6.5k System: A Wise (Investment) Decision IMO

My financial analysis of our 6.5k grid tie system may be of interest to some, although I did this analysis after I put the system in. I had a general idea that the system would "payback," but I was more motivated by 1) doing the right thing with regard to the environment, 2) moving closer to carbon net 0 with regard to our home energy use, 3) locking in a supply of electricity, 4) hedging against future increases in energy prices, 5) reducing my monthly electric bill for a long time into the future, and 6) becoming more energy self-sufficient, i.e., increasing my energy security.

The system went active on October 28, 2013. This system was more expensive that some equivalent systems because I had to do a ground mount with underground wiring 280 feet to my house and under a road, etc.; also I used micro-inverters rather than a DC string inverter. My gross install cost came to $4.59/watt. All work was contracted, not done by myself. The cost is a real number. I get a 30% federal tax credit which reduces my cost to $22,400, or $3.21/watt. No other incentives were available to me.

In MN a utility must buy back kwh in a grid tie system at the same retail rate it sells electricity to the home user. This was an important consideration in deciding to install the system.

The following chart shows my economic payback at year 20, far less than the life expectancy of the panels. And most interesting, after 20 years the payback far exceeds a standard competitive investment. At year 30 the solar system is $16,000 ahead in present value dollar over a CD investment. While some may consider an economic payback this far into the future as not worth pursuing, I look at it much the same as I planned for retirement many years into the future. Incidentally, after just 4-1/2 months of electricity production, the system already has paid back "interest" of more than 1% on the investment in saved electricity costs. No regrets for me.

Assumptions for the analysis, all based on historical 20-year averages:
Average 5-year CD interest rate the last 20 years = 3.75%
Average inflation (discount) rate the last 20 years = 3.5%
Federal tax rate, current, not expected to change = 25%
Annual panel derate/yr = 0.5%
Current kwh rate ($0.108 x 1.06875 sales tax) = $0.115
Average annual energy cost increase the last 20 years = 5%
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Comments

  • Blackcherry04
    Blackcherry04 Solar Expert Posts: 2,490 ✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO

    Thats a good analysis, there can be spoilers that pop up that you never seem to be able to control. My utility will not buy back anything, but they bank the production that is the same as yours. What they did do was change the feed in tariff and they started taxing anything they feed back to me. The fee went from $9.00 a month to $25.00 and I have to pay about 6 different taxes and fees on MY power to get it back. My Gas company was able to push through a $17.00 a month minimum consumption fee. So the overall result is about $300 - $400 per a year in costs to go against the ROI since the install. I am still happy, but it's not as good as I once figured.
  • solarix
    solarix Solar Expert Posts: 713 ✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO

    I wish I had more customers like you. A 20 year payback may well be advantageous, but for most people that sucks. It has to be less than 10 years to start to interest most people. We've been doing 7-8 year payback for typical systems since 2008 when the ITC came in. We need to get it down to 5 years to really interest the general public.
  • jebatty
    jebatty Solar Expert Posts: 56
    Re: 6.5k System: A Wise (Investment) Decision IMO

    Short term thinking is the bain of the good ole USA and very shortsighted. Solar electric is a near-guaranteed return, very low risk of loss, and pays non-taxable dividends year after year, not affected by the markets, inflation protected, with a rising rate of return as electric rates go up. I don't have to pay attention to the stock or bond market, just to the fact that every day $$$ roll into my pocket, my electric bill is very low to the point where the power company will be paying me rather than the other way around, and I can proudly tell my grandchildren what I did when they ask, "Grandpa, what did you do once you knew ...."

    Most people don't buy a house for the short term, get married for the short term, live for the short term, and definitely do not have children for the short term -- all long term "investments" which economically are expenses, not investments. Solar electric is a long term, secure investment. I was going to say that we don't plan for retirement short term, but I guess a lot of people do, and therefore have little or no retirement. I've planned long term my whole life, and with a good solar site, the federal tax credit, and utility buy back, going solar is a no brainer decision, IMO.
  • jebatty
    jebatty Solar Expert Posts: 56
    Re: 6.5k System: A Wise (Investment) Decision IMO

    Solarix, a person might hesitate in putting in a system on the belief that when the house is sold the value of the property will not reflect the (unrecovered) cost of the system. The chart I posted helps with this. The Cumulative Present Value column shows each year what I would need to get back in present value dollars each year down after install based on the assumptions.

