We’re entering a new world and the changes are going to be more profound that most people realize.

From 1900 to 1930, the world shifted from horses to horsepower.

When I moved to Grass Valley in 1986, there was still an old gold miner who rode his mule into Nevada City to get food and supplies.  That mule was his “vehicle”.

There are hitching posts along Broad Street still today, though likely most don’t know what they are. That old mule was a fairly common site in town, though cars had long since taken over the vast majority of transportation.  The Chief Crazy Horse Saloon still had a brass trough beneath the bar stools.

Few people knew that the trough was so that men at the bar could just pee without leaving their stool, the run off heading out into the street.  Tunnels under the streets ran from the respectable pubs over to the frequented brothels “respectable” men couldn’t be seen entering.  It was a different world 100 years ago with remnants (hitching posts, pee troughs, and under street tunnels) lingering long after customs had changed.

The shift from Internal Combustion Engine (ICE) cars to Electric Vehicles (EVs) will be no different.  EV’s simply cost less to own and operate, so ICE cars are dead whether they know it or not.

From 2000 to 2030 the world will shift again. This time from gasoline cars to electric cars.  There will certainly still be gasoline cars driving around a hundred years from now, but, as with horses, gasoline cars are already today like zombies moving around yet not knowing they are already dead.  In about 3 years it will come as an enormous surprise as people learn their used ICE vehicles are worth less than they expect, and ICE automakers begin to go bankrupt.

As people switch en masse to EV’s, there will manifest a glut of nice, almost new, ICE engine vehicles on the used car market.  Why spend money on a brand new car when you can buy a 1 year old car for a big discount?  The impending glut of barely used ICE vehicles is what will suddenly bankrupt ICE car makers as their sales drop suddenly and they are stuck with inventory they can’t sell.

The shift this time will be far more dramatic as it encompasses more than just vehicles. Batteries store energy and pay it back out again when needed.

If the original source of energy was gasoline, it would make little sense to store it in batteries. But if the original source is solar or wind power, then it does.

What’s interesting today is that solar power systems last longer than it takes to pay for them. At utility rates, it takes about 7 years to pay for a solar power system. They are guaranteed for 25 years and may last to 100, albeit with a replaced panel now and then. Once someone installs a solar power system they will never again purchase power from a utility as it costs less money to maintain the solar power system.

In a nut shell, electricity is today, becoming free. Do you need some electricity? Here, come have some of mine, I have too much. Come charge up your car and take it over to your home (or business) and use it if you want.

Monthly gasoline bills, wealthy oil producers, so 20th Century.

EV purchasers don’t need gasoline. They instead need a solar power system for their home or business.  Electricity from utilities (in California) to charge an EV costs about 10% to 20% of gasoline, and with solar, it’s free.

But what else does one need or desire to go with an Electric Vehicle purchase?

Well, the obvious is a well built vehicle that works. Next comes low price. And people tend to prefer to purchase a new class of vehicle from a manufacturer with 3 or more years of experience building the new technology so that it has been proven in the field.

There are precisely 2 vehicles on the market today that most people can choose between:  The Chevrolet Bolt and the Tesla Model 3.  Every other EV has too short a battery range, though it is hoped the Nissan Leaf will in September join this list, and, by 2020 the list will likely contain as many as 10 choices.  And the other models with adequate range cost too much for most people.

EV’s have one other large need: “Charging”.

This is a need that is new to gasoline car drivers and as a result, it’s one that isn’t yet fully understood by EV purchasers and or by the general business world who see an opportunity to get into the “gas station” business by installing a charging station at their restaurant, bowling alley, or grocery store.

But what do EV owners really need?

What’s ironic is that the majority of charging stations being installed are missing the mark of what an EV owner really needs.  They are being installed by business owners who don’t themselves own, an EV, in hopes of winning income from charging.

When you own an EV, you will typically plug it in at home every night just like a smart phone. You keep it charged so that every day when you take it out for a drive, you begin the day with a “full tank of energy”.

You don’t need to charge up at the local store.  Ever.  Really, you never need to charge at your local supermarket.

You may do so, but purely to get some free electricity the store offers it’s customers for shopping at the establishment.  And if the store is going to charge for the charge, it’s cheaper at home.

Safeway, McDonald’s, Costco, Home Depot, and myriad other businesses will no doubt provide free charging stations with slow charging so that the cost to the store is a dollar or two in electricity.   The store wins the customer for a small electricity cost.

For the customer, the money reaped by charging isn’t much and the “close to the entrance” EV parking space is probably the more valuable benefit.

The point is, an EV owner with 200 mile plus range really doesn’t need in town local charging at all.  They begin every day with a full tank of energy and only need charging on long trips.   Few people travel 100 miles let along 200 miles in a normal day.  So the place where charging is really important is out on the Interstate freeway system.  If I want to travel from Sacramento to Los Angeles, I need charging.

And if I’m on a long trip and need charging, I want it to be as fast as possible.  So, I want fast charging along Interstate freeway systems.

Fortunately there are a large number of fast chargers along Interstate freeways.  Unfortunately (for most auto makers) they are all Tesla Superchargers.

Tesla is installing it’s Supercharger network as a proprietary EV fueling system world wide.

No other company has a comparable charging network, game set match Tesla.  Other car companies are just now working on charging systems called Super Fast that are half the speed of Tesla SuperChargers.

Greentech Media recently published an article, “Top 10 EV Ready Cities”.  

I like Greetech Media, but, ……..Who cares?

EV owners do not need EV ready cities to live in.  They have a fueling station at home that costs less and is more convenient than any local charging station.  They also have a 110 volt plug that can connect to any outlet, anywhere, in an emergency.  They leave home each day with a 200 plus mile range and can easily scoot around to any stores they want and get home with typically more than 150 miles to spare.

What EV owners need is a good system of charging stations along highways that get them to places far away.  They need charging when they go on vacation to Yosemite or Disneyland, not when they go shopping in town.

In California, there are a ton of charging stations along highway 99.  They have been installed in Stockton, Modesto, Fresno, Bakersfield and so on down the length of the state, by businesses hoping to attract some EV charging business.  And perhaps whimpy EV’s with a <100 mile range may bother to plug into those stations.

But real EV’s with a 200 plus mile range like the Chevy Bolt and Tesla models, don’t need to.  Anyone driving from North to South in California prefers to take Interstate 5 down the center of the state where Tesla Superchargers reign supreme.  I suppose by now there are enough charging systems that the Bolt can make it down the state along I-5, but the charge times will be longer than any Tesla.

Chevrolet’s site says it “only” takes 30 minutes to charge 90 miles of range using their “Super Fast” chargers if you can find one.

That means, it takes an hour to charge the battery pack by 180 miles so that you can make a next stint down I-5 to Los Angeles.  Add 2 hours to your trip and you can make it, again, assuming you can find these rare Super Fast charge stations along the route you need to follow.

