105R Solar Panel Cost Analysis

105R | Solar Panel Cost Analysis

Brian Feroldi joins the show to talk about the costs and benefits of installing solar panels and answers questions about his investment strategies, and Brad and Jonathan recap Monday’s episode with Paula Pant before announcing a new ChooseFI project on the horizon.

  • Jonathan reports a travel-rewards win as his family gets ready to travel for the last half of December.
  • If you want to learn something, you have to ask questions.
  • You don’t need permission – if you want something, you have to take action.
  • Paula, from Monday’s episode, wasn’t looking to pursue FI, she was aiming to create passive income to sustain her freelance lifestyle.
  • ChooseFI is moving forward to create the ChooseFI International Foundation, and Paula Pant will be joining as a director on the project.
    • Financial education
    • Scholarships
  • Update from Brian Feroldi, from Episode 75, who also recently wrote a cost analysis of solar panels.
  • Brian started researching solar energy as a method for decreasing his electric bills.
  • Depending on location, some people actually receive monthly payment from electrical companies for energy production.
  • Local solar companies often provide better service and lower prices.
  • The original price tag for traditional solar panels was $26k: Grants and tax credits cut the price half, and would’ve created a significant reduction to Brian’s energy bills.
  • A second option for Brian disqualified him from some of the grants, but gave him the option to sell energy back to the power company at 2x the cost of purchasing it.
  • Solar panels are essentially purchasing an asset as they have created a negative electric bill for Brian, so he actually gets paid every month.
  • There are creative options even if someone doesn’t have $26k up front.
  • Brian’s investment strategy was developed during a rise in the market, but his if his investments are impacted by a prolonged drop in the market, total stock market index funds will also be impacted.
  • Brian only invests in a company if he’s interested in owning for the long term.
  • Individual investing requires a time commitment: if someone isn’t prepared to spend the time, the default should be total stock market index funds.
  • Is individual investing gambling?
  • How Brian considers exit strategies:
    • Is the company performing as expected?
    • Are my investments too concentrated in one asset?

 

Resources mentioned in this episode:

SpotHero

“Are Solar Panels Worth the Investment” – Brian Feroldi

EnergySage

Your Financial Resilience Toolkit

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4 thoughts on “105R | Solar Panel Cost Analysis”

  1. Great discussion on solar panels! My husband works in solar and we live in Virginia. I concur that Virginia, and specifically Dominion Power, are really awful compared to regional peers like Maryland and D.C. However, there can still be financial benefits!

    Another option, if you want to support renewable energy, is Arcadia Power. They offer two programs. One is to pay a slight premium to offset use with wind power. More to this episode’s point is option two: Arcadia offers a community solar program. You can purchase panels installed elsewhere and the savings are credited to your account. Our Arcadia solar panels for our Virginia home are in New Jersey, for example.

  2. What about depreciation on the solar system equipment? Inverters I’ve seen have expected lifespans of about 10 years, panels closer to 25 years. If we’re going to factor that into the true cost of car ownership, it should also be included in the true cost of a solar system. Also, does having solar on your roof require home insurance changes? Could it result in a higher premium due to a fire hazard or high replacement cost – maybe an add-on to your existing policy? What about degradation of the panels. From what I’ve read the panels will only operate at 80% after twenty years (1% less efficient each year especially in a heavy snow environment like the northeast). So will you actually get $2000 each year from the utility or will your kWh production decrease 1% each year? Seems to me like throwing 16K at VTSAX would provide similar returns over a 25 year time horizon and would be far easier.

    • Depreciation is a perfectly valid point that was NOT included. Time will tell what the actualy lifespan of my system is.

      For insurance, I asked and my insurer (Amica) added it to my policy and it didn’t cost me a penny more! I’m not sure how common that is, but in my case it didn’t change the math.

      As for degradation, 1% efficiency lost per year won’t change the math much. I get paid on a kWh production basis — so if I produce 1% less each year, my reimbursement will go down by that much.

      VTSAX is WAY easier AND is likely to result in more money in your pocket after 25 years….but that’s overlooking the most important point, which is that the solar returns are nearly guaranteed AND they don’t fluctuate much from year to year.

      I also LOVE the idea of taking a fixed cost (electricity) and turning it into a fixed INCOME.

      From a portfolio perspective, I like to think that buying solar as like adding more bond/fixed income to your portfolio. It won’t give you the returns of VTSAX over the long term (since there’s no compounding), but it can help to smooth out the ride.

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