Sep 14, 2009, 10:06 AM
Post #17 of 18
Looking for an investment with the potential to earn more than 10% annually??? This thread got me thinking, and I’ve concluded that it is possible to do just that!
Re: [johanson] Solar Supplies and Grid Tie Info
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According to my math, if you are a DAC power user consuming 1000+KW a month, then you are paying at least $3000/yr (3 pesos/kw or $.25 x 1000kw x 12mo’s). If, instead, you invested in a solar photovoltaic system to produce the electricity yourself, you would have the potential to earn back your investment and even make a tidy profit.
Here’s what I’m thinking:
A grid tied solar system large enough to cover 1000kw/month usage would cost roughly $56,000 US (7kw system x 5 peak sun hours per day *(see note at bottom) = 35kw per day or 1,050 kw/month, then multiply that by an average installed price of $8kw (current US prices) and the system price would be: $56,000.)
Now dividing the $3,000 per year utility bill into $56,000 system cost means that the expected payback period would be: 18.66 years. Assuming that one will be in the same house for the entire period, or that the value of the house if sold would increase by a comparable amount, the investment would not have gained anything (other than the feel good of having done your part to combat global warming), but wouldn’t have lost ground either (other than the potential for having made more on your money somewhere else).
Now, if one starts looking at other issues, such as the fact that the Mexico’s most important Cantarell oil field peaked production in 2004 and is now in rapid decline, then the notion that electric rates will climb in coming years makes locking in the .25 price by creating your own power start to look more attractive. If the rate charged for electric were to increase at 5% a year say, then, by my calculations using the above numbers, your system would be paid for in 13 years rather than 18. Still no growth in your investment though, just a quicker payback, right? Well, not necessarily. If you start looking at the fact that at that point, year 13, without having installed solar, you would be paying more than $5,000 annual for your electricity, and with the rates still climbing, the investment in solar begins looking better and better. By my calculations for this scenario, at year 13 you’ve achieved payback and your investment would now start yielding a solid 10% annual return, with that rate continually increasing over time as the rates increase further! If you follow Peak Oil theorists and believe, as I happen to, that energy rates may very well skyrocket rather than merely climb, then the return on your solar investment has the potential to skyrocket with them. Personally, I don’t know of any investments out there with this kind of upside potential with such little downside risk.
Of course these are very rough numbers and are based on unknowable variables such as future costs for electric, system maintenance issues, and your own plans for residing in or willing your property. However, as I look toward the future, investing in the production of my wife’s and my electricity through our retirement years in Mexico starts looking like a fairly reasonable bet to make!
* note: Regarding peak sun: Johanson, in your post you said you are producing up to 12kw/day with ten panels. The largest commercially available panels I know of are rated for 200 (205) watt’s per panel. This would mean that for your ten panels to produce 1200kw/day, you are seeing 6 peak sun hours on those days, or even more than 6 if your panels are actually smaller, say 175watt. Those numbers are quite high, but certainly not implausible. For the above calculations I am using a more conservative multiplier of 5 peak hours/day. Some solar irradiation charts have parts of mexico listed as closer to 4 peak hours though. The lower the peak hours, the larger system one would have to have to hit the above targets, which would in turn extend out one’s payback period.