Not bad if that were your only choice, but it isn’t your only choice.  You can instead purchase a Tesla Model 3 and “fill up” in about 30 minutes.  Tesla has built out the equivalent of the “Shell” or “Chevron” or “Standard Oil” or “BP” or “Fliers” chain of gas stations.  So Tesla is indeed a car maker.  But it is also an energy delivery company, which is what gas stations have been all along.

The new energy to be delivered is electrons, not hydro-carbon molecules.  And while there are a large number of charge stations other than the Tesla network, those typically have slower charge times.

So, if you’re going to purchase an EV, what you really want is to have a well established company, Chevrolet, Tesla, Nissan, and others are coming soon.  You want a vehicle with several years in the field, Tesla and Nissan remain.  And you want a large charging network with fast charging capability for those times you take a long distance trip, which leaves only Tesla.

Tesla is the only choice for anyone who want’s to shift to an Electric Vehicle today.

Check Mate Tesla.  While other companies claim they are going to ramp up and compete with Tesla, they don’t have battery manufacturing to install into their cars, so their words are vaporware.  And even if they did, there isn’t a network of truly fast chargers to power them on long trips.

No doubt the other car makers and oil energy companies will figure this out and a few of them will avoid going bankrupt by finally offering what EV owners really need, as has Tesla already.  But several companies will certainly fail to make the transition before the glut of nearly new yet used cars renders their new car sales zip and they go the way of Kodak, as ICE cars are no longer desired.

If you own an ICE car, as you most likely do, get ready to sell it before its resale value drops sharply.  You have about 3 years before the events detailed above kick in.

rt

 

 

 

 

 

 

I can remember my mom pulling into the gas station and buying gas. The price was 25 cents per gallon.  When I started college, I worked at Donner Gate Chevron gas station next to Donner Lake and Lake Tahoe in the Sierra Nevada mountains.  The price then was 50 cents per gallon.  One year later when I returned to work at the station a second year, after the Arab oil embargo, the price had jumped from 50 cents per gallon to $1.00 per gallon.  Oil producers profits no doubt doubled overnight due to the manufactured shortage.

A while ago, the price had reached over $4.00 per gallon after a steady and relentless series of price hikes over a period of a few years and then, overnight, the price dropped to as low as $2.20.  Why?

What would you do if you had an asset (oil) and you wanted to maximize your income from that asset?  You own a lot more than can be sold in a year and in fact, you own many decades worth of the asset.

To increase income you can increase the number of barrels you sell per year at a fixed price, or, you can increase the price per barrel at a fixed volume.  The former will consume your reserves more rapidly, whereas the latter will preserve them.  So of course you will desire to increase the price per barrel of oil and that means, increasing the charges per gallon of gasoline at the pumps.

This is what we saw up to about a year ago when the price had reached as much as $5 per gallon at some stations.

Then, all of a sudden the price dropped.  I can now find gas stations selling gasoline for $2.20 per gallon .  It seems like a short time ago I paid $4.  Certainly the cost of getting oil out of the ground didn’t get cut in half in 2 years.  What happened?  I don’t want to complain, but having lived a life where the cost of gasoline has steadily increased, this is unusual so there must be something that motivated it.  But what?

I think what happened is that Oil Giants began to believe in Electric Vehicles.  Sales of the Tesla Model S were growing steadily and rumors of the Model 3 had likely been heard.

 

 

In 2015 Tesla announced the Model 3 and in 2016 received ~500,000 pre-order deposits for the ~$35,000 consumer car.

This car will have a range of over 200 miles, similar to it’s Model S and Model X cousins.  Both of these cars, while pushing the boundaries of technology, work.  They are real items available for purchase, that actually move down the roadways carrying their owners to and from work and play.

All of those pre orders sparked Chevrolet to step up it’s EV program and announce that it would release the Chevy Bolt in late 2016 as a 2017 model.  The Chevy Bolt will also have a 200+ mile range and be the only competitor to the Tesla Model 3.  In fact, the Chevy Bolt is according to their web site, available now with the Model 3 coming out within about a year.

How well the Chevy Bolt fairs in the market place remains to be seen after their fiasco with the EV1 and the ensuing revolt documented in Who Killed the Electric Car?

At the same time, virtually every other car maker flipped their EV development programs into high gear.  The Tesla pre orders took everyone by surprise, including Tesla.  What it showed, is that people have not been purchasing EV’s because the range has been too small.

I for one have not been interested in an EV for exactly that reason.  If I need to drive to Sacramento (50 miles) for business or shopping,  drive around 30 to 50 miles running errands and then come back home, the round trip distance is easily 160 miles.  With a 50 mile range EV, I can’t make the trip.  With a 200 mile range, I can.  This is simple.  Even the Nissan Leaf with ~100 mile range is worthless to me as I’m not going to hunt around a parking lot for an electrical outlet to plug in so I can get back home.

The number of times I need to travel close to 200 miles in a year are small, maybe 10 or so.  But they are not 0.  And I want my car to work for every trip I need to make.  I could deal with charging on a trip to San Francisco airport for a vacation, but not to Sacramento, a day trip.

OK, fine.  People want an EV to have more than 200 mile range.  But what does this have to do with oil?

For the first time we have 2 viable solutions (Model 3 and Bolt) to transportation that get their “fuel” from an electrical outlet instead of a gasoline pump.  This means I can now install a 2 or 3 kW solar power system to fuel my car forever, and never have to go to buy gasoline again.

Wow.

When the cost of gasoline rose to the $4.00 realm in 2015, people actually thought about whether they needed to drive to some destinations, reducing their consumption.  People were angry with the cost of gasoline, cut back on driving, and began to wonder, “Is there a better way?”

Up to $5.00 per gallon gasoline in 2015 helped fuel the 500,000 pre orders for Tesla Model 3’s a year later.

Rising Model S sales and rumors of a Model 3, I think, woke up the oil producers who one day in 2015 woke up and thought:  “Oh bleep, we just helped cause the birth of an EV industry.  Charging this much for oil increases revenue today, but dramatically shortens the EV adoption time scale.  This is (very) bad for our long term integrated revenue.”

If EV sales come on line in earnest, hundreds of trillions of dollars of oil reserves on the books become nearly worthless.  EV market penetration is the bane of the oil industry (and boon for the planet’s health)

“How can we delay the penetration of EV’s into our market space?” the oil industry wondered and no doubt, wonders.  The answer is simple:  “Let’s reduce the cost of gasoline so people are less motivated to purchase an EV.  This way we earn fewer dollars per barrel of crude, but, we manage to sell more barrels in the coming decade and we delay our certain demise”

I think this is why the prices dropped.  The oil industry woke up to the fact that EV’s are a real threat to future oil sales.

You see, they were pushing for increasing the dollars per barrel for their hundreds of trillions of dollars of assets still in the ground.  But what they finally managed was to piss people off to the point that many decided enough is enough.  They gave rise to a significant number of people who are now bothered by the smell of gasoline as they fill their tanks.

