CitizenRE:REvisited

There is an excellently researched article on CitizenRE (also see my previous blog entry which has been in my top posts constantly since January) on Renewable Energy Access by Jeffery Wolfe of groSolar.  As the CEO of a solar installer/distributer, he is rightly worried about CitizenRE’s ability to cannibalize his business…. especially if they sign a bunch of people up, and then go bust.

This is a valid concern, both for groSolar and those of us who want the solar industry as a whole to grow and succeed.  My thought on this is if you are seriously considering installing solar on your home yourself, you should go ahead and buy it from an established solar contractor.  There are many uncertainties with CitizenRE, and the most surprising result would be if they actually get their plant running and start installing solar on people’s homes on time in late 2007.  If they do get everything working, 2009 or 2010 before a customer sees his/her solar panels is much more like it.

That does not mean, however, that no one should sign up.  As I constantly point out, rooftop PV is a lousy investment for an individual from a financial standpoint.  If you have a mortgage, do yourself a favor and use that $8,000 you were thinking of spending on PV and pay down your mortgage instead.  If you really want to spend money to do something for the planet, give your friends some CFLs, get an efficient car, use public transit, or, use that money to buy the stock of carefully selected renewable energy companies or income funds.  Buying stocks always puts your money at risk, but it will take 20-30 years to even recoup your investment when you put up a PV system.  You can do all these things in addition to signing up with CitizenRE (or future companies which I expect will be offering PV via the rental model within a year.)  If they actually come through with the panels they have promised, you and the environment will be even better off.

One other counter to Mr. Wolfe’s argument is that CitizenRE management thinks that they will eventually be up and running, and they are spending money to support the marketing effort get FRA’s signed.   It will probably take a lot longer than they are saying (these things always do) but they clearly think that they have a decent chance at pulling it off eventually.

Other good blogs to read up on CitizenRE: SolarKismet, Sietch Blog.  They’re both quite skeptical, and I think that’s healthy.  For myself, I consider money spent on solar panels to be money that could be better spent on other green endeavors.  So what if the skeptics are right?  If I want to invest in solar, I’ll buy a portfolio of the better solar manufacturers out there: they’re volatile, but I expect the payback to be a lot shorter than the 20-30 years I expect from PV on my roof.  In the meantime, signing up with CitizenRE costs me nothing.

Disclosure: I have signed up as a CitizenRE distributor.  To date, I have not signed a single FRA (Forward Rental Agreement) because I have better uses for my time than sales.    The CitizenRE links in this blog are referral links For Frank Knight, who has agreed to make a donation to an environmental charity if CitizenRE actually pulls it off and you click through one of the links here.

About these ads

10 Comments

  1. but it will take 20-30 years to even recoup your investment when you put up a PV system

    depends on the size of the system and the state you reside in. it’s not fair to cast the PV investment in this light because of the diversity in state-based incentives and because the system will also increase the value of your home (and probably a lot more in the future with higher price of energy)

  2. tomkonrad said

    I believe 20-30 year payback is fair.

    I live in a very high rebate state (CO), and here the payback after rebates is 25 years for a typical PV system… (unless you assume rising energy prices.) These numbers are from Jeff Lyng, who works for Xcel Energy as a consultant on the Solar*Rewards rebate program. He’s also a notable renewable energy advocate (and led a winning Solar Decathalon team in 2005,) and sits on the board of the Colorado Renewable Energy Society with me, so I have no reason to believe he’d be trying to make PV look bad. If anything, I’d expect his numbers to be too rosy.

    If you live in a state with a better payback (and I’m only talking about residential installations here, since the point is to compare to CitizenRE), please let me know and provide the following numbers you’re using: Cost per watt installed, state, utility, and federal rebates, expected capacity factor, and retail electric price per kWh. If your calculations lead to a payback of 10 years or less, then we’re starting to talk about an OK financial investment. Recall that you want more than to just get your money back… you want to earn a return on your money, so the payback has to be considerably shorter than the expected life of the system.

    In CO, for a system in the 2-10 kW range these are $8-9 per watt installed, $4.50 per watt Solar*Rewards rebate, $2000 federal tax credit, and a 20% capacity factor (approx.)

    For a 4kW system, the net cost would be $16,000, and you would expect to generate 7 MWh per year, for about $630 value of electricity per year (at $.09/kWh), a 25 year payback. And this is not even counting the need to replace the inverter after 10-15 years or any other maintenance, such as keeping the panels clean, or for system degradation.

    If you do assume higher energy prices in the future, there is no reason not to just wait until energy prices rise and PV prices fall. Many of the other investments I suggest, such as companies which manufacture PV, actually are likely to benefit *more* from rising electricity prices than would an investment in actual PV panels.

