Let's Talk About Net Present Value and Solar Panels
Without understanding it, you’ll never know if putting solar panels on your roof (or buying a share of stock) is a good deal or not.
Drilling deeper into the numbers.
Photographer: Justin Sullivan/Getty Images
In 1202, the Pisan customs official’s son who has come to be known as Fibonacci gave the world the mathematical tools to calculate the present value of a future stream of money. Now, 816 years later, net present value remains such a foreign concept to most people that it’s deemed too arcane to mention before the general public.
At least, that’s the impression I got after reading through the news coverage of the California Energy Commission’s decision last week to require solar panels on virtually all new houses and low-rise apartment and condominium buildings (those with roofs that are especially tiny or are in the shade most of the time are exempted). I’m not the hugest fan of the move, given that the state’s need for more housing seems to be greater than its need for more solar panels. But that’s an argument for another day. What I’m curious about is whether it’s a good deal for prospective homebuyers in California or a bad one.