    Another way to help a buyer understand the value would be based on actual production records and current after tax rate of return on an alternative investment. My estimated annual production is 9000 kwh, and at my current electric rate ($0.115.kwh) that amounts to a value of $1,035 dollars. If my alternative investment was a CD at today's rate of about 1.5%, I would need to have $69,000 deposited ($69,000 x 0.015 = $1,035) to get that return. And this does not include taxes on the investment return, which if considered would push the amount higher. I could negotiate an increase in the value of the property by up to $69,000.

    if the alternative investment rate (after taxes) was 5%, which is very good for a very low risk, after tax, safe investment, I would need $20,700 invested, and again I could negotiate an increase in the value of the property by up to that amount after taxes ($20,700 x 0.05 = $1,035).

    This analysis over simplifies somewhat, but the result is clear: a substantial return, year after year, is worth a lot of money and leaves plenty of room to negotiate an increase in the value of the property to recover the initial investment.
  • stmar
    stmar Solar Expert Posts: 370 ✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO

    "a person might hesitate in putting in a system on the belief that when the house is sold the value of the property will not reflect the (unrecovered) cost of the system"
    When we bought our place the seller said he would remove the alternative system and drop the price $$$$$. He was in the business so had an avenue to get rid of the components. Being at the end of the utility lines and getting a great deal on the property we told him to leave it and I am happy with that decision. At the very least I have increased my knowledge base and there have been times when there were power outages in our area and we did not even know it until after the fact. If we ever sell our place you can believe that it will be a selling point and command a premium for the alternative system. Our place will attract a certain type of person and that type will appreciate the independence of this system.
  • jebatty
    jebatty Solar Expert Posts: 56
    Re: 6.5k System: A Wise (Investment) Decision IMO

    I just received my electric bill for the period of Feb 8 to Mar 8. The bill was -$41.00! I think I'm going to enjoy a solar electric system that meets all of my electricity needs and which results in the electric company paying me rather than the other way around.
  • Blackcherry04
    Blackcherry04 Solar Expert Posts: 2,490 ✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO
    jebatty wrote: »
    I just received my electric bill for the period of Feb 8 to Mar 8. The bill was -$41.00! I think I'm going to enjoy a solar electric system that meets all of my electricity needs and which results in the electric company paying me rather than the other way around.
    How many KWH did you generate during that period ? Based on the cost per kwh you posted of $0.115, in excess of your use would be 350 kwh or so. Trying to see how it stacks up to PV Watts estimate.
  • jebatty
    jebatty Solar Expert Posts: 56
    Re: 6.5k System: A Wise (Investment) Decision IMO

    647 kwh for the period Feb 8 - Mar 8. Monthly production (PVWatts predicted/actual) to date is as follows:

    Nov 493/340
    Dec 419/268
    Jan 498/427
    Feb 621/725
    Mar 567/679
    (thru Mar 21)

    You can find more info on my system at http://www.hearth.com/talk/threads/solar-electric-6-5-kw-system.116031/
  • pleppik
    pleppik Solar Expert Posts: 62 ✭✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO
    jebatty wrote: »

    Thanks for the link!

    I'm planning an installation in the Twin Cities this spring, so your experiences are timely and helpful.

    Which installer did you use?
  • Blackcherry04
    Blackcherry04 Solar Expert Posts: 2,490 ✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO
    jebatty wrote: »
    647 kwh for the period Feb 8 - Mar 8. Monthly production
    Thank You for sharing. Your production is great and looks like you'll be meeting your needs and then some. This has been another learning year for me, I went into November with 2,800 kwh banked and have it down to 290 kwh without much gas usage ( > $50.00 ), so $ for $ I did well also. Enjoy !!
  • jebatty
    jebatty Solar Expert Posts: 56
    Re: 6.5k System: A Wise (Investment) Decision IMO

    Sunshine in Mar-Apr has been very good so far. The Mar 8 - Apr 8 electric bill arrived with a $104.00 credit, adding to the $41 credit for the prior month. March production (PVWatts predicted/actual) was 836/976 kwh, and April thru Apr 17 is 622 kwh, 63% of April estimated production.
  • bill von novak
    bill von novak Solar Expert Posts: 891 ✭✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO

    Thanks jebatty. It's good to see real install/production numbers to stay "calibrated" on prices and efficiencies.
  • jebatty
    jebatty Solar Expert Posts: 56
    Re: 6.5k System: A Wise (Investment) Decision IMO

    An update on my system. The last 9 days of April were very cloudy, as is the start of May, related in part to the big storm system that moved through much of the east 1/2 of the US. Until the clouds rolled in, April production was averaging 40-45 kwh/day.

    SOLAR PRODUCTION: 2013-14
    Month Average
    2013-14 PVWatts Actual ` % Difference Cumulative Value
    Nov 493 340 69% -153 -153 $39.10
    Dec 419 268 64% -151 -304 $30.82
    Jan 498 427 86% -71 -375 $49.11
    Feb 621 725 117% 104 -271 $83.38
    Mar 836 976 117% 140 -131 $112.24
    Apr 993 958 97% -35 -166 $110.17
    May 1088
    Jun 1117
    Jul 1203
    Aug 1112
    Sep 879
    Oct 701
    9961 3694 37% $424.81
    ROI 1.90%

  • jebatty
    jebatty Solar Expert Posts: 56
    Re: 6.5k System: A Wise (Investment) Decision IMO

    Interesting results as very warm late Spring weather takes over from the cold winter and early Spring. May 22 was nearly clear all day, except for early morning. Total output for the day was 46 kwh, starting at 5:30 am and ending at 7:30 pm CST. On March 1, 2013, also clear all day, output started at 7:30 am and ended at 5:30 pm CST, and total output on March 1 was 47 kwh, although the period of production was 4 hours shorter on Mar 1 vs May 22. It appears that hot weather production is about 10% less per unit of time than cold weather production. Heat is likely the reason, increased electrical resistance, although I also have been told that summer skies, while appearing clear, actually have less solar insolation at peak due to dust in the air and higher humidity.

    It may be that about 47 kwh is the maximum daily output my system will produce. The summer solstice soon will be here, and I'M hoping to break the 50 kwh barrier -- time will tell.

    It may be that my maximum daily output is about 47 kwh. In another month will be the summer solstice, the longest day of the year. Will wait and see if this production scenario remains accurate.
  • jebatty
    jebatty Solar Expert Posts: 56
    Re: 6.5k System: A Wise (Investment) Decision IMO

    An update for May on my system. May was extremely cloudy. The system needed to average 35.1 kwh/day to meet the PVWatts predicted monthly production, but output at or greater than 35.1 kwh occurred on only 13 days. 4 days were below 10 kwh. Highest daily production was 46 kwh. The goal for June is 37.2 kwh/day.

    I like the 2.36% ROI after only 7 months of operation -- already beats the best 5-year CD rate (2.3%) currently available, and leaves the one year rate (1.1%) far behind.

    SOLAR PRODUCTION: 2013-14
    Month Average
    2013-14 PVWatts Actual ` % Difference Cumulative Value
    Nov 493 340 69% -153 -153 $39.10
    Dec 419 268 64% -151 -304 $30.82
    Jan 498 427 86% -71 -375 $49.11
    Feb 621 725 117% 104 -271 $83.38
    Mar 836 976 117% 140 -131 $112.24
    Apr 993 958 97% -35 -166 $110.17
    May 1088 898 83% -190 -356 $103.27
    Jun 1117
    Jul 1203
    Aug 1112
    Sep 879
    Oct 701
    9961 4592 46% $528.08
    ROI 2.36%
  • cupcake
    cupcake Solar Expert Posts: 254 ✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO

    Since this is an opinion thread I am going to offer mine. And it will come off to most as playing the 'Devil's advocate' - but try to stay with me:

    ROI, interest rate, 4.9%, exponential payback derivative, blah blah blah... Life is measured in TIME. The way to measure ANY 'investment' is to see if it has made any REAL change to your LIFE - right NOW.

    $22,000 in DEBT keeps you in the rat-race of 9-5. The "ROI" may be whatever on PAPER, but in REAL LIFE your situation remains the same.

    If you find yourself quitting your 9-5 job to part-time and still living the same way, you made a good investment. If you quit your job and work 2 days a week doing your own business then you've made a good investment.

    The idea of 'saving energy' and 'investing' is to increase play-time. If play-time is not increased measurably (ie you know and feel that you are playing more in life) then you didn't make a good investment.


    I don't care what person "A" says about a 'good investment' if his bank account says 9 Trillion dollars and he still slaves at a 9-5 day in and day out, stressed out...
    If person "B" finds himself spending more time with his family, at the golf course, doing whatever he enjoys, playing, getting sunshine and so forth - then that's a good investment...

    People seem loose sight of the idea of 'investing' is it about...money? No. Time. Life. So one doesn't have to work as much. The things that matter in life...

    I do solar because it's 'neat' to me. I simply do not understand those individuals who place 2000Kws of solar on their McMansions for $70,000 and believe they are 'investing' or 'making money' -- I'm not saying don't do it - I'm saying its delusional to call it an 'investment'...


    Investing for the 'future' is fine. Waiting to finally live in retirement..when you're 70.. is about the most preposterous smack in the face to the entire point of life itself.

    Live NOW.


    --cupcake
    ~1.5Kw PV in parallel
    Morningstar MPPT-60 controllers (2) in parallel
    3 Trojan tr-1275's in parallel 450ah total
    Samlex 2,000 watt 12-volt inverter hardwired


  • Cariboocoot
    Cariboocoot Banned Posts: 17,615 ✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO

    If his bank account has a balance of $9 trillion and he's still working 9 to 5 he's a bloody idiot.

    The economics of solar is important. Otherwise you could be spending your money on something that is "neat" to you but is just an expensive hobby. Then you will for sure be stuck working 9 to 5 and not really having the fun you think you're having.

    Take it from an old guy who has done the work and the solar and the investing. My solar allows me to enjoy myself by living away from the rat race for months at a time without having to sacrifice much convenience or spend even more money on gen fuel for that same advantage. By the same token an investment in a GT system up here would be money totally wasted as even with the future increases in hydro rates the payback time would be never because utility power is so cheap and there are no incentives for solar.

    Anyway, perspective from an old guy who lives both in the off-grid and grid-only worlds.
  • jebatty
    jebatty Solar Expert Posts: 56
    Re: 6.5k System: A Wise (Investment) Decision IMO

    Interesting perspectives, and here's mine. 1) I'm retired and have various investments, not big in the whole scheme of things but enough.The "return" on that money is a consideration. Putting some of that money into the solar system to return 5% tax free and electric rate inflation protected is a very good investment when compared to alternatives. 2) Economic security is important to me. I am debt free, own my home, etc. Without any loan obligations, and now having electricity fully paid for into the future, my fixed monthly expenses are very low and I need very little income to live in a worst case scenario. My only fixed expenses right now are phone/internet, insurance, real estate and income taxes. I live rural, have well water, heat with wood. 3) The solar system has removed electric costs from my fixed expenses; no longer any need to have income to pay electric. Living security has improved. 4) Although I supplement my income from investments, in a worst case scenario my wife and I can live on our social security and her small pension. We lived a frugal life during our working years, and now neither of us should ever have to work again for income. Consequently, we both "work" heavily in volunteer and charitable organizations, giving our time and skills for the betterment of the lives of others and for a cleaner, healthier environment for all of us.

    Personal situation aside, I'm of the opinion for investment purposes that any long term investment that yields 5% tax free and is inflation adjusted is a very wise investment.
  • solar_dave
    solar_dave Solar Expert Posts: 2,397 ✭✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO
    jebatty wrote: »
    Interesting perspectives, and here's mine. 1) I'm retired and have various investments, not big in the whole scheme of things but enough.The "return" on that money is a consideration. Putting some of that money into the solar system to return 5% tax free and electric rate inflation protected is a very good investment when compared to alternatives. 2) Economic security is important to me. I am debt free, own my home, etc. Without any loan obligations, and now having electricity fully paid for into the future, my fixed monthly expenses are very low and I need very little income to live in a worst case scenario. My only fixed expenses right now are phone/internet, insurance, real estate and income taxes. I live rural, have well water, heat with wood. 3) The solar system has removed electric costs from my fixed expenses; no longer any need to have income to pay electric. Living security has improved. 4) Although I supplement my income from investments, in a worst case scenario my wife and I can live on our social security and her small pension. We lived a frugal life during our working years, and now neither of us should ever have to work again for income. Consequently, we both "work" heavily in volunteer and charitable organizations, giving our time and skills for the betterment of the lives of others and for a cleaner, healthier environment for all of us.

    Personal situation aside, I'm of the opinion for investment purposes that any long term investment that yields 5% tax free and is inflation adjusted is a very wise investment.