People purchasing solar power systems for their homes are realizing they can add 2 or 3 kW of solar power and use that to fuel their EV forever.  Think of that:  the owner of an EV and a solar power system will have free electricity for their home and free “gasoline” for the car, (essentially) forever.

All of a sudden, completely counter to all past experience, increasing the cost per gallon of gasoline engendered a revolt.  It led to a reduction in future oil consumption and an increase in EV sales.  This (Model 3 deposits) was the first time in history that a significant number of people, all at once, put their money where their good intentions were and decided to make the switch from gas to electricity.

I suspect certain oil industry experts woke up and realized that they had just given birth to a movement that would render their vast underground wealth, worthless…… or at least, worth less.  This “Oh Bleep” moment was quickly countered with an overnight price drop.

Fortunately for the planet, this reaction was too little too late.  A number of people woke up, opened their eyes and saw Schrodinger’s Oil Cat…… and it materialized.

The EV revolution was born and there is no going back to the previous unknown state of affairs.

Sure, we will still use oil for plastics and fertilizers.  But gasoline and diesel for transportation has been the largest consumer of oil pumped out of the ground.  If that industry is replaced by solar energy harvested from the sun, via EV adoption and battery storage development, then it will take a tiny down turn in consumption to cause an enormous battle amongst oil nations as they vie for declining demand.

It will become a consumers market and this shift is likely to happen in just a couple of years as new, 200+ mile range EV’s come to market.  By 2020 we will probably have 20 to 30 new EV models with over 200 mile range.

For the first time since the earliest days of oil, it may well be that we are about to have more oil produced than people desire to burn.  Demand reduction will drive even larger price cuts as oil producers have a lot of oil to sell, with a declining customer base to sell to.

Producers will be competing to sell their product (gasoline and diesel fuels) amidst a market glut **if / when** half the market is eliminated by electric cars fueled by solar (this assumes batteries improve).

And we all know what happens when supply is large and demand is low…..prices drop and companies (or in this case countries) go bankrupt.  The countries that produce oil at the lowest cost will hold on the longest while those with higher overhead will go bust.  It would be wise to invest in technologies beyond black gold, IMO.

This may turn out to be the best bad thing ever to happen to the industrialized planet.  In other words, this is great news for the environment.  And it’s exactly the outcome Elon Musk hoped EV adoption might produce.

Congratulations, almost, Elon.  the cards are in play and the outcome looks highly likely.  I’d sell that oil stock before the end game becomes obvious to the stock markets.  And Oil Countries, I’d try to figure out what you’re going to sell when no one wants oil for cars and you actually need to produce something useful or go back to your pre oil status.

Happily, a reduction in oil sales will reduce funds now used for terrorism.  Want to help stop terrorism, then go buy an EV and a solar power system to fuel it.

Ironically, the oil in the ground may well stay there far longer than Hubbert’s Peak projected.

Keep an eye on battery storage cost reductions and performance improvements as that will be key to accelerating this transition.

If the cost per kWhr storage is cut in half, and the storage capacity in kWhr/kg per unit weight is doubled as is anticipated by some, then EV adoption will take off in spades.

An EV car for the masses with a 400 mile range, costing less than a gasoline car and enjoying zippier acceleration, near zero maintenance, and no stops at a gas station….. would rock the industry.

Already it costs something like $6.00 worth of electricity to charge a car to the same range as $60.00 worth of gasoline.  Solar energy today, fully amortized, costs about 8 cents per kWhr so a 70kWhr battery pack costs about $5.60 to charge.

Let’s see, do I prefer spending $240 per month on gasoline or $50 per month for a solar power system I purchase and own (amortized 20 yrs at 6%)?

To be fair, the cost of “fueling” an EV is misleading.  The cost given by EV makers and by me here, does not include the replacement cost of the battery pack.  This is the piece of the puzzle the EV manufacturers haven’t wanted to talk about in the past.  The cost per mile for the battery pack was large, and ruined the claimed low cost.

However, even that negative is already eliminated.  The amortized cost for a replacement battery pack is already below $100 per month and this will likely fall to below $50 by the time someone actually needs to replace their EV battery pack.  At any rate, the EV’s being sold come with new battery packs, so this is an issue most buyers don’t consider.

So I give the EV a full green light.  The industry is ready to go, indeed, it is going already.  When I can afford it, I intend to purchase an EV and install 3kW of solar power to fuel it forever.

Sure, in 30 to 50 years one solar panel will fail this year or that, reducing my production to 90% for a few days until I get it replaced.  I’ll just replace it and be back up to full production capacity within days of realizing production is down (which is all computer data logged and easy to determine).  So, hang on to your seats, the world is about to change in a big way.

I took a test drive in a Model S Tesla.

It was more fun than a roller coaster ride.  The first surreal experience happened just as I rounded the corner onto Sierra College Blvd, shortly after departing from the Roseville, CA Tesla dealership.

There on the corner is a larger than normal, gas station.  As I was maneuvering around the corner, I gazed over to the right, saw the station and realized…………”If I owned this car, I would never again go there for gasoline.”  In the past I would have noted, “There’s a station for future reference”.  So this new thought took me by surprise.

Later, we meandered to a long straight stretch with no one (and no officers) to be seen ahead or behind.  From a dead stop on a back country road, I floored the accelerator peddle.  The wheels became light, close to breaking free.  I was pushed back in my seat, my eyes were slightly blurred and as I didn’t expect that much acceleration I slightly pulled back on the accelerator.

Having street raced 750cc motorcycles in Redwood Canyon (Oakland) and driven the “Sunday Morning Ride” from San Rafael over Mt. Tamalpias (a not so legal Sunday country ride) and zipped around in sports cars most of my life, I was surprised by the torque even though as a Mechanical Engineer I knew it existed.  I hadn’t expected to consider reducing how hard I pushed on that accelerator peddle.

I was sold.  I desire an EV now.  Both for the fun of driving it, and for the end of my days of filling up at gas stations.  Having thought about it for the past several months, I will far prefer plugging in my car most evenings compared to having to pump smelly gasoline into my car.  Every day when I leave the house, I’ll have a full tank of electrons.  And now, each time I fill up my car, or take off in the morning and smell gasoline fumes, I’m repulsed.

What about the problem of long distance travel?

Thinking about this “problem” it seems logical to me that as soon as a lot of EV’s are moving down the roads, every restaurant, coffee shop, store, and who knows where else, will install charging stations.

Why not?  A driver on a rare, long trip, will be more than happy to pay $20.00 to “fill up their batteries”.  After all, we’ve been paying $50 or more to fill up a tank of gas.  Given that it will only cost the restaurant $6.00 for that electricity, it’s a revenue generator that increases their main business (food) to boot.  “EV Charging Station, coffee shop / restaurant, Next Exit” will be a common future billboard I’m sure.

As soon as EV’s take to the road en masse, charging stations will pop up like mushrooms on the second warm day after a long series of cold rains.  Meanwhile, the 200 plus mile range will do for almost all of my driving needs and I’ll keep my gas car until the mushroom hunt is easy.

