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What does solar power really costs


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To actually calculate the real ROI on a solar installation, is quite complex.

This thread is dedicated to get together as many ideas as we can, from forum members, to build the most comprehensive model to get to the real cost of a solar installations, and the ROI you can expect.

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It would perhaps be better to calculate the net present value over a fixed period, let's say 10 years.

The period of 10 years should be long enough to include maintenance and replacement of the installation. The "income" would be the cost of electricity from the grid for the time period with one's specific consumption and the fixed monthly cost one pays to the municipality or electricity provider.

[Your quotes suck. No offense meant.]

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Perhaps we should start with some definitions. ROI is not the number of years it takes to pay for an installation with savings on grid tariffs. It is the surplus left over after expenses on such savings as a percentage of the capital invested. Amortization period is the number of years it will take to pay for the installation from savings on tariffs. Now this is where it gets a little more tricky than it normally looks. It would seem that most members simply calculate how much they save per month on tariffs and divide the capital costs by that. What they forget is that the capital invested in the installation could have been invested in an income producing investment. To be realistic such possible income has to be subtracted from the savings on tariffs as the capital is tied up in the installation. The result will be an increased amortization period. Likewise if you borrow the capital cost, your savings in tariffs need to at least cover the repayments of the loan as well as the interest. If the cost is added to a bond the repayment period may be long enough to cover the useful life of the installation. Any excess savings would be money for jam as there is no investment for the excess savings. From a financial perspective it gets more intricate than calculating the tariff savings and dividing the installation cost by that. This only matters if one wants to logically and accurately determine the feasibility of the solar installation.

But even if we don't make it too complex for a start, something more fundamental will be better than nothing and could always be refined as it progresses. Let's see if someone wants to take the first step and come up with an initial spreadsheet.

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would be interesting to see what you guys come up with, think it's going to be a tricky one.

my inverter software gives me a yearly value as to what the panels have generated and for me thats fine just knowing it has not gone to Eskom or the clan.

20161009_165512_resized.jpg

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Wow by the sound of things this is could to be fun! 

I for one would first start of by differentiating between two maybe three different groups as the approach to ROI will differ fundamentally between them.

  • First group is would be the group that is the PREPAID group that only pays for what they use (I will venture as to state that this group will be the easiest to approach and it seems that most guys falls within this group)
  • Second Group would be the guys that falls within the monthly leavy group (the farmers usually falls in here) Here it will get a bit tricker because this will sort of push towards going off grid.
  • Third group would be the complete off grid guys (I suspect that these will have a complete different approach than the rest as usually their of a capital need rather than a cost saving)

Could this work?

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WOW, lekker points already.

I agree with Paul, keep this Forum based, free to all, not to be included in any software.

 

1 hour ago, meyerwh said:

[Your quotes suck. No offense meant.]

Noted ... yet it seems to me we had a problem and a opportunity arrived - just joking. :D

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@TinkerBoy As far as I can see what you are calculating in AICC is the Amortization Period not Return On Investment. The titles that you have at present in AICC are just fine as is the calculation method. The only problem is that municipalities now have bracketed charges for electricity so provision for a single charge causes a problem. One would only install AICC or any other monitoring/control program once you have installed the equipment. Then all the other financial considerations are purely academic as the decision to spend the money has already been taken and one can cobble together your own spreadsheet if you are interested in the actual financial implications based on your equipment.

@PaulF007 and @The Terrible Triplett with due respect for your open source views, what happened to freedom. I use Ubuntu as my main operating system and of course all the open software needed. But who will be adversely affected if features of a commercial program is discussed. We all discuss the features of commercial hardware all the time. It would indeed be a sad day if this forum turns out to try and enforce restrictions in open discussion. Some of the members are surely going to purchase AICC for the RPi when it becomes available. Others may also find it useful to voice their views and submit suggestions. So I would plead that we do away with restrictions and advocate a more open and free group. We surely have enough rules and laws making our lives a misery. Maybe I am just getting too old at 78 with the experience of a lifetime of lack of proper freedom and ever increasing government oppression.