    Yep I tend to agree, I stopped working last August, total debt free except for investment property that is cash flow positive (just barely) but on the short track for pay off. We have a decent 401K and the wife works a part time job for some "pin" money and gets a very small pension payment. So far we have not touched the 401K, our only costs are water, electric (really small bill for fees and such), nat gas (about 3-5 therms a month) and the usual phone, internet, car and house taxes. All in, it looks like we can stay cash flow positive until some major expense comes along. BTW the Chevy Volts have made a big difference in our fuel bills, the wife just put $10 in hers for the first time in a year, and mine hasn't had a fill since September but is getting pretty low now. Our solar has made the payback and it is all positive now except for the occasional maintenance requirements.

    What we notice is food inflation seems to be the worst offender right now, the wife is avid coupon-user/sale shopper and that helps. We just ran across a deal where Safeway was closing a store and had 25% off on groceries and 50% off on General merchandise like soap, paper and health & beauty items. They offer to increase coupon values from face to $1.00 for every thing they sell. After it was all said and done we bought $475 in items and only paid about $205 out the door. Lots of laundry-dish-bar soap, coffee, Splenda (since I have blood sugar issues), etc. Many items that we got we never find coupons for and generally never go on sale but the ones that we could use coupons on helped quite a bit. The outcome on that trip, no need to buy coffee, Splenda or soap products for the rest of the year at least. We were big Costco shoppers but after getting the increase in member fees we decided it just isn't worth it and we will let that lapse in August after a big run there to stock up in July. The only saving grace here in Phoenix is there is a lot of grocery competition, Safeway, Fry's (part of Kroger), Winco, Basha's, Walmart, Albertsons, Sprouts (for fresh veg). The sales can be pretty lucrative in a relative sense.
  • tmarch
    tmarch Solar Expert Posts: 143 ✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO

    Here's another perspective, I retired and put my retirement into a IRA which currently pays .08%. I bought a ranch and installed a 6K system as our remote location=high kwh cost. I used some of my retirement to purchase the system which in effect allowed me to withdraw the money without any income tax due to the tax incentives. My ROI is roughly 6% on the system which is much better than .08% that the balance of my IRA is earning.
  • cupcake
    cupcake Solar Expert Posts: 254 ✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO
    solar_dave wrote: »
    Yep I tend to agree, I stopped working last August, total debt free except for investment property that is cash flow positive (just barely) but on the short track for pay off. We have a decent 401K and the wife works a part time job for some "pin" money and gets a very small pension payment. So far we have not touched the 401K, our only costs are water, electric (really small bill for fees and such), nat gas (about 3-5 therms a month) and the usual phone, internet, car and house taxes. All in, it looks like we can stay cash flow positive until some major expense comes along. BTW the Chevy Volts have made a big difference in our fuel bills, the wife just put $10 in hers for the first time in a year, and mine hasn't had a fill since September but is getting pretty low now. Our solar has made the payback and it is all positive now except for the occasional maintenance requirements.

    What we notice is food inflation seems to be the worst offender right now, the wife is avid coupon-user/sale shopper and that helps. We just ran across a deal where Safeway was closing a store and had 25% off on groceries and 50% off on General merchandise like soap, paper and health & beauty items. They offer to increase coupon values from face to $1.00 for every thing they sell. After it was all said and done we bought $475 in items and only paid about $205 out the door. Lots of laundry-dish-bar soap, coffee, Splenda (since I have blood sugar issues), etc. Many items that we got we never find coupons for and generally never go on sale but the ones that we could use coupons on helped quite a bit. The outcome on that trip, no need to buy coffee, Splenda or soap products for the rest of the year at least. We were big Costco shoppers but after getting the increase in member fees we decided it just isn't worth it and we will let that lapse in August after a big run there to stock up in July. The only saving grace here in Phoenix is there is a lot of grocery competition, Safeway, Fry's (part of Kroger), Winco, Basha's, Walmart, Albertsons, Sprouts (for fresh veg). The sales can be pretty lucrative in a relative sense.



    I quit my job at age 25 and never had any debt.. no mortgage, no CC's, no student loans. Inflation bothered me too... I found the solution to this was business. As inflation rises, simply charge the client more... problem solved. For those who are not in business this can indeed be difficult to manage...

    Kind of sad to see most of humanity falling into the same old system of debt-enslavement at such a young age...

    Perhaps solar can remind people that nature provides everything...