We have 2 years before the ITC ends for solar power, so get it while it’s hot.

rt

 

 

By now virtually everyone knows about the existence of solar power.  In the middle of Africa where power grids don’t exist, night time lighting is had via solar power.

In many countries there are incentives to help cover the cost of acquiring solar power.  In the US, you will receive a 30% tax credit on the entire purchase price including any tree removal or other costs directly associated with installing solar power.  This basically means that anyone who pays taxes can purchase a solar power system for 70% of the retail price.

Businesses can take an additional ~20% off that price using tax deductions for the accelerated (5 year) depreciation of the solar power system asset.  For a solar power company this short term makes good sense.  There is no guarantee that unexpected circumstances won’t vaporize the solar company’s asset on the home owners house.

For any other company that just wants solar power for themselves, the life of the system is more than 25 years.  So this accelerated depreciation works out as an additional discount off of the purchase price.  The business that purchases a solar power system lands a whopping 50% discount off of retail.

Then they reap a zero dollar power bill every year thereafter.  This amounts to a competitive advantage, especially if they are in manufacturing of products that use a lot of electricity.  Gas stations have low margins and high lighting electricity bills.  Solar helps them increase their profit margins.

OK, so what?  It still takes 3 to 7 to 11 years for various people to recover their investment, right?  And if you need to risk your cash for that long a period of time, then all of the incentives make sense because it seems extremely risky to make the investment in the first place, right?

If you, like the majority of people in the US, believe those statements, then you have missed the greatest value solar power systems yield their owners.  The energy solar power systems produce is normally their second greatest Return on Investment.

I assume you read my earlier post and are planning to purchase your system and will not be tricked into signing a Power Purchase Agreement (PPA).  But do you also know that a solar power system will yield it’s purchaser the greatest percentage rate Return on Investment in the first year after purchase?

Few people do.  The typical solar power system (I can’t bring myself to say, “solar system” as that’s the thing the earth zips around within) sales pitch goes something like this:  “Hey, Ms Homeowner, if you purchase this $30,000 solar power system, the Fed will give you $9,000 off and the money you save on electricity will have paid for your system in about 10 years.”

In contrast, I am explaining to you here, that you profit the first day your power system is turned on.  Here’s why.

Suppose you had a 2,000 square foot home, and then you added a 1,000 square foot addition, would you expect to sell your home for the same price it would command when it was only 2,000 square feet in size?  The home is now a 3,000 square foot home.  There is no way anyone would offer a 3,000 square foot home for the same price they would have asked if it was only 2,000 square feet.  If the original home was $200,000, the new asking price would be around $300,000.

The same goes for the addition of a solar power system, only more so.  When you add a solar power system, your property value goes up.  And it typically goes up by more than the cost of the power system itself.  Home buyers preferentially purchase, and pay a premium for, solar homes.

Today the PG&E territory is just now reaching 5% of its capacity in solar installations.  If people really understood the value, this figure would be more like 50% today.  Let’s use some common figures to understand what’s going on and why it’s being missed.

Let’s assume a common solar power system cost of $30,000 (7.5kW).  The 30% tax credit reduces this cost to $21,000.  The solar power it produces would amount to around $2,100 per year in California (PG&E territory).

You can calculate the value of the energy a solar power system will produce over it’s lifetime at a website called PV Value.

What this site does is to calculate the future value of energy your system is going to produce.  Then, it discounts that future energy value using historic inflation values.  In the end, it gives you a Present Value for Future Energy Production.

In other words, if I hand you $1,000 today, it is worth $1,000.  If I promise to hand you $1,000 ten years from now, it is worth around $500 to $740 today.  Future money is worth (today) less.

To determine this figure, you need to make guesses as about inflation.  I simply assumed a 3% inflation rate to get that value.  And you need to assign a risk that you won’t receive the payment.

The point is, income years from today is worth less in today’s dollars, than is income earned today.  The study of how this all works is the essence of business finance.

The PV Value web site does all this for you.  That said, there are values you can enter that alter the prediction so understanding how this all works will improve your estimate of your solar power system’s Discounted Present Value of Future Energy Generation.

For the $30,000 solar power system above, we can calculate the energy it will produce and what the value is likely to be.  This includes things like the percentage rate the utility rates increase each year.  Using numbers I consider as accurate as possible, the 7.5kW power system will produce energy with a Net Present Value of around $55,000 in the PG&E / California market space.

So one way to think about acquiring solar power is that you are going to spend a net of $21,000 today and you are going to benefit by $55,000 (in today’s dollar equivalent) over a 25 year period in the form of future energy savings.

This is great if I’m going to stay in the home for 25 years.  But few people fit that category.  Most homes are sold within about 10 years and many people have a 2 to 5 year time horizon.  Over 5 years, I won’t break even, therefore, solar doesn’t make sense for me………is the thought many people have.

This is how most people think about the value proposition, but this is the smaller half of the benefit.  This value estimate entirely ignores the increase in property value.  Virtually every solar sales person will let you know how many years it will take you to recover your investment.  They are communicating to you, the above value analysis.

If you hear a solar sales person tell you how many years it will take for you to recover your investment, you know that you are listening to someone who doesn’t really understand what’s going on.

The property value typically increases by more than the cost of the system.  And I find that it typically increases by less than the PV Value estimate.  For the example above, My first guess would be that the property value would increase on day 1, by around $42,000.  This is 140% of the Retail cost and around 75% of the value of future energy production, and about 200% of the net cost for solar a home owner pays, and roughly 300% of the net cost a business owner would pay.

I then check the value of the property.  Typically, the increase in property value will be less than 15% of the property value prior to adding solar.

Let’s pretend we are dealing with a $200,000 property.

For this system, the property value should increase by between $30,000 (solar purchase price) and $55,000 (energy value estimate).  In other words, if I assume $42,000 is the property value increase realized, then the owner doubled their equity on day 1.

I feel one should also verify that the solar power system isn’t too large for the property.  I personally use 15% as my upper limit for property value increase based on experience.  In this case, the original $200,000 property value * 15% = $30,000.  So I would also consider $30,000 as a different maximum value for a different reason.

Typically I use double the net system cost as the property value increase.  This would be the $42,000 figure.  Then I also check whether 15% of the property value is lower or higher.  In this case it is lower, so, I would reduce the expected property value increase to be $30,000.  If the home value was $500,000, then 15% would be $75,000 and I would leave the $42,000 figure alone.

Basically, the higher value the property, the higher the solar power system value can be.

For the lower priced home, people typically aren’t going to spend a huge amount on electricity, and so they typically aren’t going to value a huge solar power system to the full extent it would be worth on a higher dollar home.

Keep in mind appraisers and real estate agents do not understand this, so you need to provide these figures when you sell.