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@TinkerBoy As far as I can see what you are calculating in AICC is the Amortization Period not Return On Investment. The titles that you have at present in AICC are just fine as is the calculation method. The only problem is that municipalities now have bracketed charges for electricity so provision for a single charge causes a problem. One would only install AICC or any other monitoring/control program once you have installed the equipment. Then all the other financial considerations are purely academic as the decision to spend the money has already been taken and one can cobble together your own spreadsheet if you are interested in the actual financial implications based on your equipment.
@PaulF007 and @The Terrible Triplett with due respect for your open source views, what happened to freedom. I use Ubuntu as my main operating system and of course all the open software needed. But who will be adversely affected if features of a commercial program is discussed. We all discuss the features of commercial hardware all the time. It would indeed be a sad day if this forum turns out to try and enforce restrictions in open discussion. Some of the members are surely going to purchase AICC for the RPi when it becomes available. Others may also find it useful to voice their views and submit suggestions. So I would plead that we do away with restrictions and advocate a more open and free group. We surely have enough rules and laws making our lives a misery. Maybe I am just getting too old at 78 with the experience of a lifetime of lack of proper freedom and ever increasing government oppression.


I fully agree. If you don't like what others is posting ,simply scroll past it. Very simple.

Sent from my SM-G920F using Tapatalk

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2 hours ago, ebrsa said:

Let's see if someone wants to take the first step and come up with an initial spreadsheet.

Well it's not much and there would be a ton to add but here goes.

The attached spreadsheet calculates the amount that you could borrow if you had a set power bill. So if your current bill is R 1000 how much could you borrow if you wanted to pay it off in 5 years the value would be about R 78 470 .I also added a quick breakdown of possible energy usage for said amount but you could also add the total units used for the month so that a Average price could be determined for your system. I know that there is diferent rates for different consumption levels but I think that a average price should do the trick for a basic break down. 

Now I would imagine that you should then incorporate a Basic solar "quote" system  to determine if the said amount will be able to supply the goods. 

I am not sure how we would be able to share the file amongst each other to keep the most recent one available but i am sure there would be a solution.

Solar cost Calc.xlsx

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@ebrsa I whole heatedly agree with you re no restrictions.

I am just putting it out here that the work done here as a collective should not be incorporated into any other software. Even more so if said software is intended to earn some income, even donations.

See, the idea struck me for the day before yesterday when I though of adding something like this to SolWEB. Then I thought no, that is not cool after seeing all the brilliant ideas and comments coming out, most of them are not mine, so rather keep it simple and free right here on the forum to help all, adding value to Power Forum.

That's all.

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55 minutes ago, PaulF007 said:

Well it's not much and there would be a ton to add but here goes.

The attached spreadsheet calculates the amount that you could borrow if you had a set power bill. So if your current bill is R 1000 how much could you borrow if you wanted to pay it off in 5 years. Now I would imagine that you should then incorporate a Basic solar "quote" system  to determine if the said amount will be able to supply the goods. 

I am not sure how we would be able to share the file amongst each other to keep the most recent one available but i am sure there would be a solution.

Solar cost Calc.xlsx

Perhaps you could share it via Google Drive, if you have a google account?

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On 2016/10/09 at 9:12 PM, TinkerBoy said:

The first link looks quite ok. I have attached a trial for a 5kW system with lots of thumbsucking. I basically pay R150,000 for it and use all electricity myself. With a price of R1.1 per kWh i cannot break even within 10 years.

The tool is quite crude... i really think it would be better to do it from scratch.

export_summary.php.htm

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Something I often wonder about, is whether power you buy from Eskom really costs only what you pay for it. I mean, when you install a Diesel Generator, do you include the cost of the equipment, or just the running cost (Diesel and services) afterwards? Most people don't include the cost of the equipment, because repayment isn't even an issue. It's not the point of the exercise. When we install solar power, we go the other way: Now we're looking at repayment. So these two examples make sense, but does it really follow that because these are someone else's fossil fuel generators we leave out the purchase cost and only look at "maintenance"?

