among many other green initiatives. The motivation was good and well worth the small amount of funding.

The invention of LED lights changed the trajectory of solar lighting. At first, the lights were too dim to compete with incandescent bulbs. Now, the LED lights are long lasting, uses less power, put out very little heat and most importantly are bright. This means that the little amount of solar power can go much more in terms of lighting.

Meanwhile, solar panels have made tremendous progress in terms of reduced cost and increased efficiency. Along with the government incentive of generous tax credits, some have converted their homes to solar especially in areas of the country where the sun is more visible in the south and west.

In the Northeast where I live, I've been noticing more homes adding solar panels to their roofs.

Real Owner's Experiences

When I started doing research on the practicality of solar powered homes, I found very little hard data and owner experiences. There are plenty of websites that promote and sell solar solutions and provides rosy financial picture. There projections are based on best case scenarios and certain assumptions. It is hard to estimate what the real costs/benefits are over a long period of time.

Outstanding Issues

The following is a list of considerations before committing to a long term investment in solar power.

  • cost
  • efficiency
  • reliability
  • depreciation
  • esthetics
  • weather variability
  • electric grid
  • availability
  • marketability

The Problem Long Term

The problem I see with solar power for home use is economic. Once the government incentives are removed, there will be a drastic reduction in home conversions. This will lead to the "orphan technology" syndrome. A term coined to describe computer technologies that becomes obsolete. The same can be said for solar technology once the tax incentives expires.

The end of 2016 is the deadline for the expiration of tax credits. We will see in a short time whether solar power for homes are viable.

Climate Change...

The science of global warming and climate change is intricately tied to all the efforts to move to greener energy. It is also tied to the environmental movement to reduce pollution and CO2 outputs. This is a theory that will require a long period of time to confirm or deny. With due respect to Al Gore, the science is NOT settled. There are many who disputes the claims and long term projections of current climate scientists and models. In addition, the climate variability depended on many other natural events which are totally out of man's control. It is a leap of faith to believe that climate on earth is capable of being affected by man made activities. Before committing to a long term strategy that could last 30-50 years, careful considerations must be done now.

The big question for me is still this. What if AGW theory is wrong? or not as big a factor as projected? What then?

Technology

As it is with many new technologies, there needs to be a period of trials. This is often referred to as the beta phase. Solar technology received government funding in the early stages to help kick start it. After the initial period, if a technology proofs to be worthy or cost effective, it will be naturally adopted. However, if a new technology does not meet the criteria, it should be abandoned for other more promising technology. Solar power for homes has reached that point.

The following are two projected charts. Time will tell if they fulfill their promise.

My Recommendations

Before I offer my recommendations, I want to state up front I have no financial interest related to the solar energy field. I am a conservative who is also a skeptic on AGW theory. If you follow some of my other hubs, you already know that. I also don't believe the government should pick winners and losers when it comes to energy production. The solar tax credits will expire at the end of 2016.

Here are my list of recommendations.

  • Weight all factors carefully before making a decision.
  • Don't do it for the wrong reasons.
  • If you are convinced by global warming theory and want to do your part to help, go for it.
  • Don't expect long term savings on your electricity usage. The price will fluctuate up or down and there are no long term guarantees.
  • The viability of solar energy for home depends on your location and your house. Probably more suited for the South and Western states. The shape and direction of your roof will determine the efficiency of your installation.
  • Once you decided, make sure you pick a reputable installer. Check with your local BBB.
  • Consider adding the power wall as battery backup. It will come in handy when you have power disruptions.
  • Tying to the power grid is not as lucrative as it may seem. There are cost and complications related to that option.
  • Speak to a few owners in your area that have installed one for at least 3 years. Learn from their experiences.
  • Check with a few local realtors about the potential value of adding solar power. It may not be as rosy as the salesman claims.

Solar Power Niche

I do believe there is a niche market for solar power. These are solar farms in the South and the West. It makes sense where the sun is strong and less interference due to weather. Also, energy production should be left to professionals. These system after put into production will need periodic maintenance and upgrades. A private home cannot follow up with all the necessary steps.

