Savings and payback period after Solar installation

A3@MBB said:
Good luck getting access to your investment, making payment to an installer that have the necessary equipment in stock and getting it installed when, as you say, shits hit the fan.
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Last thing I'm gonna do when the grid collapses and all hell breaks loose is to attempt to sell USD and buy panels :ROFL:

I'll be racing to the airport to try and beat the jet fuel outage.

Enjoy trying to protect your residential power station from a hungry mob with dead cell phones.
 
Its nearly impossible to do this calculation properly.
For instance what is the effect of load shedding on appliance failure, how much food is wasted because of the unreliable power, loss of income and career growth of you vs someone with reliable electricity, less stress and better quality of life, etc.
 
Forum Reader said:
Also add another column with interest you could have earned at 10% p.a. on R185k:

View attachment 1489667

In your situation, the interest you could earn on R185k is more than you save on electricity costs per year. So the R185k lump sum cost is never recovered in column "Cumulative Solar Invest" and instead just grows.
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Could you do the math for me?

800kWh usage per month pre solar
Upfront cost of R100k
Now buying 100kWh per month
 
B-1 said:
Its nearly impossible to do this calculation properly.
For instance what is the effect of load shedding on appliance failure, how much food is wasted because of the unreliable power, loss of income and career growth of you vs someone with reliable electricity, less stress and better quality of life, etc.
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Agreed, but you can get the gist of it.

And it's better to try than to wave it all away saying "reliable power is priceless". Everything has its price. You can go live in Holland for less than some people seem to be willing to spend beating this problem into submission.
 
B-1 said:
Its nearly impossible to do this calculation properly.
For instance what is the effect of load shedding on appliance failure, how much food is wasted because of the unreliable power, loss of income and career growth of you vs someone with reliable electricity, less stress and better quality of life, etc.
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And on the other hand its also impossible to calculate the governments new schemes to limit their losses to solar. Nersa suggested a R1k per month levy, PE saw 260% increase in a solar levy.
 
Tomtomtom said:
Agreed, but you can get the gist of it.

And it's better to try than to wave it all away saying "reliable power is priceless". Everything has its price. You can go live in Holland for less than some people seem to be willing to spend beating this problem into submission.
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I don't think I could ever afford a house in Holland anywhere near the same size as I have now even with accounting for a monster solar install.

Emigrating is just as hard to calculate.
 
Forum Reader said:
Yeah it's pointless doing the calcs. The cost won't be recouped but you'll have electricity. People should stop thinking that they will save money or get back what they spent. If you can't do without electricity then you just have to spend the money.
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Its not pointless. Most are borrowing the money so need to understand how much they can spend.

Spend to little and you will be paying for electricity AND the solar debt. Spend too much and you end up paying more than you would save and potential earnings.
 
Tomtomtom said:
Last thing I'm gonna do when the grid collapses and all hell breaks loose is to attempt to sell USD and buy panels :ROFL:

I'll be racing to the airport to try and beat the jet fuel outage.

Enjoy trying to protect your residential power station from a hungry mob with dead cell phones.
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I'll be with you on that plane.
At least I would be washed and shaved :cool:

Yeah, all jokes aside.
Adding R180k on a R3mil+ property will not change the fact that you will take a big financial knock if and when that day comes.
 
deweyzeph said:
Well, in my case, I already have enough saved up for a small solar system, but I want full independence. I don't want to have to worry about an overcast or rainy day, or being able to run the kettle, the washing machine and the dishwasher at the same time. I understand that is going to cost me significantly more than a R150k system but that's what I want and that's what I'm prepared to pay for.
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Serious question, why not just go for the R150k system and then head over to Makro for a generator when there's extended periods of overcast days? We have enough sunny days here in SA that it'll only be a few times a year that you'd need to break out the genny, and it's a considerably lower up-front cost to achieve independence.
 
Tomtomtom said:
www.moneyweb.co.za

As supermarket diesel bills top R1bn, it’s not as simple as ‘going solar’

Executives at food retailers are making a rational decision to use diesel. They will also have deliberated at length whether load shedding is a two-year problem or a 10-year one.
www.moneyweb.co.za www.moneyweb.co.za

Curious if the die-hard solar-or-nothing guys on here can see what these corporates are missing?
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I saw that article earlier today.
The main thrust of it was, for a home user with relatively modest requirements, solar is basically all you need. Even then your geyser and stove are normally on non-essential circuit.
OTOH for businesses, a lot of their activities involve making heat, such as cooking stuff. Solar power would probably keep the tills running but if they can't actually cook their chickens or keep the ice cream cool, then there's not much point.
 
newby_investor said:
I saw that article earlier today.
The main thrust of it was, for a home user with relatively modest requirements, solar is basically all you need. Even then your geyser and stove are normally on non-essential circuit.
OTOH for businesses, a lot of their activities involve making heat, such as cooking stuff. Solar power would probably keep the tills running but if they can't actually cook their chickens or keep the ice cream cool, then there's not much point.
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Yep, takeaway for me was if you have intense enough heating/cooling needs you won't physically be able to fit sufficient solar.

But also: why not batteries for storing grid energy outside trading hours?

