

Google invests $75M (more) into home solar power. - jeffool
http://googleblog.blogspot.com/2011/09/taking-in-more-sun-with-clean-power.html

======
mark_l_watson
Our local utility company just hooked up our new solar setup to their grid
yesterday afternoon. In exchange for a hefty rebate on the installation, we
had to agree to be hooked up to their grid for 10 years.

What this means is: power we generate goes to a very nearby facility and we
buy back power. Our setup allows me in real time see how much power we are
generating, how much we are selling back to the utility vs. how much we are
using. For most of today, it looked like we were generating about 800 watts
more than our house was using. The installer looked at our historic
electricity bills and installed enough panels so that we would get paid back
some money every year, but not a lot. So, I expect maybe a "negative"
electricity bill of about $400 a year, instead of a yearly "positive" bill of
about $1000.

With the rebate and state and federal tax savings, our break even point is
supposed to be in 5 or 6 years. I think it may be sooner than that because the
contractor did not account for rising electricity costs.

Anyway, this is fun - part of the value.

~~~
icefox
Same here, got my install finished just a month ago. The inverters we used
aggregates the data (to warn us of problem) which I have made public
<http://enlighten.enphaseenergy.com/public/systems/TTAL25069> We also expect a
payback of around five years (in MA). After running the numbers it was pretty
clear in MA that solar is a very decent (300% return in ~10 years)* and safe
investment. Just too bad that you can only really invest ~15K before you
produce more than you need.

Edit:

    
    
      *
      100% return in SREC + no electric bill in 3-5 years
      Several more years of SRECS,
        easily 50% of the original investment
      The longer you stick in the house, the no electric
        bill once again pays back (With no tax!) the initial
        investment 100% after ~15-20 years
      100+% back when you sell the house (as they are
        depreciated on the initial 30K+ install cost, not
        your post tax incentive cost and probably still
        worth in the 20's) and solar seems to be causing
        houses to sell quicker to boot.
    

If I was going to retire soon and needed to start moving investments to a more
predictive safe place to put some cash getting panels seems a win all around
and removes one more unknown bill from my life. But again it is only ~10-20K
of a retirement fund, but hey every bit helps.

~~~
ph0rque
300% ROI for 10 years is about a 11.6% annual ROI... pretty much guaranteed. I
have a feeling that companies will be springing up that match up investors who
want that kind of a low-risk ROI (almost everybody) with people who want solar
power on their roofs for free, with similar electric bills as they're paying
now (also almost everybody in much of the continental US).

 _This_ is why solar power will quickly dominate soon, IMO.

~~~
seigenblues
I agree with your math but disagree with your conclusion :)

 _this_ is why Google is funding it -- getting an 11% return is great if you
have giant piles of cash sitting around doing nothing. Those margins become
substantially thinner if your cost of capital is 7%, 8%, 12%, etc.

edit to add: BTW, there's some great research that suggests when people "do
the math" and figure out how much energy-efficiency/renewable energy
technology will save, that they usually require ROI's of 50-100% -- i.e., "if
your fluorescent bulbs/solar panels/low-flow shower head won't pay for itself
within a year, i won't bother". It's sad, but it's a real obstacle.

~~~
nitrogen
_"if your fluorescent bulbs/solar panels/low-flow shower head won't pay for
itself within a year, i won't bother"_

I'd guess this is largely caused by our psychological tendency to overly
discount future gains combined with loss aversion (people are used to things
failing after a year, so if it hasn't paid for itself by then, it never will
(example: I just had a 4-year fluorescent bulb I installed one year ago fail,
about a month after I threw away the packaging with the warranty info on it)).