It might be futile to look at it that way, your tax money will be spent (and wasted) on building big coal plants whether you like it or not... but I have this gut feeling that you kinda sorta have to include that in a comparison.

Sorry, don't have numbers for that :-)

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8 hours ago, plonkster said:

Sorry, don't have numbers for that :-)

But still good food for thought :)

I think the problem arises when you moved to solar with "Borrowed Money" to save on your electricity bill. The principle involved is that you are now using disposable cash to pay off your system in the form of monthly installments. Now obviously common sense dictates that your monthly power bill should now be the same or reduced to lower than what your current installment is else the whole exercise was futile. Yes there is a capital component that forms part of the system but the capital value only hold a value if you could recoup the capital by selling it. One could argue that a solar system will enhance the value of the property but that remains to be proven in the market.

It was mentioned before and forgive for not remembering who , but I will say I was not first , that if you take the capital investment made into solar and you look at what your possible investment returns on that capital could be you might even find that Solar might in some instances not make sense at all. 

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You always have to take amortization of the capital investment over its usable life into consideration. There is no question that Eskom does and the depreciation forms part of their expenditure. How else are they going to accumulate capital to replace a power station or pay for the loan if it was constructed with borrowings. All costs plus their profit is what they charge for electricity. When considering the true cost of solar power one has to do the same. You have to invest in the capital equipment which funds could have been invested in income generating investments. Then as part of your costs, the monthly amortization costs have to be deducted from savings on Eskom power to get true savings. There is also the matter of appreciation of some investments. Warren Buffett, well known for his investment skills, bought the majority shareholding in  his company, Berkshire-Hathaway on 10 May 1965 and the shares closed at $18 that day. At the time R1=$1.60 approximately so for R1125, which was a tidy sum in 1965, you could have bought 100 shares. This very day the shares are trading at $217,330. Just Google BRK/A. So your investment would today be worth R310,799,286.40. For returns like this you could probably have been running a sizable diesel generator, replaced it several times and still be very wealthy, but that's another calculation. The Remgro group yielded comparable returns. Similar factors come into play even with solar as grid consumption prices escalate and central banks keep inflating currencies. This is just to show that there are many factors to take into account and informed assumptions to be made to arrive at a reasonably realistic conclusion. Maybe best to do is simply to divide the capital cost by savings and then after a few years feel great about yourself as you enjoy what seems like free electricity. Besides the whole solar thing is quite an interesting and rewarding exercise.

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3 minutes ago, ebrsa said:

Maybe best to do is simply to divide the capital cost by savings and then after a few years feel great about yourself as you enjoy what seems like free electricity. Besides the whole solar thing is quite an interesting and rewarding exercise.

It's wonderful once you forget the pain you went through, right? That's a phenomenon I find very interesting: You have times when the money river is in flood and times when it runs low. Stuff you buy in the good times -- even at double the cost -- is worth so much in the bad times. Then you look back and your past self looks like a genius!

In computer programming we find the same thing. The rule is to spend the time when it is needed: Don't implement features that aren't needed right now, because it is better to spend the time later when you know better what is needed. Nevertheless: Whenever you encounter a bit of computer code where you can clearly see that the you of the past had some vision (even if he spent time he shouldn't have)... it makes you feel good about yourself. The investment is long forgotten by then :-)

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10 hours ago, plonkster said:

It's wonderful once you forget the pain you went through, right? That's a phenomenon I find very interesting: You have times when the money river is in flood and times when it runs low. Stuff you buy in the good times -- even at double the cost -- is worth so much in the bad times. Then you look back and your past self looks like a genius!

Agreed, the money it took to go off grid is long gone and forgotten about. Now I have free electricity, which does require some maintenance, and I will have to replace batteries in the future but today it cost nothing! I,m probably about half way through the payback period currently, being about 3 years.

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