A Big Investment For Only 70 Cents An Hour

The other day a friend of mine installed a series of solar collectors on the roof of his house. There must be about 35 of them up there. And they are on the front side of his house so that everyone can see how nice and dark blue they look. I estimated that he spent nearly $50,000.00 to have them installed.

We have a law in California called the Solar Rights Act which allows you to install solar collectors on your roof just about anywhere you want and nobody can stop you even if it looks bad and lowers the property values of nearby homes. Now, some people might argue that a red tiled roof covered with black or blue solar panels is very attractive and has a sort of high tech appeal. Others might disagree and contend that it looks ugly and detracts from the appearance of the neighborhood. I don't feel strongly one way or the other.

Well, the other day I approached my neighbor and inquired about the performance of his system. After all, it had been running long enough to provide some indication of how much money he was saving.

My neighbor proudly told me that he was "saving lots of money." In fact just the other day he said that he had reached the phenomenal output of 7000 Watts! He explained that while it was just for a moment, it had actually reached that incredible level.

"Hmmmmmmm," I said as I digested this new information. "Let's see now, electricity in our neighborhood in the first tier of our billing schedule is about 10 cents per kilowatt-hour. That means that at the moment you reached 7000 Watts you were producing about 70 cents of electricity per hour."

"Only 70 cents?" my neighbor gulped.

I didn't want to hurt his feelings so I backed off a bit. "Maybe I made a mistake," I suggested. "Let's do the math together. 7000 Watts is 7 kilowatts, right?"

"If you say so," he agreed.

"And 7 times 10 cents is 70 cents, right?" I continued.

"That sounds correct," he mumbled under his breath.

"So at that moment when you reached the peak of 7000 Watts you were making 70 cents per hour, right?"

"You must be right," he said, but then he began to complain, "How come it seems so low? I thought I was going to make much more than that. What is wrong?"

I could see that his vision of making millions of dollars from "free" sunlight was fading, so I figured I would finish him off completely.

"Did you say that 7000 was the peak?" I asked.

"Yes," he replied.

"So the average amount of money you are saving is somewhere between zero and 70 cents per hour. Let's assume it is 35 cents per hour. That's the average of zero and 70," I reasoned out loud.

I continued, "Lets assume that you can collect sunlight for about 6 hours per day. Does that seem reasonable, given the shade from your trees and the fact that you put your panels on the western slope of your roof?"

My neighbor nodded his head, "yes."

"So that figures to be about $2.10 per day," I calculated in my head, as I prepared to deliver the final blow.

"How much did you say you paid for the solar panels including installation?" I asked.

"About $45,000," he gulped again. "But I got a 30% tax rebate from the State of California," he beamed.

"That's good," I responded. "Let's see now, 30% discount means you paid about $30,000. right?"

By now my neighbor had removed his I-Phone from his pocket and was helping me with the calculations.

"More like $31,500," he corrected me.

"Good," I responded, "It is important to be accurate."

I continued, "If we use simple math, and divide $31,500 by our daily rate of $2.10, how many days will it take before you pay for your investment?"

His fingers raced over the chrome plated I-Phone as he performed his accurate calculations. "15,000 days," he responded.

"And how many years is that?" I continued to pressure him.

"A little over 41 years," he quietly responded. "Gee, that's a long time, isn't it?"

"It seems kind of long to me," I said as I watched him sink into deep depression. "But that's just my opinion. And look at it this way, at least you didn't have to wait 41 years to pay for it. You can pay for it right now."

"Yes," he gulped again, "Right now."