California Passes Solar Panel Mandate
Alex BekezaBusiness Member
Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
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California Passes Solar Panel Mandate
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Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
8y@Nathan Gesner I just had to weigh in on your comment and so called "hard truths" which turn out to be entirely false. I've responded to each of your points respectfully because I've had a different experience with solar than what you describe.
1. The payback period for solar hasn't been 20 years in 20 years. In many areas such as California the current average payback period is 5-8 years on a cash purchase. A 20 year payback period like you describe is not impossible but it would be rare with today's prices. You'd have to drastically overpay or detail your panels with gold trim to have such a long payback period. The panels on my roof were paid off in less than a year. I bought them at wholesale price and installed them myself, so it depends on how good a deal you get, how good your roof orientation and pitch is, how many sunny days you get in your region, how good your local incentives are, how much local competition there is among solar installers, etc. However calculating payback periods is uncommon these days anyway as the cash purchaser is rare. Just like real estate most people finance their systems, so what matters is cash flow. Typically loan payments are less than a normal utility bill, so people with solar pay less per month for electricity than those without, that's why people do it, because they like saving money.
2. Solar is indeed "green energy". What you are referring to is called embodied energy or energy return on energy invested (EROI). It is easily calculated including resource extraction, manufacture, shipping, and installation. Solar panels take 1 to 4 years to offset their embodied energy with electricity production, depending on the brand. The standard warranty is 20-25 years, so they pay back the energy it takes to produce themselves several times over during just the warranty period, and average life expectancy is 30-50 years as evidenced by the panels produced in the 70's that are still making electricity today.
3. Yes there are tax subsidies for solar. Please find me a form of energy that is not subsidized. Nuclear for example is the most subsidized form of energy, it would not exist without government subsidy because nobody would insure a nuclear power plant. Tax dollars insure nuclear plants, clean up disasters and also store the waste indefinitely. 43% of coal is mined on public lands, then it is shipped on railways built with tax dollars and burned in power plants built with tax dollars. Oil would be insanely expensive today if not for the Intangible Drilling Cost tax deduction of 1916, the Oil Depletion Allowance Act of 1926, the Domestic Manufacturing Deduction of 2004, etc. Energy is about the farthest thing from a free market you'll ever find, so why single solar out for getting government support when all forms of energy do? Many conservatives and libertarians actually love solar, it's not just liberals who love saving money! In fact the Solar Investment Tax Credit, the 30% tax credit which is driving the growth of the solar market, is from the Energy Policy Act of 2005, which if you recall was during the presidency of George W. Bush. That tax credit was recently extended by another Republican president.
4. Batteries are either a luxury add on for those who prefer a battery bank over a generator for backup power, or a necessary component for a backwoods cabin that is off the grid. 99% of modern solar electric systems don't even use batteries. They use what's called net metering which doesn't require batteries. As far as circuits burning out I'm not sure what you're referring to there, that's completely made up.
5. What panels use those hazardous materials? None that I've ever seen. Cadmium was used very briefly and on a small scale years ago but that type of panel is obsolete. Modern solar panels are made from silicon wafers. Silicon is the eight most common element in the universe. It is not hazardous and is easily recycled.
6. Every solar system I've worked on has produced more energy than forecasted. Somebody may have messed up an energy forecast at some point, but it is not standard industry practice or lawyers would really love solar. As far as birds burning up, that has happened in a few isolated incidents with concentrated solar farms in the Mojave desert, which is a completely different technology than rooftop solar. It's not a factor with the types of panels you find on residential rooftops like California now requires. Also birds get killed by semi-trucks every day but that doesn't mean we're going to halt the trucking industry does it?
There is a lot of bad/outdated information about solar out there, I didn't want it to be propagated here. I'm not sure I agree with California's mandate, and I'm not sure how it will be implemented when many homes aren't suitable for solar, however I hate to see solar categorized as liberal/bad technology when it's actually great technology that benefits everyone regardless of political affiliation.
122 Replies
- Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes8y
@Steve K. my comment was to agree with Jordan's on the cost/benefit in MN.
Sure people can finance them but they still have to pay the debt if they sell their property so it isn't a solely cash flow game. A buyer isn't going to assume the debt.
You could have positive cash flow for 5 years but it would end up a big loser if you sold your house and had to pay a lot of debt to close. You have to look at break even unless you plan to live in your house forever OR if research is conducted to prove that solar increases house prices in an area. In our location that doesn't appear to be the case.