If you use a loan instrument such as PACE (Property Assessed Clean Energy), then you are actually zero dollars (cash flow) out of pocket, and your equity will have increased by the same $21,000 as someone who paid cash for their system.  The difference is that for the PACE property, the value went up by $42,000 minus the net loan amount of $21,000 (I assume you pay down on the note using the Tax Credit when it arrives).  When paying cash, you increased in value the same $42,000, and you reduced your liquid cash equity for a net gain of $21,000.

Except for the loan origination fee and interest costs each year, loans can be a great tool to get into solar without disrupting your cash savings.

Whether you take out a loan or pay cash, you profit by $21,000 on day 1.  If you take out a loan, you of course pay interest on that loan.  But typically, the loan payments are below the payments you were already making to pay for electricity.

A good way to think about this is that you are paying rent on electricity if you don’t have a solar power system to generate your own electricity.  If you own your system, then you are making mortgage payments on your solar equity asset.

Notice something very interesting here.  Your payments are going to pay off on an asset that increased your home value.  They are no longer going to pay for electricity.  From the first day your system went operational, you get electricity for free, period.  But you do still need to pay for the home improvement that increased your property value and resulted in, free electricity.

If you signed up for a Power Purchase Agreement and didn’t read my previous post, then you are paying your solar company rent for the electricity they produce.

Do you rent a car to drive to town every day?  Probably not.  We rent things we need to use once in a while.  We purchase things we need to use every day because owning is typically the lower cost path in the long run.

Why then would you rent electricity?  While it is true that the vast majority of people still rent electricity, this is just herd mentality and the value of solar hasn’t quite sunk in just yet.

In defense of people who don’t own solar yet, the value got better in an unusually short period of time, and most people are just now realizing that maybe they ought to look into it.  What’s more, there are so many companies out there, how do you know what to ask for?  Every solar sales person tells you a different thing.

Well, read my articles before you purchase is all I can say.  Otherwise, have fun swimming with the sharks.

Let’s get back to our example.

Beyond the immediate profit from increased property value, you also win every year by having electricity you no longer pay for.  Even if you have a loan to pay down, you are paying for the equity asset, not the electricity.

The electricity is free as a byproduct of improving your home so that it produces it’s own electrical power.  The $2,100 per year the above system will generate is additional profit and not the slow pay back most sales people and most property owners think it is.

The profit happened on the first day of operation when the property value increased by about double the net cost of the solar power system.

You now understand well enough for me to introduce a far better way of thinking about solar.  Acquiring a solar power system is like purchasing a Bond.

The maturity date of the bond is the date you sell your property (home or business).  The cost of the bond is today, 70% of the retail cost of the solar power system.  In two years, the cost of the bond will be 100% of the purchase price.  The interest earned each year during the life of the bond is about 10% annually.  …..we invested above, $21,000 into the system and it saved us about $2,100 per year in power costs.

Finally, the value of the bond at maturity is $42,000.  It doesn’t matter if you sell this year, next year, or 25 years from now, the value of the solar power system will (paradoxically perhaps) $42,000 in today’s dollars.  This is because the power system will never die.  One module here, an inverter there, and so on will need replacing decades down the road.  But the entire system will never die, ever.

No one (ok, there will be some strange reason someone will do this) will ever go back to paying the utility for electricity once they have free electricity.  Replacement parts will always cost less than utility power.

I’ve watched a number of the shows where people flip homes.  What I haven’t seen are any of those people adding solar onto the homes they flip to bump them into a completely different category.  Soon they will be doing this and about the time it becomes well known that this profit potential exists, the 30% Federal Tax credit will disappear because it is already, no longer needed.

Contrary to what the vast majority of people think, the greatest profit is had by those who install solar and sell their homes within a year or two.  The lion’s share of the profit is in equity, not energy savings.  This turns the incorrect idea that it takes ten years to recover the investment upside down.

Try this.  Go to a real estate web site that allows you to perform searches on homes for sale in your area.  Then, adjust the area until you see about 100 homes for sale.  Then, keeping the area of the search fixed, add the search term “solar” as a specifier to reduce the number of homes listed.  Typically in California, this reduced search will have around 5 to 7 homes in it or around 5% to 7% of the original number.

Now, if someone is searching for homes in an area, and they happen to wonder about solar homes, they will perform this search.  And your home will not have very many others that are both like yours, and, have solar.  Thus, they will visit / consider the 5 or 7 solar homes before they wade through the hundred other homes in the listings.

This is in part, why solar homes sell faster than homes without solar, and it is why solar homes demand a premium price and sell faster.

The incentives are going to run out very soon because the economics already favor going solar without them.  So, get your solar power system as fast as you can.

In PG&E territory, the limit for solar connections before the end of Net Energy Metering terms 1.0 is going to take place around November 15th of this year, 2016.  It’s probably already too late to order a solar power system and get in before the change, but you might just make it if you do so this coming week.

We are rushing to build out a couple final power systems before the change takes place.

If you want to sell your home, the best way to increase your profit is to install solar first, then sell the home second.  And to realize this profit, it is important to set on the counter, a description of why the solar makes your home worth more.

I recommend including a pdf print out from the PV Value web site.  Copies of your utility bills showing your bills are essentially zero.  By just telling people your power bills are zero, your home perceived value increases.  If your home shines over the other solar homes, then I would also include a print out of nearby solar homes.  But if there’s tough competition, maybe not.

Hope this helped.  And the next time you write that check to the utility, remember, every penny is being flushed down the drain and could instead be deposited into your home’s equity.  If you use your utility payments to pay for a solar power system, you would own it within about 5 years time, though this depends on a lot of parameters, so, 3 to 11 years is a typical range.  The larger the power system the faster the pay off.

rt

 

Dear Lay Person,

This description may take a while to go through, but, it will be intuitive. Dark Energy and Dark Matter are two of the most vexing issues in science today. And yet with a rather simple change in how we think about our universe, our expectations change and Dark Energy becomes something we expect instead of something that is shocking.

You may have heard scientists  claim that about 70 percent of the universe is made up of Dark Energy (about which we know close to nothing).  You may also recall that the idea that energy must be conserved in all reactions used to be a fundamental tenet in physics.  but even that has been thrown out the window in accepting the form of dark energy currently agreed upon.

Another 20 percent of our universe is supposed to be made up of Dark Matter (about which we also know close to nothing.  We have ruled out most all of the “reasonable” possibilities such as neutrinos, very dim stars, moons, and rocks that don’t glow brightly like stars.

If the dark mass was made of those, it would make sense, and, we would have found them by now.  But it is not.  So we are now on a quest to find some entirely unknown particle.  And scientists have been slowly lowered into this pot like the proverbial frog that doesn’t jump out when the water heads toward boiling.

This leaves 5% of the stuff in the universe that is the 100% of stuff we actually know about. Stars, gas clouds in galaxies, planets, and the computer I’m typing on are all made of that 5% of real stuff we all know about.