  3. Correct me if wrong, but there may be additional annual tax savings if a home equity loan is used to pay for the net cost of system.

    Also, what about the increase in the value of the home? I have seen claims that for every $1k saved in yearly energy costs, the value of the home increases ~ $20k. Does that not factor?

    Regarding other investments, you may be right but I’m trying to get my head around the return on residential solar.

    Thanks for the feedback – much appreciated!

  4. tomkonrad said

    If your numbers are right that $1k saved in energy increases the value of the home by $20k, then the 4kW system I analyzed above would add $12,600 to the value of your home. But it costs $16,000, for an immediate loss of $3,400. Another reason it’s a bad investment. And, 25 years later, after you have recouped your investment, I can gaurnatee you your 25 year old system will not be worth $12,600. Since it’s old, we know it will be worth considerably less than a new 4kW system with current technology. 25 years from now, everyone expects that PV will cost considerably less than it does today, so the value of the old system will be minimal… it might even have zero value because it is taking up valuable roof space which could be used for much more efficient future solar panels.

    As for the tax savings, if you finance the example system with a home equity loan, you will be able to deduct the interest from your income if you itemize taxes. Suppose your marginal tax rate is a very high 30%, and you can get a 6% home equity loan. Then you will be paying $960 in annual interest, which will work out to an after tax $672 a year (after the best-case $288 tax savings) You will still be cash-flow negative at -$42 a year, which means that you now have a portfolio of $16,000 of debt, and a solar system with net losses, maintenence costs, and the future obligation to pay the bank back $16,000: financing actually makes things worse.

  5. I’d just like to mention that solar has a big cradle-to-cradle aspect in that the 25 year old panels are disordered by cosmic rays, but are still fairly high purity silicon. As input into new panel fabrication, they are a little like recycled aluminum cans which
    are much cheaper to use than ore for making new aluminum products.

    Now, in twenty five years, silicon may no longer be the material used for solar panels. In which case, you could be looking at a mess, but right now, they’re worth $60/kilo or so as scrap. Most likey, that would cover the cost of getting them off your roof.

    I kind of like silicon for this aspect. Some of the other potential technologies may not
    have such a clear use when they are worn out. There is also a bootstrap aspect to silicon, where it can power its own production which seems to me to enhance its
    sustainability.

    Bucky Fuller was very big on the idea of the grid extending around the world. This is actually not so hard to do with some thick trunks. Might we get to a point where
    the Sun never sets on the silicon empire, and solar provides a stable always on
    energy source?

  6. tomkonrad said

    I can’t imagine we won’t have some good use for the relatively pure silicon in old solar panels 25 years from now. I’m guessing we’ll probably be using some (or many) sorts of thin film, but thin film amorphous silicon will probably be one of those.

  7. [...] of panels to satisfy demand.  Will current signee’s get their panels?  Possibly.  But as I said in response to an earlier controversy, PV is not a great financial investment, and there are green things you can do with your money that [...]

  8. Samantha said

    Nice Blog, and nice post to, i get so many information in this blog, i will visit this blog frequently…

    I like your post, specially about
    My thought on this is if you are seriously considering installing solar on your home yourself, you should go ahead and buy it from an established solar contractor.

    Cheers

  9. Howdy,
    It has been a long time since I have hit the blogs about Citizenre and am happy to say there is some great news!
    After a lot of passion and dedication of those of us who did not give up on the mission to bring renewable energy to the masses we have now got what we need to really make a difference.
    We had a press Release this morning and I am happy to share three of the links where you can read about recent developments:

    http://www.marketwire.com/press-release/Citizenre-Signs-Development-Agreement-1392962.htm

    http://newsblaze.com/story/2011020906124600002.mwir/topstory.html

    http://finance.yahoo.com/news/Citizenre-Signs-Development-iw-1095316263.html?x=0

    We are finally doing what we started out to do even tho’ we had to make many changes.
    Our plan is now even simpler… there is no longer a deposit required and all it takes to get a system is to be a home-owner in one of our service areas, have a home suitable for solar power, and the first month’s rent.
    No credit checks and a fixed rate for 10-years so many citizens can produce their own clean green energy.
    WE will be adding new service territories as time progresses.
    Peace,
    Frank Knight
    P.S. I have literally over 400 blogs to post to that basically wanted not to hear from us until there was some serious action so you may see this same message repeated… I certainly don’t have time to make individual posts right now and will have many hours just copying and re-posting!

  10. Lending said

    It is a readable and valuable article. It has been very helpful in understanding of diverse things. I’m sure most people will agree with me.

RSS feed for comments on this post

Comments are closed.

Follow

Get every new post delivered to your Inbox.

Join 151 other followers

%d bloggers like this: