Need help promoting solar!

While some like to argue for these higher rates, you don't want to use them for your purposes. When looking at solar as an investment over a 20 year term you want to look at historic electricity rate increases over that same term (i.e. 20 years). Additionally, you want to look at rate increases in your specific market as opposed to the national market.

It's one thing to promote solar, but you don't want to use figures which can discredit your argument. The cost of coal, gas, oil, etc. will continue to rise and at higher and higher rates and that's an easy argument to make, but it's preconditioned upon a whole host of factors, namely that other cheap sources of energy will not come online.

Best practice is to use conservative figures. Typically, I'll use a utility escalation rate of .4% and the 10 year treasury as the discount rate. Additionally, I don't take the ITC into consideration when calculating ROI.

I've seen a number of systems sold with ROI projections that use utility escalation rates of 4%, no discount rate, factor in the ITC without even giving consideration to if the homeowner can use the ITC or not and a dollar for dollar home equity addition...these kind of practices will come back to bite the industry.

[QUOTE=EEMLoanGuy;118101]EIA tracks utility rate info back to 1990.



This is a link that you gave me EemLoanGuy, and it is where I got my numbers. I took the last 5 years of data for Kansas which was a 7.3% increase annually in electricity prices.
Did I use 7.3%? No, I chose to use 2% instead. To say that I am discrediting myself and hurting the solar industry for using numbers like these is going a little far.

As I stated above Russ, I got my numbers from a link on this very thread.

Add in all of the external costs associated with burning coal and you will see that it is not cheap power. Just because the cost is not on your electric bill doesn't mean you aren't paying for it.

Unless you can point me to some source for examination of your claim, I cannot not believe a 7% annual increase in U.S. electricity prices between 2007 and 2012. Everything I've seen for any string of more than 2 or so years is less than that 7% by quite a bit.

Regions and pockets of abnormalities within states, or geographic regions, or specific sections of the economy are often quoted by those on both sides of the energy price situation to justify a preconceived opinion and B.S. their audience. That trick is so common it's becoming difficult to decipher fact from fiction.

The time frame use quote also sounds like cherry picking the numbers.

In Texas average retail fell from $0.131/Kwy down to $0.79 a 40% decrease since 2007. Nationally down 11% in the same time frame and expected to go further down with NG prices.

Sort of what I'm talking about, but is that $.079/kWh ?

[QUOTE=dougdstecklein;119117]I did not say you are discrediting yourself. Your original reference was to a national increase of 7%, so there was some miscommunication. Since you are referencing data specific to your market it is best practice to use a longer time horizon than 5 years.

I'm also in the business of promoting solar as well as other energy efficient measures and there are A LOT of people that will challenge your findings and you'll need to be prepared for that. For instance, recently I sent out a postcard mailer and I needed to illustrate average monthly electricity bill savings based upon $10,000 in upgrades. The average reduction that I saw was about 40% and it was completely supported by the data. Due to the nature of the advertisement I spent about 6 months defending that figure. It was easy enough to defend the figure to those with little or no experience in solar or home energy efficiency, the greatest challenge was with Home Energy Raters.

More and more people are starting to see the benefits of solar PV and for that reason promoters need on guard against systematic bias. Again, I'm not piling on, just trying to give some good natured advice to help prepared you for future conflict.

While NG does play some role in that decrease it's not a major role. The major cause for the decrease since 2007 is the decrease in economic activity. U.S electricity demand peaked in 2007 and has been declining since.

Here is the source:

If this link doesn't work, Eemloanguy posted a functioning link earlier in this thread.

I did mistate that it was the U.S. I meant to say Kansas, which is where I live. I was trying to justify using a 2% increase in electricity costs to calculate my solar payback period.

I took the last 5 years of data for Kansas. 2012= $0.1124/kWh 2007= $0.0819/kWh 7.5% annual increase.

I guess I should have just used the last 20 years of data which still came out ahead of my 2% estimate.
2012= $0.1124/kWh 1992= $0.079 2.1% annual increase

Has nothing to do with the economy, the large price drops occurred from 2010 to now it has all resulted from NG prices falling to record lows from an abundance of natural gas. Producers are shifting fuels from Coal to NG.

