"When solar power leaves you feeling burned"

[OzSolar]

My local NPR just ran this story that I found pretty interesting. Not surprising to me at all but still it's something you might consider sharing with your friends and family who are asking you about going solar with someone that knocked on thier door or who bought them and 30 others suckers a lobster dinner to come listen to great new opportunity.

When solar power leaves you feeling burned​

The potential of rooftop solar is being squandered. Time’s economic correspondent Alana Semuels reports a cautionary tale, and writer Andrew Moseman explains why the country isn’t ready for a solar revolution.

 

[robby]

Solar is just not for people who won't spend the time to heavily research what they are buying.

 

[Shimmy]

Solar is just not for people who won't spend the time to heavily research what they are buying.

Very few economic/investment things are.

 

[JWLV]

Most of the door knocker salespeople are selling leased solar. It's probably the dumbest thing a homeowner can do if they sign up.
1. The homeowner does not own it. The leasing company does. Therefore the leasing company gets the tax credits.
2. The homeowner is locked in for a 20 or 30 year contract.
3. The homeowner still pays for the electricity they use, but to the leasing company and not the electric company. But if the homeowner uses more than the solar generated electricity, they are still responsible to pay the electric company for the excess usage.
4. It's incredibly difficult to sell a house with leased solar and a long term contract attached to it.
5. After the 20 or 30 year contract, the leasing company still owns it. The homeowner can buy it out if they want, which would be a huge mistake since the solar panels would have degraded signficantly and 20 year old tech is way outdated by then.
6. Terminating the contract is extremely expensive. I've heard termination is around 2 to 3 times the value of the solar system.
7. Solar leasing companies are not doing this out of the goodness of their hearts. Leasing company needs to make money. Where does the homeowner think the money comes from? Without leasing solar, the homeowner uses electricity and pays the electric company. With leased solar, the homeowner uses electricity, pays the leasing company that pays the electric company. The math does not work out in the homeowner's favor.

 

[Overtaxed]

As I postulated in another post, this kind of has to happen. "Selling back" power to the utility at your buy rate is a gross economic distortion, it must end or the power company will cease to exist. And the power company can put in panels cheaper than most homeowners can (economy of scale and putting the panels in the "right" spot, rather than what's available on your roof), they don't want my/your power, they can happily build their own generation facilities.

Right now a lot of the solar economy exists on a premise that cannot scale; effective "free riding" the system.

The problem for the power company is storage, they have no way to store tons of power generated (either by them or homeowners) during the day, so they need all the generation infrastructure they would have anyway, PLUS all the renewables, either directly owned or by proxy via grid tie sell back.

The longer term problem is that once battery storage becomes cost effective, why have a link to the power company at all? Just put in enough panels and batteries and then pull the plug. The cost of electric for everyone still connected to the grid will, of course, go up, but that will only accelerate the move to solar + battery.

In 50 years, the vast, vast majority of power sales will be in high density areas (where solar cannot work; cities, high rises, etc). Those in the suburbs and rural areas; it will be much cheaper to just generate and self consume.

This presents a massive problem for the utilities in the medium term, the transition to serving only urban areas coupled with the requirement to serve rural areas and the ease at disconnecting entirely sets up a "heads I win, tails you lose" situation for them. The rules will have to change, perhaps we will all be required to have a power drop with a significant minimum bill to fund the grid; or the requirement to service everyone in an area will drop, and you'll find lower income rural residents getting clobbered.

Also, the other point they made I kind of discovered and talked about in a different post. If you're not willing to do a solar build yourself, the economics don't work. The installer is capturing pretty much all the benefit, you're left with a solar array that has a multi-decade ROI, and that's assuming (a wildly incorrect assumption, IMHO) that the power company doesn't change the rules to be even less attractive for home solar.

 

[Tulex]

50 years is far enough away for solar to evolve to the point that you won't need much area to make a lot of power.
Battery storage may become an option for power companies. It can be done locally.
Many people will always want grid tied because you can't always make the power you need to charge the batteries. Where I live, I've got 12740w of 19110w installed. I've had weeks of 5kw or so days. In the summer, I only had 6370w installed, and that was nearly enough to run the house.
Any advancements for individuals will also exist for the power companies. What I actually see happening is a middle man. Companies that invest in collecting and storing power to sell to the power companies.

 

[1201]

I advise people i know to NOT buy solar. it will never pay for itself in texas at retail prices.

 

[Overtaxed]

50 years is far enough away for solar to evolve to the point that you won't need much area to make a lot of power.
Battery storage may become an option for power companies. It can be done locally.
Many people will always want grid tied because you can't always make the power you need to charge the batteries. Where I live, I've got 12740w of 19110w installed. I've had weeks of 5kw or so days. In the summer, I only had 6370w installed, and that was nearly enough to run the house.
Any advancements for individuals will also exist for the power companies. What I actually see happening is a middle man. Companies that invest in collecting and storing power to sell to the power companies.

We might get another doubling of efficiency in 50 years, doubt we'll get beyond that. That would 1/2 the area requirement, however, for most SFH's, real estate for panels isn't a huge problem.

If batteries get cheap enough for the power company, they'll also be cheap enough for you/I. But the "corner case" would still, as you said, lead many to keep a grid connection, the days without sun where having enough battery for something that happens 1X per year would be silly. On site generators might fill in the gap; it all depends how high the grid interconnect fee goes (and I could see it going VERY high).

 

[Danke]

1. The homeowner does not own it. The leasing company does. Therefore the leasing company gets the tax credits.

Just curious. There is a 30% tax credit I believe for homeowners in their primary residence. Does that also apply to companies who install solar? For instance, if I had a second home that was owned by an LLC, can that LLC claim the tax credit?

 

[teal95]

For years it's been heads we lose, tails they win. I have no issue with it being flipped. The utilities have earned the right to get screwed.

 

[Overtaxed]

For years it's been heads we lose, tails they win. I have no issue with it being flipped. The utilities have earned the right to get screwed.

Oh, they have, no question! But if you still need them, at all, they're going to find a way to get the pound of flesh. IMHO, the only options that will make sense long term are "grid only" and "standalone". The hybrid setup, or grid tied backfeed, the utilities are going to find a way to capture most of/all of the value of the solar on your house for themselves. The only way to win will be "don't play". Which, of course, is going to have a big negative impact on those who have no options, the captive audience will be the only place left to extract $$.

 

[OzSolar]

4. It's incredibly difficult to sell a house with leased solar and a long term contract attached to it.

Totally correct.

I've have acquaintances that are realtors, bankers, work at closing companies and even a real estate appraiser. They know I'm into solar and they've all volunteered what a trainwreck it is to do a transaction on property with solar on it. *I assume they are referring mostly to the homes that can't be sold until that secondary lien (or lease or ??) is is either cleared or transferred. The appraiser mentioned that solar adds zero value to a home in this area by the way.

edit to fix typo's.

 

[JWLV]

Just curious. There is a 30% tax credit I believe for homeowners in their primary residence. Does that also apply to companies who install solar? For instance, if I had a second home that was owned by an LLC, can that LLC claim the tax credit?

This is what I know about the 30% tax credit. Note that I’m not an expert or professional in this matter.

The tax credit can only be claimed by the owner of a new solar system for the year it was installed and turned on. So even if the homeowner buys out the solar system from the leasing company later on and becomes the owner, it is not new and the install year has already passed.

I am not aware of any restrictions of primary or secondary residence or a corporate entity for the tax credit.

 

[G00SE]

Imo, batteries are “cheap enough” now.
Obviously I’d love to see them cheaper, but one can get 30kwh for ~5k fairly easily.
In the scheme of life and what people spend money on, that’s not a lot.
In regards to sell rates equaling buy rates not being fair, I personally don’t care. That poco has a lot more funding and subsidy than I. They could also try and help facilitate the growth of residential solar instead of stimy it or figure how to extract more money from it
It shouldn’t be that complicated/cost prohibitive to micro grid new builds

 

[Tulex]

The solar investment tax credit is a credit you can claim on your federal income taxes. The ITC is not a tax deduction or a tax refund. Instead, it reduces what you owe in taxes. The credit is currently valued at 30% of your total solar photovoltaic (PV) system cost.

The federal solar tax credit is available to any U.S. homeowner, condo owner or cooperative housing corporation member, as long as you own a solar panel system. You cannot claim the credit if you are leasing solar panels.

You can claim the credit for the tax year you turn on your system. For example, if the installation is completed in December 2024 but you can’t book an inspection and gain permission to operate (PTO) from your local utility until January 2025, you can only claim the credit for 2025.

You can only claim the federal solar tax credit once. If the taxes you owe are less than the value of the credit, you can roll over the remainder towards future income tax burdens.

For example, if you install a solar energy system worth $19,000, you’ll owe 30% ($5,700) less on your federal tax return. If your tax liability is less than $5,700, the remainder of the credit will be applied to your federal income tax liability the following year — you won’t be refunded the remaining credit amount in cash.

As outlined by the Inflation Reduction Act of 2022, the ITC will decrease to 26% in 2033 and drop to 22% in 2034. It will be canceled completely in 2035 unless Congress renews it.

 

[Hedges]

This is what I know about the 30% tax credit. Note that I’m not an expert or professional in this matter.

I am not aware of any restrictions of primary or secondary residence or a corporate entity for the tax credit.

The credit I'm looking at I think is only for principal residence.
There may be a similar investment credit that could work for other types of ownership or property.

Check the tax forms before making your decisions on what to do.

 

[schmism]

As I postulated in another post, this kind of has to happen. "Selling back" power to the utility at your buy rate is a gross economic distortion, it must end or the power company will cease to exist. And the power company can put in panels cheaper than most homeowners can (economy of scale and putting the panels in the "right" spot, rather than what's available on your roof), they don't want my/your power, they can happily build their own generation facilities.

Right now a lot of the solar economy exists on a premise that cannot scale; effective "free riding" the system.

The problem for the power company is storage, they have no way to store tons of power generated (either by them or homeowners) during the day, so they need all the generation infrastructure they would have anyway, PLUS all the renewables, either directly owned or by proxy via grid tie sell back.

There are several issues with the above.

1) commercial/industrial electrical use is 2/3 of the total power used (homeowners useing the last third) so if somehow all the homeowners suddenly didn't need the grid, thats fine 2/3 of the customers are types that solar is a poor option for anyway and will still supply grid operators with income sources.
1a, if there ever did come a day when to many grid owners (who are currently diffrent than the power plant owners) were to claim they could no longer maintain the grid network, then thats the perfect time for the govt to step in and take over that infustructure like they do for roads and sewers and water.... (it is just another utility)

2) the peak solar production is in the summer when peak demand is for AC. these happen at roughly the same time meaning that nothing generated by the solar actually needs to be stored. Power providers already maintine "peaker plants" ready to come online with very short notice to provide grid stablization durring high peak demands (meaning there isnt enough generation capacity) solar is one way to offset/eliminate those needs.

Battery infustructure is already showing great positive impacts for grid stablization in both CA and AU.

 

[Overtaxed]

Imo, batteries are “cheap enough” now.
Obviously I’d love to see them cheaper, but one can get 30kwh for ~5k fairly easily.
In the scheme of life and what people spend money on, that’s not a lot.
In regards to sell rates equaling buy rates not being fair, I personally don’t care. That poco has a lot more funding and subsidy than I. They could also try and help facilitate the growth of residential solar instead of stimy it or figure how to extract more money from it
It shouldn’t be that complicated/cost prohibitive to micro grid new builds

To get anywhere near the grid's level of reliability for my home, I'd need a ton of battery. 500-1000KWh would probably be the target (500KWh would give me a week of power stored). At least 50-100K in just battery (although to be fair, everything else is a rounding error, 100K in battery, 20K in "everything else"). Even that, I'm not sure that would be enough to get to the 99.99% that I get from the grid, but it would be close. The payback period on that works out to right around "never"; my electric rates are around 11c/kwh, I pay 200-300/mo for my power. Straight line w/no depreciation, it's 20-30 years before I break even. In reality, given the cost of money and the lifespan of the batteries and panels, it's exactly "never".

Batteries at around 1/4 to 1/6th their current cost is where it starts to make sense for me to consider it.

 

[Doggydogworld]

For years it's been heads we lose, tails they win. I have no issue with it being flipped. The utilities have earned the right to get screwed.

It's not the utilities who get screwed, it's less well-off renters and others who can't install solar. They pay extra to cover the freeloaders. It's not noticeable when rooftop solar penetration is only a percent or two, but the scheme inevitably breaks down as penetration grows.

It's very expensive to install enough solar and battery to disconnect from the grid, especially w/o a generator. A few grids in really screwed-up states (e.g. CA) will have big problems with opt-outs, though, if they don't get their act together.

 

[Brett V]

One facet of the tax credit many overlook is that you must have enough income tax burden to take the credit.