    --cake
    ~1.5Kw PV in parallel
    Morningstar MPPT-60 controllers (2) in parallel
    3 Trojan tr-1275's in parallel 450ah total
    Samlex 2,000 watt 12-volt inverter hardwired


  • Cariboocoot
    Cariboocoot Banned Posts: 17,615 ✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO
    cupcake wrote: »
    I quit my job at age 25 and never had any debt.. no mortgage, no CC's, no student loans. Inflation bothered me too... I found the solution to this was business. As inflation rises, simply charge the client more... problem solved. For those who are not in business this can indeed be difficult to manage...

    Kind of sad to see most of humanity falling into the same old system of debt-enslavement at such a young age...

    Perhaps solar can remind people that nature provides everything...

    --cake

    Boy were you lucky. "Simply charge the client more" is a formula for going out of business when the 'other guy' undercuts you. Only people who can get away with that sort of hedge against inflation for sure are governments.
  • cupcake
    cupcake Solar Expert Posts: 254 ✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO
    Boy were you lucky. "Simply charge the client more" is a formula for going out of business when the 'other guy' undercuts you. Only people who can get away with that sort of hedge against inflation for sure are governments.


    Actually that's not the case. You see when I raise my prices everyone else raises their prices too. Nobody can undercut me... it's why you don't find anyone selling $1 a gallon gas or $10 solar panels. If you undercut you LOSE. You INFLATE to stay in business. That's what I've done since 25... its what everyone (who knows) does, including the govt as you pointed out...

    Next time you, say pay a mechanic to change your brakes, ask him why he's not charging 1970's labor rates of 50 cents an hour... he, like I, and like all businesses inflate as inflation happens...

    To put it simply, when , say the price of gas or gold goes up, so do my prices, -- the secret is, when inflation happens it means people HAVE the money to spend (rather than them being UNABLE to spend it)...

    People complained about $2 gas...then $3 gas... then $4 gas... but they still buy gas... why? Simple, they have the money...

    I only inflate because inflation happens -- see its like a paradox... and nobody can undercut... just like I can't find undercut gas, or undercut solar panels, or undercut gallons of milk, or undercut loaves of bread anywhere I look...

    When inflation happens wage-workers expect more money to 'keep up'... same thing with business people, when inflation happens I want more too to 'keep up' - so I charge the client more...

    --cake in a cup
    ~1.5Kw PV in parallel
    Morningstar MPPT-60 controllers (2) in parallel
    3 Trojan tr-1275's in parallel 450ah total
    Samlex 2,000 watt 12-volt inverter hardwired


  • Cariboocoot
    Cariboocoot Banned Posts: 17,615 ✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO

    Tell it to Wal*Mart.
    See you in fifty years.
  • solarix
    solarix Solar Expert Posts: 713 ✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO

    As a business owner myself, the key is to charge the right price. To high and good competitors will charge less and gain your market, too low and you won't make enough profit to fund a proper operation. It is basic supply and demand economics to find the right price point that has the highest supply and demand. For you solar guys, it is like finding the Max Power Point. As a debt slave, you are often at the mercy of your company to raise the price of your product (your labor) - at least as a business owner you are in control of your half of the game.
  • Cariboocoot
    Cariboocoot Banned Posts: 17,615 ✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO

    Now that is an accurate statement.

    I've been both employee and business owner in my day and can tell you neither is a simple thing to manage. I made the most money as employee, but it came with a price of aggravation caused by having supervisors who couldn't change a light bulb without help. As a business owner the aggravation comes from clients who can't be pleased no matter what and you soon learn to size them up beforehand and avoid them. But the money is dicey at times; you can no more guarantee your income one way than the other. Staying out of debt is the best defense against financial ruin no matter how you earn your dough.

    And then there's those ugly little tragedies life is so good at handing out. Everything was fine in my life up to about four years ago. Then it changed. Investment is a good way to hedge against that as well.
  • stmar
    stmar Solar Expert Posts: 370 ✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO

    Have you noticed that the consensus here is to try to "be debt free"? I think that falls into line with the alternative energy mentality of self reliance. It is amazing to me the people that do not get this, to them monthly payments (interest $$) are the norm. They do not realize how much they spend in interest, I realize how much I have saved for sure over the years. Being debt free helps when inflation raises it's ugly head, at least you can maneuver enough to minimize the pain by getting higher interest rates for your cash or your investments increase. When you are at the mercy of interest $$, inflation dictates. I learned a cheap lesson 45 years ago; bought a set of new tires from Sears and got my first credit card and ended up paying over double what the original cost was because I thought you just paid the minimum payment. Cost me a few hundred dollars which was a lot for a kid but it was well worth it.
  • cupcake
    cupcake Solar Expert Posts: 254 ✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO
    Tell it to Wal*Mart.
    See you in fifty years.