Why has the scientific community come to agreement that 95% of our universe is made of things we know nothing about?  It has taken a long time to arrive at our current situation.  A lot of work has been expended, and the mysteries have held their ground and revealed precious little about where the solution exists.  In frustration and after the exhaustion of reasonable ideas that were proven wrong by experiment, the scientific community has arrived at consensus.

95% of our universe is made of stuff we have never held, touched, or put into a bottle.  Why did this agreement come into existence?

The answer is simple. We have equations that tell us things behave a certain way, and the universe is doing a different set of things. if we hold onto our theoretical ideas, then our observations must be wrong (by 95% in this case). If instead, we hold onto what our eyes, ears, and instruments have actually measured and detected, then we need to re think our physical “laws”.

Let me give you a very simple way to understand our universe. To do this, first I need for you to let go of what you think you know, and follow along on a journey into a new, perhaps science fiction, universe where the laws for how things work are different.

In this universe, there exist no forces of attraction.

Now we of course know that an apple falls to the ground. So what does the above statement really mean? It doesn’t mean things do not accelerate toward one another. Rather, it simply means that a proton in my pinky finger, does not reach out across 2 million light years to every proton in ever star of the Andromeda galaxy, and pull with a zillion teeny rubber bands.

The notion of a force of attraction, if you think about it carefully, is a notion you have long accepted, but in fact, never understood how the two objects exerted the “pull”. “It’s a force field” the teacher says………..ok, fine, how does the force pull? The teacher has no answer.

The simple (but wrong) way to understand how to make this transition, is to think in terms of gravity. We are told there are countless neutrinos passing through our bodies every second. They pass right through the earth with only a tiny number being filtered out. Every time a neutrino strikes our body, it imparts a little push.

But we are hit by more neutrinos from above because the earth filters many of them out. this means we are pushed down harder than we are pushed up. While this is true, it is not a large enough push to explain gravity. But you should now get the idea that there can be different ways for a force to manifest such that two objects are pushed toward one another.

If we know nothing about the true nature of how the force works, and retreat into mathematics, then it really doesn’t matter what’s going on at a fundamental level. But, if we are later confronted by something odd, like say, Dark Energy and or Dark Matter, we would do well to remember that our original formulation lacked any explicit description for how the force was communicated.

We do NOT know that gravity is a force of attraction. All we know is that two nearby objects are caused to accelerated toward one another.

So far so good. Now you asked to learn about the most challenging problem in physics today, and for me to describe it so a lay person can understand it. So please bear with me, we’re about half way there.

The original thought was, “There are no tensile means for transferring action” or “There exist no forces of attraction”.

It shouldn’t take very long before you realize that this statement bans all particles. If nothing can hold onto anything else, then, the center of a particle cannot hold on to or pull on, the outer portion of itself.

And yet we observe things that appear to be, particles. What other options might we have?

On pages 316 to 317 of “A History of the Theories of Aether and Electricity” by Whittaker, E. T. (Edmund Taylor), 1873-1956

We find that a pulsating sphere in a compressible aether will accelerate toward another sphere pulsating 180 out of phase (pulsing oppositely) whereas two spheres pulsing the same, will repulse one another.

The property “pulsation” is what Bjerknes and others used to explain the electric force in Electro-magnetism.

Before you recall your teacher telling you that Michelson and Morley proved there is no ether, let me point out that the aether here is not the ether MM considered. MM were searching for a medium to carry light. Here, Bjerknes is using the aether as the ocean within which all material objects exist. The electron (his pulsing sphere) IS matter. And it is nothing but a pulsation in and of, the aether.

We are seeking Dark Energy so you can skip this list if you want and you won’t have missed a thing. But if you’re curious, here are some further topics one could explore:

1) Matter is made of oscillations within the aether
2) The waves are, Electric “fields”.
3) To persist, and to maintain their phase relationship, there MUST ALSO EXIST a structure of waves to which the pulsations are coupled. T
4) That structure of standing waves IS, spacetime
5) Nuclear strong force is a pulsing sphere to pulsing sphere direct coupling
6) EM is pulsing sphere to spacetime to pulsing sphere coupling
7) Nuclear Weak force is just an exchange of differently phase coupled pulsing spheres

The nuclear strong force, nuclear weak force, and electromagnetism all have in common that they deal with ways pulsing spheres interact due to ***phase*** interference. But there are other ways pulsing spheres can interact……………and remember, when I say pulsing spheres I’m simply saying, “matter as we know it to exist”. I’m just describing it differently than as being a particle.

A pea like particle has no waves. So the wave particle duality makes no sense. In contrast, a spherical standing wave as taught by Bjerknes, has both waves and a central point of convergence for those waves. It has, in other words, a “location” we can point to and say, “It is over there”.

We are almost there.

8) Gravity results not from phase interference, but rather from a frequency interference.

A frequency interference, to first degree, just causes a pulsing sphere to move slightly back and forth as the frequency of the in coming waves, beat against the oscillation of the pulsing sphere. BUT, a portion of that in coming frequency mis matched wave energy gets scattered.

Just like in the neutrino example, if the pulsing sphere scatters in coming mismatched frequency waves, then, it will recoil away from those waves.

The earth, therefore, filters out some of those waves arriving from the distant (red shifted, frequency mismatched) universe.

Now, you can understand gravity for what it truly is. A mechanism that pushes nearby objects toward one another.

Two ships on the ocean know this force all too well. When ships pull alongside one another, the waves lapping on the outside of their hulls, force the ships into one another. We also know this force as the Casimir force.

Now, what property of Bjerknes’ pulsing spheres might stand in for the property we know as “Mass”?

The answer is rather simple. the pulsing spheres are spherical standing waves. I’ll convey a two dimensional version for simplicity.

Imagine a fishing bobber on a mirror flat, infinite, lake. The bobber moves up and down to send outward a series of circular waves to cover the entire infinite lake. Now, freeze those waves and reverse their direction. We now have a series of waves converging into a center location. As each wave hits center, it runs into itself and then heads back outward again.

We wind up with a series of waves moving in and out at the same time. This standing waves structure takes on a completely different dynamical appearance, but its important to remember, its just formed by convergence and reflection. This reflection at the center results in a piling up of the medium…. water in our lake example and aether in our spherical standing wave aka electron model.

Long story short, Mass simply corresponds to a portion of the medium within which the wave structure exists. Mass, corresponds to a quantity of aether.

You almost certainly know one important equation no matter what your scientific background happens to be. That equation is Einstein’s famous E=mc^2.

The standard interpretation of this equation that your teacher may have taught you, and which I will ask you to forget, is that Energy and Mass are two forms of the same thing. This is wrong.

Notice that the equation does not say, E = m.

If it did, then Energy and Mass would be two forms of the same thing.

What the equation actually says is that the Energy that will be observed in the “observed” products of a nuclear reaction is equal to the mass that disappears, times the speed of light squared.

I just told you that mass corresponds to a quantity of the aether that made up the standing wave. And aether is also what fills the entire ocean we call a universe. In other words, what we call empty space, is in reality, an ocean of aether.

When a star drives fusion reactions in it’s core, mass confined within hydrogen nuclei is released, and the products of fusion have a lot of energy. This is what causes the sun to shine. But, we have a rule in this universe:

Aether is conserved in all interactions. If aether is “stuff” then it would make no sense for that stuff to magically appear and disappear (as mass is supposed to do in our universe.). Instead, the aether must be emitted and become part of, the universe.

And since what we call empty space is just a portion of that aether ocean with standing waves we call spacetime within it, the fact that aether is emitted in the core of the sun means that what we call empty space must be flowing out of, the sun. All stars are emitting space.

And all galaxies are emitting space. And that space, the ocean of aether, can be measured and has the property, “mass”.

Thus, we can understand Dark Matter as simply being the stuff we have in one breath been calling “empty space” and another breath we have been calling it “a seething, energetic, quantum vacuum where virtual particles pop into and out of existence”. The Dark Mass of a galaxy is simply the space between the stars, to which we previously have ascribed, “nothingness”.

Finally, now that we understand that stars are emitting what we call space, we can answer the original question: “What is Dark Energy?”.

I’m going to skip a detailed description of what a black hole must have space flowing into it, and why it must have a core where that inward flowing aether rams into itself with so much pressure that it is forced to condense. But before our universe was born, there must have been a universe sized black hole into which an enormous quantity of aether had flowed and condensed into a universe sized black hole core.

When that core breached confinement, it exploded and boiled sending it’s contents racing outward in what we call the Big Bang inflationary epoch. Our universe of contents exploded into a previously existing ocean of aether and all of our universe of matter is expanding outward like raisins in a loaf of bread as it is so often described.

The problem recently discovered is that the galaxies (raisins) are increasing the speed with which they are racing away from one another. They are accelerating.

Notice that the fact that they are accelerating doesn’t bother you?

You now know that space is flowing out of all of the galaxies in the universe. And you know that gravity is not a long range force of attraction that reaches outward and pulls on other galaxies. It is a force originating in the distant universe that pushes nearby galaxies toward one another. So there is no reason the expansion of the universe should have been slowing down.

Within this model, we expect that the expansion of the universe would just coast along, or, it would accelerate. This is opposite to what physicists believe we ought to think. They thought the universe would be coasting along or slowing down due to the attraction force of gravity.

And given that we know that stars and by extension, galaxies of stars are emitting more of what fills the entire universe, the only thing we can expect is that the expansion MUST be accelerating. We don’t know how much without equations or math. But it must be accelerating, period.

You may now listen to any talk given by a leading physicist / cosmologist on the Dark Energy problem and just smile, because you understand what they don’t.

Dark Energy is the ultra simple result of stars emitting space.

If this doesn’t quite make sense yet, just think back to when you last watched a rocket ship blast off of a launch pad. You see huge billowing clouds of gas that used to be contained within the rocket engines. That cloud of gas pushed the earth’s atmosphere away from the launch pad.

If you had billions of rockets blast off at the same time and general location on earth, you would feel a wind pushing away from the center of all of the rockets. If you watched a floating helium balloon, you would notice it being moved away from the launch area.

In the same manner, all of the stars in all of the galaxies in all of the universe, are emitting the medium out of which the universe is made, aether. So the expansion is increased as a result, and we observe that the universe is accelerating in it’s rate of expansion.

Interestingly, so called Dark Energy is nothing more or less than the continuation of Inflation. matter consists of the last droplets of aether that failed to boil away during the inflationary epoch. Today, fusion replaces boiling as a far slower, but otherwise the same, process.

And rather than Mass to Energy conversion reactions, we should think of fusion reactions as being

Mass to Space conversion reactions, and the equation we all know and love should have another term:

E = mc^2 + space

It takes about 100 Joules of energy to create a cubic meter of space, or, equivalently, it takes around a trillionth of a gram to create a cubic meter of empty space.

In summary, Dark Energy is what happens because stars emit space.

Ross Tessien

 

Buy your system Laertes.

Solar Power, done right, has a 0 month time to pay back on investment, and begins earning you an income from the first day it is put into operation.  If you (or your company) pays taxes, then the first year income can be 30% of the cost of your system plus one full years worth of utility payments eliminated.

But to earn this income you must purchase and own the system.  This is how companies selling PPA’s and Leases are making their income.

Depending on what geographic area within the United States you desire to consider, the ratio of Third Party Owned Solar Power Systems (Power Purchase Agreement (PPA) or Lease) to Solar Power System Purchases goes something like 8 to 2.  In some places you will be hard pressed to find anyone with a solar PV power system who actually owns the thing.  According to the Solar Energy Industries Association (SEIA), in New Jersey, just 1 out of 10 solar power systems are actually owned by the property owner.

Now those are some amazing marketing and sales results.  Viewed for the outside, these ratios would lead any reasonable person to conclude that PPA’s are by far, the best deal out there.  If 9 out of 10 of my neighbors chose a PPA rather than to purchase their solar power system, it must be the best way to install solar power.

I have so far never recommended a PPA or Lease to a client in spite of the fact that I could sell them.  Of course, while I have decades of experience as a Mechanical Engineer including a background in inertial confinement fusion energy, I am a relative newcomer in the solar arena.  So maybe I have it all wrong.  You be your own judge.

If you haven’t heard the sales pitch for PPA and Leasing companies, let me save you a couple hours talking to the sales guy.  Here are a few to check out:

Sungevity, shows the solar vs company charges in an unusually honest graph.  Wouldn’t you rather have the companies income be your income?  Here is a Solar City video that goes into the overall program.  Notice that if all you see is this video, it seems like they are showing you every option available, but really, they are directing you toward their PPA and Lease options.  Here is Vivint Solar’s pitch.  And another from Vivint Solar, I have to say, I really enjoyed this video!  You can find more videos on YOUTUBE.COM by searching for Solar, Lease, PPA, Purchase.

Often, as in the Solar City video above, the solar sales person will come offering you different options.  You could purchase your solar power via a PPA, or via a Lease.  You can pay for nothing up front, or pay a little up front to get more savings, or pay a lot more up front and earn even more savings over time.

It sounds as though you are being given every one of the good, better, and best choices for acquiring solar power.  But what you are really being shown are different views of the same coin.

Let’s dig deeper.  PPA’s enable virtually anyone to have a solar power system installed on their property.  The company will take out permits for it, install it, and if need be, repair it.  Great, I love it.

Often the savings on day 1 are about 15 percent of your bill.  A $100 per month bill becomes $85, a $300 per month bill becomes $255.  And what’s more, we lock you in to these savings so that in the future when your utility rates go up, your PPA payments won’t.  Your savings over time will grow, just sign here, now, please.

But let’s inject a little reality.  When you sign a PPA contract, you are NOT purchasing a solar power system.  You are agreeing to purchase electricity, every month, for 20 years, at a price you agree to today.  You will make payments, for 20 years, that are around 85% of your current utility bill.  And, you won’t have any maintenance costs, the company will take care of everything for you.

No money down, no maintenance, no hassle, it all sounds great.  What is not to like?

Well, if I decide to sell my home, having a PPA is deemed by real estate agents to be a large negative for starters.  And if the house is vacant for months or even years, the PPA payments continue even though no electricity is being used.  OK, but you don’t plan on having the home vacant, and you don’t plan on selling.  No maintenance is nice.

The lack of maintenance responsibility sounds really attractive to almost everyone.  But the fact is, solar PV power systems rarely need servicing.  And if they do, whatever went bad is likely under a 25 to 30 year warranty anyway.  And besides the fact is these are solid state electronic devices with no moving parts.  There is almost nothing to go wrong.  The odds are greater, IMO, that your system will last longer than 40 years than they are that it will fail in less than 20.  (Inverters being the only exception, they do wear out and must be replaced, a simple change out.)

So the lack of maintenance benefit of a PPA or Lease is really a Red Herring tactic used by the sales people to scare customers away from purchasing their own solar PV power system.  My 1975 stereo is still working great.  Today’s solar equipment is likely going to last 40 to 50 years, and the expensive panels are warranted for 25 to 30 years.

Interestingly, many people can get a 12 year loan on a purchase for a solar power system at the same payment rate as a 20 year PPA or Lease.

It turns out that on the one hand you could take out the PPA and everything is done for you.  They really do not want for you to look into how to do the things yourself.  All you do is to make payments for 20 years.

On the other hand, you could take out a loan and the payments will end in 12 years.  After that you will get another 13 to 18 years of operation under warranty, plus perhaps as much as another decade or two before repairing the system no longer makes sense.  In other words, you could wind up with 20 to 40 years of free electricity.

Here is what I recommend:

First of all, It has been shown by Lawrence Berkeley National Laboratory and others that your property value will go up by an amount typically equal to the purchase price of the solar power system.  Understanding this is key to understanding why purchasing your own solar power system is so dramatically better a choice than the PPA or Lease options.

On day 1 when your power system is put into operation, your property equity increases by an amount equal to the cost of the system.  You have NOT made an investment in solar energy.  You have made an investment into your property value just like adding another 200 square feet in an addition to the home.

What this means is that each and every penny generated by the solar power system should be thought of as profits.  Your equity break even already took place via property value increase.  In 7 to 10 years depending on your system details, you will DOUBLE your equity (not pay it back).

The first year you will earn 30% Federal tax credits if your system goes into operation prior to the end of that program.  And beyond that, each and every month, for decades, you will be saving your after tax dollars you used to send off to your utility.

Even purchasing your system via a loan is a net zero equity swap.  You increase your property equity, and you increase your debt liability.  Cost Equity Increase – Cost Debt Liability = 0 Net Change in Your Equity.  So even with a loan, all of the savings and all tax credits are pure profits you get to keep.

To recap, having a PPA or Lease is a negative for future property sales.  Having a solar power system that is owned, is a positive.  Homes with solar power sell faster and at a higher price that reflects the size of the power system.

If you purchase a solar power system using cash in a 2% CD, you swap out an equity instrument paying you about $15 per month in before tax dollars, for a fixed equity instrument (the solar equipment) that generates about $150 after tax dollars income.

If you close up the house, for sale or any reason, the property racks up electricity credits.  If you do so with a PPA or Lease, you continue making payments even though no one is using the electricity.

If you take out a loan to pay for your power system, your payments will likely end in 12 years.  If you sign a PPA or Lease, your payments in about the same amount, will end in 20 years

If you purchase your solar power system with cash, you own it.  If you pay for it via a loan, then in about 12 years you own it.  In both cases, you will likely get decades more free electricity.

If you sign a PPA or Lease, you will make payments for 20 years, and then you will have to purchase the system if you want to own it.  And, the price after 20 years of payments, just might be as high as the original system cost if they use a fair market valuation scheme based on future electricity production.

I can imagine there may be some instances with non profit organizations where a PPA may make sense.  But I haven’t seen it yet.

My recommendation is to crunch the numbers on your own situation.  But be aware of the things the PPA / Lease sales people aren’t going to tell you about.  Be certain to find some local solar companies that focus on building and selling you the equipment (the systems themselves and not the PPAs or Leases).

Most of you, I will never meet.  So hopefully this information helps you get the best solar deal you can.  Find the smaller solar installers close to you and pick the best of them.  And make sure that the company you select focuses on actually selling the systems, rather than PPA’s or Leases so that the pricing you get is competitive with local companies that also sell the equipment.

rt

Hello,

At this site you will find a variety of articles on wide ranging topics.  This site will also refer to videos at my youtube.com channel, woodfirepower.

In a general sense, woodfirepower and this blog site, are about self reliance.  They explore the topics of energy, food production, heating, shelter, and so on.  The topics will hopefully stay close to those real people can use to make real life easier or better.

The first post (after this intro) explores solar PV power technology Is it better to purchase the equipment, or to sign a PPA, or Lease?  While 90% of systems sold in New Jersey, and perhaps 80% across the country are sold under a PPA or Lease, my post strongly suggests that those customers have made a poor decision.  This opinion is counter to what you will read in other posts.

And counter opinions are what I focus on.  Whenever I can write about a subject where the general consensus holds an opposite opinion, I will.  But other topics are just practical.  We have a daughter 1.5 years old and son 5.5 years old.  My second post will be about the top ten (or more) things you will want to have as tools to more easily raise a child through the first 3 years of life.

Rather than a silver picture frame, I will talk about things new parents can actually use, every day, to ease the challenge of raising a baby.

My background is as a Mechanical Engineer.  I have a lot of knowledge that goes across the science / physics fields of study including a fair amount of Inertial Confinement Fusion research.

I have designed and built Aquaponics systems and explored new methods for efficiently growing food while using just 10% of the water used in normal gardening.  I worked for a while (and intend to return to this work in the future) on Tesla Boundary Layer Steam Turbine development.

I will write several articles on energy of all sorts and solar energy in particular.  An up coming article will explore energy storage technologies such as batteries, that may one day connect to create a new network of power generators.

To understand what that article will explore, just pretend that you could head down to a warehouse and acquire batteries for energy storage for free.  If that were the case, how would our world change?

For one, the most expensive component of electric cars would be free, so they would cost less than gasoline cars and win significant market share.  Further, you could install (for free) energy storage at your home and business.  This would enable you to capture solar energy by day, and use it by night and through stormy winter weather.  Having a network of energy storage devices, analogous to the Internet, would change the global energy profile and eliminate wars being fought over oil.

So by making some simple, and at present absurd, assumptions we can explore ways the world around us would change.  And if we find that some wind up creating a world that we like better than the one we now live in, it might just be worth the effort to attempt to create those particular technologies.

Personally, nearly free battery technology would be something I would want to work on developing.  Hopefully someday soon I will.

In the meantime, I am adding this blog to my youtube channel woodfirepower so that I can present information in both written and video formats.