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Friday, April 28, 2017

Green Spot: Solar Powered

Posted by Tim Stobbs on November 28, 2008

Ok, I’ll admit.  I have a bit of a eco-geek dream of building a house that produces as much power as it uses in a year (aka: a Net Zero House).  So obviously I’ll likely be looking at some solar photoelectric power generation to help make that happen.  The issue I’ve found so far with the plan is this.  Those damn systems cost so much and your return is so low, it’s like taking on a second mortgage to get the system to pay for itself.

Honestly depending on your local variables payback periods of 20 years or more are possible.  So what makes a system worthwhile and what makes it useless?  Well here are some of the common factors to look at.

  1. On/Off Grid – Living in the middle of no where honestly helps.  Why? Because sometimes bringing in from the grid to remote locations can cost more than building your own system.  For example, one couple I know found out it would cost $50,000 to bring in power to their location, so they skipped the power company and build a solar system and a wind turbine instead.
  2. Consumption – Before you can even consider a system you should make sure you already have a low power consumption lifestyle.  Otherwise you are going to find replacing 1000 kWhrs a month in power is going to require a system that costs more than your house.  It won’t make much sense.
  3. Cost of Grid Power – If you are paying more than $0.11/kWhr, it makes the math a lot easier to justify the cost of putting in a new system.  On the other hand if your power is around $0.07/kWhr because it’s all generated from hydroelectric you may not bother with the solar system at all.  You likely won’t be able to produce power for as cheap as you can buy it off the grid.
  4. Net Billing Policies – Find out if your power provider let’s you sell the power back to the grid at a higher rate than you pay for it.  That can really help justify a system, also in some cases you need to find out how bad the paperwork is to get a system connected to the grid.
  5. Sunshine – Let’s face it solar power generation doesn’t make sense in Vancouver regardless of how much you would like it to or if your house is surrounded by trees.  Some areas are better for solar systems than others.  Do some research to find out if you are wasting your time at putting in a solar system in your area (hint you might want to consider wind or a micro-hydro system instead).
  6. Are You Staying – Perhaps one of the most under looked at factors is are you planning to live in your house for a long time?  If not, perhaps you should face the fact that you likely won’t stay in the house long enough to see the payback in your system.  There is no guarantee that you will find a buyer who will pay a fair premium for your house to have a solar system.  So you could lose money on the project if you move.

Well that’s just a brief overview of some of the factors involved in determining if a solar power generation system is right for you.  If you want to learn more I suggest you check out your local library or the internet to find out what technologies would work well for you and what is all involved in putting in a system.

2009 Goal Planning

Posted by Tim Stobbs on November 27, 2008

Well so far it’s looking unlikely that I’ll meet my 2008 goal as I’ve previously mentioned.  So in light of that and the poor market performance I find myself a little unsure how to make some goals for next year.

It occurs to me trying to set a net worth goal is likely doomed to fail.  There is too much volatility in the stock market and even the local real estate market for me to pick a number or % increase that will have any meaning.  So with that metric out of the window I’m trying to come up with a new one.

My current thinking is I will likely focus on building up our TFSA and our taxable investment accounts in light of some of the good deals to be found on some companies stocks right now.  Yes I’m aware I might get sucked into a few value traps if I do this, but that is part of the risk of buying low.  The issue of doing this is the market value of these purchases might decrease further so using anything around the market value of them as a metric would be useless.

So instead I think I’m going to run with a single goal in 2009.  The goal would focus on extra income from distributions and dividends rather than net worth.  Also to reflect the uncertainty going forward I’m going to use a range of values instead of a single number. So far I’m thinking the goal would be: To increase the pre-tax investment income from distributions and dividends coming into my household (less any interest from my HELOC to buy investments) by $750 to $1000 per year by Dec. 31, 2009.

So what do you think?  Is that a reasonable goal for 2009?  Have you thought about what you are going to do next year?

Inflation’s Zig Zag

Posted by Tim Stobbs on November 26, 2008

Ok,  was it me or was that recent almost 1% drop in inflation a little weird to watch.  I mean I know gas was dropping in price but I didn’t expect that big of a shift in the CPI (Consumer Price Index) between months.  We were at about 3.4% and are now at 2.6%.  So that seems to line up with my personal observation that assuming an inflation number over 3% is a bit excessive for retirement calculations.

Of course with a statement like that your are going to ask: prove it.  Ok, here’s a little data analysis.  Let’s look at the CPI from 1995 to present (see here).  So from Jan 1995 to Oct 2008 inflation was only at 3.0% or greater for a total of 18 months out of 166 or about 11% of the time.  Typically this sections of higher inflation only last four month or so before dropping back down.  Basically a little smart planning and you can avoid the worst of the effects of inflation be controlling your spending during these brief high periods.  The average inflation during this time was a mere 2.1% even including the high parts.

But what about history?  Ah yes, let’s look at that.  I’ve got an 2007 Andex Chart here in front of me showing the inflation averages by decades.  For the 50’s it was 2.4%, 60’s was 2.6%.  Then for the completely screwed up 70’s and 80’s the average was still only 7.6% and 6.2% respectively.  The 90’s average was 2.1%.  So did you notice that?  If you ignore the 70’s and 80’s for a moment, you notice that we have almost four decades where the average was around 2.3% instead of the actual average of 4.2%.

So what about those awful years from 1972 to 1983.  Perhaps we should put it into content.  They were a freakish event where the government let things get out of hand.  In summary, it was a mistake.  Something that has a relativity minor chance of repeating itself in my opinion (but feel free to argue with me on that one).

You see the danger of including that period of high inflation is your taking a rather unusal event and making it normal.  Rules of thumb are suppose to be general and not applicable to freakish events like inflation from 1972 to 1983.  So why do people keep insisting on using a 4% inflation number in their calculations?  It personally doesn’t make that much sense to me.

Well that’s just my rambling thought on this.  Feel free to tell me I’m wrong and why in a comment.