Nothing to do with the economy? You may want to revisit that idea. Demand is forecasted to be flat for many years and utilities have reacted by cutting operation costs where they can. The correlation between the economy and electricity costs has been documented by the EIA.

Maybe I should back up and start again.

1.) As tempting and comforting as it may be, past rate changes for any time span or region are no reliable indication, ZERO, of future trends as perusal of any chart showing retail electricity rates will quickly confirm.

2.) While I'd agree with those who say: "But we must use SOMETHING", history isn't one of the somethings I'd put much faith in. There are other ways to predict the future, all of them more or less unreliable. The best are little better than a crap shoot. Looking at the past alone for guidance for the future is the errand of a fool. And there's a lot of us around.

3.) With respect to your 5 yrs. in Kansas: It's been my experience that most per yr. rate increases, when calculated over several consecutive years, are usually calculated as an average yearly compounded rate of average yearly increase. Doing that would give your 2007 to 2012, 5 yr. annual average increase at about 6.5%/yr., compounded annually. That itself is an average # as yr. over yr. increases will almost certainly be different between any 2 consecutive years.

4.) FWIW, On the link you provided, which is probably as good as most, with respect to the chart of annual residential electricity prices from June of 2003 ($.0925/kWh) to June of 2014 ($.1289/kWh): If my math is correct, and the chart's #'s reflect some version of reality, that works out something like a 3.1% average, annual, compounded increase of the average price of residential electricity in the U.S. for those 11 years, June, 2003 to June, 2014.

That # may be good for some things, and may be accurate, but is also of limited practical use to someone trying to guess their future energy bills. Because it's an average, and because it covers a big area, it may very well be thought of as applying to no one at all. Not much help to Mr. & Ms. Sixpack.

And, The main point is, to reiterate, because it refers to the past, it says nothing reliable about the future of energy prices any more than does a crystal ball. Predicting the future from the past feels comforting because humans fear the unknown and look for a way to make the fear go away by making the unknown known, regardless of how illogical the method(s). Thinking (wishing, hoping, defining, commanding ??) that the future can be estimated from the past lessens the fear of an unknown future and therefore feels good.

I can't predict the ave. price of residential electricity next June using this year's price any more than I can predict next June's 's ave. temp. from this June's or the average of the last 11 June's temps.

Example: Again looking at the chart on the link you provided, climb in the "Wayback machine" and imagine it's July, 2006. At that time, anyone looking at the trend of annual increases for the 3 prior years, 2004 (2.6% actual), 2005 (5.4% actual) & 2006 (10.3% actual), might see a disturbing trend of large yr./yr. increases and plan for rate Armageddon (This is the type of stuff fear mongering peddlers love, and is their bread & butter). However, the following 5 years showed a relatively benign 1.9% average compounded annual increase, with 2010 showing an increase of approx. 0.0%. So much for those predictions of gloom & doom, at least for electricity prices for the next 5 years.

6.) I'd suggest a better way may be, as scary as it seems, to accept the fact of life that the future is not predictable in any real sense beyond a probability distribution, and take your best shot with (perhaps a little bit of) one eye on what happened, and the other on things than affect future prices, and expect to be wrong most of the time.

FWIW, using less electricity will certainly lessen the impact of any rate increases. Might also just shave a buck or 2 off the bill.

Statistics don't lie. Statisticians do. So do peddlers and truth spinners.

+1. Good explanation of not being able to accurately predict the future.

Although people with an agenda sometimes use just enough data to put fear into the populace to sway them towards getting their goals accomplished even if it is total BS.

Sometimes?

I try not to use absolutes when making a point. But I also have to "sometimes" bite my tongue to keep from using the "always" word.

An old sales trick I learned from real pros is to highlight/manipulate the uncertainty of an unknown future without your product in it into a caricature, let people's fear of the unknown take over, and let them convince themselves that you, and your product, are the answer to their future health and well being.

Works most every time.