A promising new technology is the Powerwall introduced by Elon Musk. If the economics can be proven, this will make a great alternative to having backup generators for private homes. However, it this technology is to be adopted, I hope the government will stay out of it. There should not be any incentives given to support this new technology.

Summary

This is one topic close to my heart. I have followed the potential of solar power for many years. I also like the prospect of low cost renewable energy. However, I have seem too many technologies fall by the way side because they did not fulfill the promise. I hate to see naive people be pulled into something for years to come based on hype.

After Thoughts... (Dec. 19, 2015)

Recently, one of my old friend in the Northeast area said he has installed Solar Panels on his roof and have had a great experience so far. He has leased it from Sungevity since 12/2014. He wrote a blog describing his experience and offered some great money saving ideas. He also submitted a review here which you might find useful.

I am still skeptical about solar power in the Northeast region and would like to see at least 5 years of use before making a commitment. It is good to get some hard data from a real homeowner. In my friend's case, he lives alone and have an electric heated home.This should figure in his total electric usage for the year and how much to rely on solar power.

Jan. 2016 Update

It appears that Congress has extended the energy credits till 2019. The solar power conversion have not moved as quickly as they envisioned.

Update: August 2016

Recently, Vivint Solar has made some inroads in my neighorhood of Westchester County, NY. I've noticed at least 10 new homes with solar roof installations this year. The deal Vivint offered is a free installation with 20 year contract. You are guaranteeded at minimum a 50% savings on your monthly electric bill. Our average bill here is aproximately $120 per month. In return, Vivint will use the roof to generate electricity and tied to the grid. Your savings come from renewable energy credits by the Federal and State government and also from the generated solar power which is targeted to produce 80-90 percent of your usage. Vivint will provide maintenance and repairs as needed. It is hard to say at this stage whether this is a good alternative to leasing or purchasing a PV system for the home. Time will tell if the savings will continue over the 20 years life cycle. It will also depend on the price of electricity provided by the local utility company which in our case - Consolidated Edison Company.

A Solar Home with Snow cover

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    • jackclee lm profile image
      Author

      Jack Lee 12 months ago from Yorktown NY

      Doc, I just published a hub on LED lighting.

      https://dengarden.com/home-improvement/LED-Lightin

      I am doing my part to save the environment. This is one project that makes sense and has immediate results. I recommend it to all my friends.

    • Doc Snow profile image

      Doc Snow 12 months ago from Atlanta metropolitan area, GA, USA

      "The unknown factor is what is the impact on Con Ed.? Will they be able to maintain their current cost structure if more and more people convert to solar?"

      That is indeed a good question, and one that presumably underlies some of the anti-solar initiatives seen around the country.

    • jackclee lm profile image
      Author

      Jack Lee 12 months ago from Yorktown NY

      I agree with your financial analysis but that is not what I am seeing here in my neighborhood. These new installations are from Vivint and they offer free installation which I think is their main selling point. If the power generation meets their design goal, the company stand to make a profit after the break even point of 5-8 years.

      The unknown factor is what is the impact on Con Ed.? Will they be able to maintain their current cost structure if more and more people convert to solar?

    • Doc Snow profile image

      Doc Snow 12 months ago from Atlanta metropolitan area, GA, USA

      Good points. However, I think that the coming thing will not be solar leases as much as home-owner purchases. Many home-owners have gone that route because analysis shows that their savings over time are much larger than with the leasing model you discuss. As system costs continue to come down, the amount to be financed decreases. As an example, we upgraded our windows in 2014 to triple-pane energy efficient units, spending about $10K, of which about half was financed with 0% interest for the first year. We were able to pay off the loan within the year, so we paid no interest.

      Similar arrangements should be possible for solar PV systems, and costs are not all that much larger, with typical systems running on the order of $15K (depending, of course, on the size and thermal character of the house). It's very, very easy to spend that much just to remodel your kitchen!