Did the analysts forget that option or did they determine batteries charged from the grid cost more than generators fuelled with diesel?
 
Tomtomtom said:
Did the analysts forget that option or did they determine batteries charged from the grid cost more than generators fuelled with diesel?
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There are pretty well-established formulas for calculating anticipated future values. In the article they did mention that whether it's a 2-year or a 10-year problem makes a difference.

Batteries with sufficient energy to cook stuff would be quite a large up-front investment, and think of what it would do to the price of batteries for the rest of us. Plus it essentially just makes the problem for the grid worse, because when the power is on then Eskom needs to run its usual load plus charge everyone's batteries. (The latter is more the grid's problem than the business's problem I guess, but if a lot of businesses do it and then it pushes load-shedding up another stage or two, then ... well I don't know whether it's a factor in the calculation here I'm just spitballing.)
 
Forum Reader said:
Hi payback period is infinite because his electricity bill and thus savings is quite low for an R185k cost. So no, his power is never free but in fact costs more and more due to opportunity costs, even with 10% annual Eskom escalation.

Though if he needs it, there is no other choice but to spend the money. People don't do calcs like this when they buy a car. The money is always lost.
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I don't really agree. You say there is opportunity cost but there is also opportunity cost if you don't install solar because what will you be paying Eskom 10 years from now?

e.g. Take the 185K and invest it at 10% per annum and get the total cost after 8 years.
Now take the cost of a solar system over 8 years and then at "break even" in say year 8 start deducting the cost of paying a municipality each month from the invested amount.
You can't assume that the invested amount is not affected and still sit with an escalating electricity bill forever. That is not an accurate comparison of opportunity cost.

There is an opportunity cost of not installing solar which needs to be calculated and subtracted from lost investment opportunity figures.
 
Paul_S said:
e.g. Take the 185K and invest it at 10% per annum and get the total cost after 8 years.
Now take the cost of a solar system over 8 years and then at "break even" in say year 8 start deducting the cost of paying a municipality each month from the invested amount.
You can't assume that the invested amount is not affected and still sit with an escalating electricity bill forever. That is not an accurate comparison of opportunity cost.

There is an opportunity cost of not installing solar which needs to be calculated and subtracted from lost investment opportunity figures.
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It depends on your variables but I think it could potentially happen that you may never "break even".
If your 10% annual return on R185k keeps pace with electricity price increases, then you may always be financially worse off. Particularly at long enough timescales (such as 10 years) where you have to consider replacing batteries and stuff.

IMO the opportunity cost is, not having electricity half the time.

You could look at everything in life through a financial lens, but then you'd never do anything. Sometimes it's worth paying for convenience. That's how I see the solar thing.
 
Paul_S said:
I don't really agree. You say there is opportunity cost but there is also opportunity cost if you don't install solar because what will you be paying Eskom 10 years from now?

e.g. Take the 185K and invest it at 10% per annum and get the total cost after 8 years.
Now take the cost of a solar system over 8 years and then at "break even" in say year 8 start deducting the cost of paying a municipality each month from the invested amount.
You can't assume that the invested amount is not affected and still sit with an escalating electricity bill forever. That is not an accurate comparison of opportunity cost.

There is an opportunity cost of not installing solar which needs to be calculated and subtracted from lost investment opportunity figures.
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His calc was simple with a 10% p.a. assumed increase in Eskom costs vs getting an assumed 10% return p.a. on R185k. So in this case his savings and cost (lost interest) both grow at exactly the same rate and since his savings is less than the cost (lost interest), there is never a break even point.
 
I just recently got a quote for a 3 phase install.
It came to 300k including a 75K ex vat sunsynk 3 phase, 2x 5kw hubbles and 10x 545w panels.
My usage averages 30kwh a day at R3 a unit more or less.
So I'm spending R2700 a month on electricity and the system will produce 22kwh a day on average or it will save me R2000 a month.
That R2000 a month saving will not cover the R300k cost of servicing the debt if I draw it from a bond.
The nett effect is I will be paying R700 a month to do a pretty good job of beating load shedding.
Adding an extra 5x panels will increase the savings more than it will increase the payments to service the debt...savings will go to another R700 a month and the debt servicing will go up another R250 a month.
So now I would be saving R2700 a month and the debt servicing would cost R3250 a month more or less.
Nett cost is thus R550 a month and I'd have pretty much no electricity bill and pretty much no loadshedding.
As time goes on the savings will climb while the debt servicing would not and the system would break even in 2 to 3 years after which it would start making money. (assuming 10% a year kwh cost increase)
The question is how long will it take to extinguish the debt entirely and will the solar system still be functioning at that time.
Further I see it recommended that you clean the panels every 3 months which will also add to the costs.

A well designed solar system using less expensive components will likely actually be viable even on an ROI basis but one does have to focus and not just go at it blindly.
 
newby_investor said:
Serious question, why not just go for the R150k system and then head over to Makro for a generator when there's extended periods of overcast days? We have enough sunny days here in SA that it'll only be a few times a year that you'd need to break out the genny, and it's a considerably lower up-front cost to achieve independence.
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I live in an area where you would be hung and quartered for even firing up a generator so definitely not an option.
 
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