    Every item at wall*mart is tagged with a "W" at the end of its serial number, ie XXXXX"W" no matter the manufacurer... this denotes a 'wall*mart grade product'...

    they are not the same products you would get elsewere, hence the special tagging and denotation. Wallmart does not undercut, they simply offer inferior products -- ie low quality products -- indeed walmart is synonomous will LOW quality... its why nobody buys solar panels from wallmart....


    50 years? It's about now not having to slave a 9-5 from my 20's-40's and onward... most will never know what that feels like..ever..
    ~1.5Kw PV in parallel
    Morningstar MPPT-60 controllers (2) in parallel
    3 Trojan tr-1275's in parallel 450ah total
    Samlex 2,000 watt 12-volt inverter hardwired


  • cupcake
    cupcake Solar Expert Posts: 254 ✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO
    solarix wrote: »
    As a business owner myself, the key is to charge the right price. To high and good competitors will charge less and gain your market, too low and you won't make enough profit to fund a proper operation. It is basic supply and demand economics to find the right price point that has the highest supply and demand. For you solar guys, it is like finding the Max Power Point. As a debt slave, you are often at the mercy of your company to raise the price of your product (your labor) - at least as a business owner you are in control of your half of the game.


    100% agreed... the debt-slaves must wait for the business owner to 'inflate' their paychecks, which of course is put off to the last possible moment -- or..as is custom in business, I just hire a young, idealist college student who has $200,000 in "Musical Therapy" grad-schol debt to work feverishly while I lay off the older cynical employee...

    Back when I started I'd go by the 'make it sting' principle for pricing. If people say 'yes Ill take it' then the price is too low..., If they go 'now way, thats crazy' then the price is too high... if they 'welll...' HESITATE a bit (ie it hurts a bit..) then the price is just right...

    But again, what controls these prices is the broader inflation itself... old clients sometimes call me trying to get 2001 prices... they seem perplexed until I remind them that gas and milk was $1.50 a gallon in 2001, and now its $4.50 a gallon...

    Say you are a solar-panel installer (contractor)... when gas goes up your prices have to go up to cover those costs, but when gas goes up so does the trucking company that brings the milk and bread to the grocery store... its exponential, everything goes up, and inflating is the way to keep IN business...those who dont raise their prices simply sacrifice themselves OUT of business... its a dirty game, but hey... I didnt make the rules...
    ~1.5Kw PV in parallel
    Morningstar MPPT-60 controllers (2) in parallel
    3 Trojan tr-1275's in parallel 450ah total
    Samlex 2,000 watt 12-volt inverter hardwired


  • cupcake
    cupcake Solar Expert Posts: 254 ✭✭✭
    Re: 6.5k System: A Wise (Investment) Decision IMO
    Now that is an accurate statement.

    I've been both employee and business owner in my day and can tell you neither is a simple thing to manage. I made the most money as employee, but it came with a price of aggravation caused by having supervisors who couldn't change a light bulb without help. As a business owner the aggravation comes from clients who can't be pleased no matter what and you soon learn to size them up beforehand and avoid them. But the money is dicey at times; you can no more guarantee your income one way than the other. Staying out of debt is the best defense against financial ruin no matter how you earn your dough.

    And then there's those ugly little tragedies life is so good at handing out. Everything was fine in my life up to about four years ago. Then it changed. Investment is a good way to hedge against that as well.



    The only "hedge" in life is HARD WORK... every time I've been called "LUCKY" I have flash-backs of all the brutal back-baking labor I've endured...

    Even when people see my solar setup, they call me 'lucky' --- no I'm not lucky - I had no idea what I was doing - I asked the fine people ON THIS FORUM for help and WORKED, and FAILED to [try to] get it right.... tenacity and hard-work fix everything...but call me old-fashioned...
    ~1.5Kw PV in parallel
    Morningstar MPPT-60 controllers (2) in parallel
    3 Trojan tr-1275's in parallel 450ah total
    Samlex 2,000 watt 12-volt inverter hardwired