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Are Solar Panels Ready for Prime Time in New Jersey?

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Posted by Jay Chan on November 15, 2004, 7:33 pm
My friend has signed up for installing 58 solar panels in the south
facing side of his roof. This project will cost him $4,000 out of
pocket (after 70% reinbursement from New Jersey State government). He
is already in the power grid, and he expects to sell unused solar
power back to the utility company (in a lower rate). He figures that
he will break-even in 7 to 10 years (more likely 10 years), and the
solar panels will last 30 years. And he definitely will stay in the
same house for at least twenty years (it is a beauty house by the

Regardless if having 58 solar panel on the roof is ugly or not, I am
wondering if this project makes economical sense. I have a feeling
that he hasn't figured in inflation and the return from alternative
investment, and I don't know if the solar panel will hurt or help the
market value of the house. But I really don't know much about solar
panel and whether 10 years break even period for a 30-years device is
too long or just right. And I really don't know if that 10-years break
even period is just a marketing talk or not.

My questions are:

-  That solar panels have been in the market in Japen since two years
ago (2002). Is the 30 years expected life span realistic for solar
panels that was from 2002?

-  They say that a solar panel will pay for itself in 7 to 10 year. Is
this realistic?

-  What do you think in general a device that takes 1/3 of its
expected life span to break-even? Is this a good return? Will someone
be better off investing the money elsewhere?

-  What was the trend of the utility rate in eastern US? Is it faster
than inflation?

-  What do you feel in general about this deal? 70% off seems to be a
very large discount.

Thanks in advance for any information.

Jay Chan

Posted by Ron Rosenfeld on November 15, 2004, 8:36 pm
On 15 Nov 2004 11:33:01 -0800, jaykchan@hotmail.com (Jay Chan) wrote:

It depends on the cost of the panels, the power output from the panels, and
the cost of electricity, and his payment from the power company for selling
back electricity.  All you've told us is that his cost is $4,000.  But
without knowing the other factors, there's no way to tell.

However, if he has purchased, let us say 5 kW of panels, and lives in the
Atlantic City area, and has a fixed roof mount oriented south at an angle
of 39.5, and pays $.112 per kWh for electricity, the electricity he
generates would be worth about $84/yr (retail).

Financial calculations can be done to answer this question.  Again it
depends on the data I mentioned above, plus his expected return on other
investments.  What's available to him?  Is he a stock market maven who is
averaging 15% per year?  Or is he like many of us who is happy with bank
interest rates (currently less than 2%).

I wish I could get that discount.


Posted by GLC1173 on November 15, 2004, 9:05 pm
 Jay wrote:

   What's more questionable is what the spare-parts market will look like in 30
years for a rather-new-to-market item!  Will the company that made them even
still be in business to replace ones broken when a heavy branch falls on them?
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Posted by Steve Spence on November 15, 2004, 9:09 pm
 There are no spare parts for pv modules, you just replace the broken
module with whatever is current at the time and submit a claim to your
homeowners insurance.

Steve Spence
Dir., Green Trust

GLC1173 wrote:

Posted by daestrom on November 15, 2004, 9:25 pm

I would have to say yes.  After all, the technology is not just two years
old, even if the panels are.  Projected life can be a bit tricky, but I
understand some manufacturers warrant their equipment for 20 years, so a 30
year servicable life seems quite plausible.

'Pay for itself' is a very tricky term.  Will he recover his $4 000, or
will all $6 666 be recovered?  Does his 'pay for itself' calculation do a
simple pay back, or does it include the interest his money could have earned
elsewhere (sometimes called 'opportunity cost')?  Does it expect a rise in
electricity prices faster than general inflation?

What electricity costs does this system help him to avoid?  What's the
difference between what he pays for retail usage during the day, and the
credit/payment the utility gives him when his usage is less than his
generation?  What about annual operation/maintenance costs?  Are they paid
for along with the 'pay-back'?  Admittedly, maintenance should be low, but
is it zero?

So many questions, too little information....

Generally, 1/3 life to break even is not bad at all.  But without knowing
the details of the 'break-even' analysis, I'm not going to go further than

A somewhat anecdotal calculation based on my personal electric bills over
the past four years, shows the cost/kwh of electricity for me here in NY has
been rising about 2%/year.  That's the 'all in' price with

These sorts of government subsidies/rebates leave me with mixed feelings.
It is about the only way that PV can be economically viable for many
grid-tie installations.  One can ask oneself if the government should be
using the public tax dollar to foster this particular technology, or should
we just wait until rising energy costs from other sources makes PV more
competitive.  Tough choices, can't make everyone happy no matter which way
it goes.


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