- 8yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
I have had solar for many years.
Some thoughts:
- I had an inverter fail but it was covered under warranty. My inverter warranty was far less than 20 years so in my case the solar system was not a 20-25 year all items warranties. Maybe inverters have longer warrantees today.
- With the tax subsidies the payoff was projected at 14 years. With rate increases higher than expected and net metering the payoff was around 9 years. So the sales estimate ended up being conservative. I never tried to determine what the payoff would have been without subsidies but it would have been longer. However, to counter this prices have come down a lot since 2004 when my system was installed.
- The panels have the long warrantee but they are not warranted for that long at 100%. The panels are warranted to have a certain minimum efficiency that reduces as they age. The reduction is fairly small but it adds up. This also may have improved since my panels were purchased.
- As has already been indicated, most solar systems do not include batteries. The excess energy in the day is put onto the grid and at night you draw from the grid. Therefore battery life/maintenance is not part of the equation for most systems.
- The efficiency of the panels has a lot to do with their orientation, amount of light (and lack of shade), keeping clean, etc.
I am conservation minded (color me green). Overall I am a fan of solar especially in sunny locales that have decent orientation but think there are many CA homes that are not ideal choices for one or more reasons. Build a house in the forest with a north facing roof where the panels are in the shade all day and have poor orientation and the payoff of the solar system may exceed the life of the system. Therefore I think there should have been an expected recovery period. For example, if the solar systems is not projected to fully recover cost in 12.5 years (half life) then it is not mandated. If the solar system is projected to fully recover its cost in 12.5 years then it will result in savings and benefit the environment, lower the need for grid upgrades, etc. and is a smart addition to the home.
- Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes8yFollow the money I would bet dollars to donuts at least one of the politicians who voted this owns, will own or a close friend or relative own part or all of a solar supply company
- Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes8yOr receive money from lobbyists for solar
- Davis, CA · Member since 2016 · 595 posts · 344 votes8y
let alone that a HUGE % of houses dont have the right exposure... total BS scam.
- Architect · Papillion, NE · Member since 2015 · 1k+ posts · 840 votes8y
Did I read this right... A 15 year payback period? Anything over 7 years is not sustainable.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes8y
@John Woodrich I see what you’re saying and agree that payback period is something that people will always want to calculate, I just don’t think we should write off an entire industry because the payback period is longer than one person in Minnesota desires. Leases are transferable and loans can be paid off without prepayment penalties. After 5 years that note will be relatively small. People pay off their mortgages when they sell their houses all the time too it’s not a novel concept and a house having a 30 year payback period doesn’t stop us from buying houses. Studies have been done by the National Appraisal Institute, the DOE, and the Lawrence Berkeley Lab among others and all determined that homes with solar sell faster and for an average of $20k more for every $1k in annual energy savings than homes without solar so even if the initial investment isn’t recouped through energy savings it will likely be recouped by a higher sales price. Personally I would consider free electricity an added benefit when purchasing a home and sales prices on homes with solar compared to those without prove a majority of people agree. Appraisers in my area consider solar an added value so if you’re looking to force appreciation it’s low hanging fruit.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes8y
@Jim Adrian the payback period in California where the mandate will go into effect in 2020 is often less than seven years already and will be quicker in 2020 possibly half what it is today. It’s not 15 years in that market or any of the more established solar markets, it’s usually less than 10 and shrinking fast.
- Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes8y
@Steve K. I am not writing off an industry, I am just saying there are things to consider. Asking a buyer to assume a lease is the same as asking them to pay an assessment in our state - not going to happen.
You work for a solar company correct?
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes8y
I lived in Europe for seven years and know exactly how cheap our fuel is. If we got rid of subsidies and paid what things are worth, it would prevent so many people from driving gas-guzzling F-350s two blocks to eat at McDonalds. Maybe it would drive innovation for more economic cars or alternative fuel sources. Necessity is the mother of invention. Instead of allowing the free market to work, we subsidize things and stifle innovation.
Same with farm subsidies. If corn cost $5 per ear, I would stop eating it or grow my own. If enough people stopped eating it, farmers would find a way to cut down the price or they would switch to a different crop supported by demand.
That reminds me: it's lunch time!