[https://secure.wikimedia.org/wikipedia/en/wiki/Hyperbolic_di...](https://secure.wikimedia.org/wikipedia/en/wiki/Hyperbolic_discounting)

~~~
droithomme
My CFLs haven't lasted very long since production of most of them shifted to
China. They last a year or two, which is a bit longer than the bulbs they
replace, but not much. There's no place to dispose of them safely though so
they are just stacking up in boxes for now. I found with the warranties that
you have to ship the bulbs back at your own expense to an address, which
because of the weight of the ceramic base costs more than the bulb did
originally. This means in practice they don't really have a warranty, so you
did the right thing throwing the warranty packaging out.

------
droithomme
I feel the title here is misleading as it suggests that Google is investing in
developing some sort of solar systems with this specific $75 million. But
reading the article, we see they are actually investing in funding a bank
(finance company) which will be offering loans with interest for PV rooftop
installations, for which they will receive payments with interest from the
homeowners purchasing said systems at full cost. So they are investing in the
same way that Chase invests in credit card debt by offering people credit
cards, or that GM finance invests in cars by offering auto loans.

The claim that the monthly loan payments will be "often less than paying for
energy from the grid" is certainly false and I'd be willing to bet money that
it will not be established that people are generating solar energy for less
than the cost of buying it off the grid.

Finally, if one was really interested in green technology, either installing a
roof top solar hot water heater and/or a geothermal heat pump will save more
energy than a rooftop residential PV installation will generate, but at a much
lower cost.

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drats
10,000 homes sounds like a lot but it's tiny compared to the US population,
only enough to make a press release make the news really. And very tiny next
to the world population now approaching the 7,000,000,000 mark. The simple
fact is that no energy that needs subsidies or other fiddling in the west is
going to fly with anyone else.

Surely they know enough now about thin-cell solar to invest into more R&D for
it. Give the 75 million to 75 professors to have 5 new PhD students each and a
bag of money for experiments. Given the history so far[1] I don't think a few
percentage points more from 375 PhDs is out of the question. Those few points
would have a far more dramatic effect in the long-run than just helping to
finance installation of current technology for the equivalent of one small
town.

[1][http://upload.wikimedia.org/wikipedia/commons/e/ed/PVeff%28r...](http://upload.wikimedia.org/wikipedia/commons/e/ed/PVeff%28rev110408U%29.jpg)

~~~
0x12
The hard part is not to make higher efficiency solar cells (within limits),
the hard part seems to be to make them cheap enough so they're commercially
viable.

For instance, these 35+ % efficient cells have been available for two years
now:

[http://gizmodo.com/5388795/sharp-triple-layer-solar-cell-
set...](http://gizmodo.com/5388795/sharp-triple-layer-solar-cell-sets-new-
efficiency-record)

But you wouldn't be putting them on your roof unless you wanted to achieve a
specific number of Watts on a small surface.

The figure to monitor is $/Watt, and that's where any gains will come from.
Any decrease in the price per Watt is real, immediate gain. Increases in
efficiency are only good if they lead to a lower price per Watt.

~~~
Someone
In a typical installation, the cells aren't the major cost anymore. Because of
that, efficiency does decrease $/Watt, even if the $/Watt price of the cells
isn't lower.

------
aero142
"homeowners pay a monthly payment for the system, at a price that’s often less
than paying for energy from the grid."

Is Google claiming that this is profitable overall? As in the lifetime costs
for installing the solar panels on my house are less than the equivalent cost
of electricity from the grid? If so, shouldn't someone be offering to pay me
to install this on my house and then selling the electricity back to me
directly?

~~~
bigethan
There are many companies doing just this (sunrun, solarcity, etc). There's
currently some loophole that as a business they get paid more for their
electricity than a homeowner would (due to subsidies to encourage businesses
to use solar). So they get a price that you alone could not get. I think
that's why it works.

~~~
seigenblues
bigethan -- that's not necessarily how it works. It does work differently in
different state & local markets, so it's possible that there's a market that
works that way. I don't know of any, personally.

Usually the deal is something called a PPA -- Power Purchase Agreement. It's
usually set up that you agree to pay some fixed price-per-kWh, and that price
escalates by some regular way over the life of the contract. That price could
be higher, or lower, than the prevailing rates for electricity in that market,
and that escalator could be higher or lower than rates at which energy prices
increase -- but either way, they're locked in from the start.

------
joshu
I want to do solar power but I am terrified that as soon as I buy it it will
immediately become outdated.

Here's some advice I got earlier: [http://www.jig.com/need/solar-power-for-my-
house-near-los-al...](http://www.jig.com/need/solar-power-for-my-house-near-
los-altos)

Still haven't done anything. Any advice?

~~~
droithomme
Thanks for posting that link, the numbers they discuss are similar to numbers
I am familiar with and thus I don't have to make any claims to use them.

