Is it economical to install a solar power system (photovoltaic) for a new home?

Assume you will live in this home for the next 30 years, you're in California where the sunlight is plentiful, energy costs are high, and the government is offering rebates. You run the numbers, and as long as the cost of the system is wrapped into your mortgage, you are saving cash from day one. Ta-da! It's good economics, right?

Not so fast. Economists consider all alternatives, and one of the alternatives is to wait a few years and then add solar power to your home, when the systems are likely to be far more efficient and much less expensive. If you wait, you run the risk of losing any government rebates, and there's an economic penalty for not wrapping the cost into your original mortgage. But waiting still makes sense if the new system is twice as efficient.

If you add those considerations to the uncertainty of living in the same place for 30 years, the possibility of energy costs from the grid coming down (it could happen) and the weekly maintenance of the solar panels (you need to hose them down if it hasn't rained lately), it's hard to justify installing solar power.

My new home will have solar power. It was a city requirement. I plan to brag about it to people who are passionate about the environment and bad at math.
Rank Up Rank Down Votes:  +32
  • Print
  • Share


Sort By:
Aug 11, 2009
You could buy a new dress when it comes out or wait until the end of the season when the price goes down. But your size might not be left, and you won't be able to wear it until next year, when togas might be all the rage. If you buy a smartphone this year, next year it will be smaller, cheaper, have more megapixels and more memory. One could make similar arguments about marriage, although I'll leave that minefield alone.

Fortunately, for many situations, upgrading in one form or another is an option. You can sell your smartphone and use the proceeds towards your new one. Sure, you're not going to get your money back, but you did enjoy it for the year...you could (potentially) upgrade your solar panels in much the same way as time goes on, having benefited from the rebate on the initial installation. Surely replacement panel installation is cheaper, and might be even cheaper when the new panels come out. Once again, I could make a similar case for marriage...

It always makes good economic sense to wait, until of course, the economy comes to a complete halt because everyone is waiting. At some point, you just have to take the plunge.
+2 Rank Up Rank Down
Aug 11, 2009
No problem ! Just wait for the Cash for Clunkers equivilent for solar panels.
+3 Rank Up Rank Down
Aug 11, 2009
The last line of that article was why I come back to this blog. Brilliantly put.
Get the new Dilbert app!
Old Dilbert Blog