The DIY Landlord Book4.7248 Reviews - Arlington, TX · Member since 2018 · 3 posts · 6 votes8y
On my Joshua Tree property, we have a solar setup and are awaiting our fulfillment & installation of a Tesla battery at the moment.
My thoughts:
Pro's- If you can afford it at the moment and buy your set outright, look at it as paying for your electricity bill upfront (mostly). Nothing more and nothing less.
Con's- It is still a requirement to stay connected to Edison (Southern California), which means that we still get billed and taxed for using their "infrastructure" to sell the electricity back to them.
Our monthly bill from Edison usually runs $1.14, which sounds great....However, our yearly infrastructure charge is hovering around $748. I only speak from my experience in CA. but the only way I truly see it being any kind of reasonably returning investment is if someone can truly go off the grid. We are still currently awaiting Edisons "Approval" for our battery. I believe that if it becomes a mandate, then the consumer should have the option of choosing wether they have someone else forcing you to pay them for their infrastructure that you do not need.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes8y
@John Woodrich yes I’ve been installing designing and selling solar for 15 years. I’ve done some work with Xcel in MN but only large utility scale systems, you guys are right that residential is borderline there and still in early adopter phase but that will change soon. In the early stages customers are environmentalists or engineers who like the technology or people with money to burn but today with leasing and financing and much lower pricing in many markets the solar customer is a much broader category. Leasing is not my favorite mechanism for solar and I can confirm what you’re saying regarding the transfer being a hiccup during a home sale. I wouldn’t want to assume a lease, I would make the seller pay it off, additionally leasing companies hold a lien (fixture filing) on the property so there’s that. But not everyone dislikes leasing, leases are transferable in many areas and plenty of people just see it as a lower bill than the electric bill would be without solar so it’s still considered a selling point for some. But of course for strict resale value cash is king. Probably the most fiscally responsible move is to finance the system if you’re planning to live in the home a few years since interest rates are around 2.99%, you can keep your capital invest it elsewhere and make more than 3% then pay off the system when you sell the house if the loan isn’t paid off already. Loans come in 5,10,15,20 year terms in order to create cash flow up front you can select the product that works for you. If your loan payment is less than your old electric bill was it’s a no brainer for people and there’s a lot of soft value as well, the environmental benefit for environs but also libertarians get the warm and tinglys of screwing the utility who usually screws the consumer. Sometimes it takes a few years to get positive cash flow but in places like California it’s easy to achieve day one. Financing is gaining market share on leasing, leasing was a popular model a few years ago but today financing is much more common. Cash purchases are exceedingly rare these days, few buyers ask me to calculate payback anymore which is why I find it odd when people get hung up on payback, it’s a throwback to five years ago for me which is an eternity in solar. Most new home construction in my area includes solar, it’s definitely recognized as not only a selling point but almost a necessity among home builders. They all at least offer it as an option.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes8y
@Dan H. with the invention of micro inverters which carry a minimum 20 year warranty many other inverter manufacturers have bumped up their warranty from 10 years when you bought in 2004 to 20-25 years today in order to stay competitive and also because it’s become cost effective for manufacturers to offer that long of a warranty because inverter related issues are very scarce these days as inverters have improved. 20-25 year bumper to bumper warranties and even lifetime warranties are common these days. Avg. price per watt installed in 2004 was $7.70, today it is hovering around $3 with the bottom around $2.50. Congrats on being an early adopter, your system is paid off and printing cash while others are still calculating their payback period.
- WorldWide · Member since 2016 · 1k+ posts · 1k+ votes8y
They need to include an addendum that specifies that a Tesla needs to be put in the garage as well. That way Elon can keep his
scambusiness afloat. Not really surprising, coming from a state that paints their asphalt white to help prevent global warming... - 8yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Originally posted by @Steve K.:
@Dan H. with the invention of micro inverters which carry a minimum 20 year warranty many other inverter manufacturers have bumped up their warranty from 10 years when you bought in 2004 to 20-25 years today in order to stay competitive and also because it’s become cost effective for manufacturers to offer that long of a warranty because inverter related issues are very scarce these days as inverters have improved. 20-25 year bumper to bumper warranties and even lifetime warranties are common these days. Avg. price per watt installed in 2004 was $7.70, today it is hovering around $3 with the bottom around $2.50. Congrats on being an early adopter, your system is paid off and printing cash while others are still calculating their payback period.
I know just a bit about the micro inverters on the panels but do not know how it changes the primary inverter.