So his system cost $51,000 and produces 7500kWh of energy per year. If he were
to have set up with this Google Finance system that offers 20 year 11%
financing, and assuming 1.25% property tax where he lives (PV panels will
increase the value of his home after all) then his monthly payments will be
$579.54, or $139,089.86 in payments through August of 2031, with a total of
$75.339.86 in interest paid to the finance company Google is investing in.
This is a good, safe investment for Google.

For the homeowner, the 7500kwH per year will cost him $750 to buy from the
grid at 10 cents a kWh. Instead he will be paying $579.54 * 12 = $6954.48 for
the power, nearly ten times as much.

Google's claim that you save money assumes that the cost of electricity will
increase so dramatically in the future that the overall cost will be less with
solar, not including your cost of financing, and not including any money you
might have made from investing your money elsewhere for 20 years, but
considering that the average price of electricity between now and 2030 will be
more than 92.7 cents per kilowatt hour.

\------

Solar PV is fine and sometimes the only choice if you are living completely
off the grid, but it comes at a cost, and works best when you massively reduce
consumption, switch all interior lights to 12V, realize you can't run high
wattage things like microwave ovens or toasters, you'll need a kerosene
powered refrigerator, and you have a costly bank of toxic batteries to
maintain and periodically replace. I have done this.

For grid connected living if you are interested in going green I would
strongly recommend taking a look at these things:

\- rooftop solar heater - free hot water, which otherwise is costly to heat

\- dry all clothes on clothesline. Don't even own an electric or gas dryer.
These use a lot of energy. If living in an area that prohibits line drying,
move to an area that permits it or accept that your community does not support
green living and perhaps lobby to change things.

\- geothermal heat pump if you need conditioned air. This one depends on
climate. Electric fans throughout the house are a better option than air
conditioners. (Also do note that many estimates of typical household electric
use which are used in calculating recommended solar size installations assume
that gas heat is used and electricity is not used for heating during winter.
This may be true, but the gas heat is an additional part of the total energy
cost. With a properly designed geothermal heatpump you reduce your cost of
heating significantly compared to either gas or electric.)

\- if building from scratch, do a passive solar design. Properly done (not
easy to find those who can do this), you can have zero costs for heating and
cooling year round.

Implementing even a few of these changes can save much more than the 7500kWh
of energy that is generated by the PV panels year round in the example, and at
considerably less cost.

------
tryitnow
Has solar reached a point where further price declines are not highly likely?
If not, then most people I've talked to would hold off on going this route.

If prices will decline significantly in a year, then it would make sense to
wait and deploy solar systems until further price declines are unlikely.

~~~
Retric
It's more a question is the returns this year > decline over this year vs any
given gain. AKA I could wait 10 years and buy a beastly computer but I would
have to use a 'crappy' PC for those 10 years.

------
bennesvig
Why not nuclear power?

~~~
littlegiantcap
If I had to guess I'd say 3 reasons.

1\. Nuclear is unpopular because of the Japanese Earthquake incident. Fair or
not theres a lot of baggage that comes with nuclear energy these days.

2\. Second, the regulation surronding nuclear is a nightmare. A plant hasn't
been built in the US since something like the early 80's because of this
reason.

3\. The financing approach makes a lot of sense for Google. They can make a
lot of money without building any sort of infrastructure.

~~~
itswindy
_The financing approach makes a lot of sense for Google. They can make a lot
of money without building any sort of infrastructure._

Solar is more hype than anything, and it's good press. Is anyone making money
from solar?

~~~
seigenblues
Yes, we are. The numbers can work in a couple of different ways in a couple
different markets. It's neither hype, nor press, but thanks.

I'm surprised Google is able to make residential PV contracts make sense: my
guess is that the consumers here are either paying more than the prevailing
market rates, or they are locked into a very long contract (20+ years?), or
both.

By contrast, we target the commercial market, have shorter contracts (10
years), and guarantee a discount relative to the utility co's.

~~~
joeag
Residential is the most profitable part of the solar market because
residential rates are by far the highest, so your PPA or lease revenue, even
at a discount to grid, is still fairly high. Sure it costs more to install
residential than commercial or utility scale, but the higher revenue more than
offsets this. Also all PPA or leases are long term arrangements where the
provider includes an escalator of at least 2% a year. If utility rates don't
rise at least that fast, the long term contract is a bad deal for the buyer.