I was aware the prices had come down significantly. When I purchased my system: 1) the prices were much higher 2) CA had a big tax rebate 3) the fed tax rebate was limited to I believe $2k (this limit was removed in the great recession). So I got a big state tax rebate but smaller fed rebate and higher price.
I suspect my system would barely have paid itself off, if not for subsidies (mostly the CA tax rebate), in the life of the system but with the lower cost now I think most systems with good orientation in sunny CA should be able to pay for themselves at less than 50% of lifespan (just a rough guess).
I was unaware that the inverters now had standard 20 year warrantees but they are proven technology that should be reliable.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes8y
@Dan H. just to clarify not all inverters have standard 20 year warranty, some are still 10 but with those you can extend it to 20 because many utilities require a 20 year full warranty due to the net metering agreement being a 20 yr. contract. Micros are used instead of the central inverter, not in addition to so you’d have one or the other not both. They’re great for mitigating shade and come with individual panel monitoring so you can see individual panel production, track degradation more accurately, trouble shoot easier if necessary etc. Lots of changes since 2004! That’s cool you got in that early. I was an installer on the roof back then, and a carpenter too on the side because there wasn’t enough solar work to keep busy full time. We have much better roof attachment methods now and racking is much quicker to put together. It used to take us 3-4 days sometimes for a single standard residential system, now quick installers can bang out 3-4 in a day.
- Residential Real Estate Broker · College Station, TX · Member since 2013 · 1k+ posts · 969 votes8y
@Nathan Gesner Preach On Brother - Amen & Amen!
- San Diego, CA · Member since 2018 · 18 posts · 6 votes8y
This is kind of depressing to hear being from California and getting into the Real Estate Business. I really like living in this state but if Taxation and Regulations are getting in my way, I will simply leave. I feel like this presents a very annoying handicap to the market that's unnecessary; and if it becomes more than a handicap and truly slows down the market to an unreasonable point, people will just switch markets.
It's bad for California, but hey, we can make another California :) One with less smog.
- Dos Palos, CA · Member since 2018 · 14 posts · 5 votes8y
My first thoughts on this topic of solar on new homes by 2020 is how will that affect me in the resale market? Will I need to put solar on the homes I rehab? I live in an area where it makes sense to have solar, but shouldn't our state make it more affordable?
- Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes8y
This could be a bad law. California residents are suffering from very high housing prices. The State ranks dead last in difficulties in adding new housing stock. So this makes it even more expensive to build housing. I didn't read the law, but for sure exemptions need to be in place for low income housing.
- Contractor · Member since 2018 · 26 posts · 31 votes8yAlex, you probably didn’t think this was gonna be such a hot topi! Haha! There are two problems: government removes choice and forces consumers to buy something. Then the second thing is they “help” by subsidizing it to lower cost which is ironic because they can only subsidize it because tax payers are footing the bill anyways!?!? Unfortunately this is most likely what will happen. Housing prices will continue to go up at faster rates than desired. There will be a housing crisis because people aren’t going to be able to afford these new homes/apartments. Government will step in to subsidize even more housing so that people can live in these homes. Government will then be forced (ironically self inflicted) to raise taxes or create new fees somewhere to fund this causing prices to go even higher and so on and so forth. Free market. Free market. Free market.
- Exeter, CA · Member since 2017 · 17 posts · 8 votes8y
$9500 added for solar is totally reasonable but is it only for the construction part? When I first moved to Central California we were quoted $20000 for solar and minimum 10 year payoff. That was in 2014. Up until reading this discussion I have been completely against purchasing solar. Have the cost have gone down that much? Also, when CEC states that you'll save $19,000 in energy bills over the course of 30 years, thats only $50 a month, and it looks like that $50 is going to the purchase. Unless it truly is $9500.
Here's my actual yearly PGE summary for the last 3 years. I live in Tulare County - hot hot summers. I have a 2500 sqft home with 14' vaulted ceilings.
2015 - $1,955.50
2016 - $2,152.60
2017- $2,864
- Exeter, CA · Member since 2017 · 17 posts · 8 votes8y
@BJ Dante
Interesting. At this time this taking a loan to pay for solar makes zero sense.
- Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes8y
Another thing to factor in when adding solar to a house is that you may have to make the decision whether you want to replace your roof at the same time... Or factor in the added cost to remove everything during a re-roof in the future.
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