Profit Greenly

Everyone can profit greenly

Author: Profit Greenly

1,000+ MPGe eBike to Profit

We’re in the midst of a quiet transportation revolution right now. Recent advances in electric motors and batteries have made electric cars a reality and they’re getting cheaper and better every day. A lot of people have noticed this, but electric bicycles (eBikes) haven’t gotten nearly as much attention. These machines are so efficient they can have lower emissions per mile than walking or pedaling a regular bike. Back to the Future II promised us hoverboards by 2015. Instead, we got eBikes that get over 1,000 MPGe and save us thousands more dollars than they cost. Maybe the future’s not so bad?

Our 1,000 MPGe Reality

People can get pretty impressed when they read that a Tesla can get the equivalent of 140 miles per gallon of gas (MPGe). This makes sense because we’ve become accustomed to terribly inefficient gas cars that get 30 MPG or worse. Once you do realize that eBikes easily get over 1,000 MPGe, even an EV will seem downright inefficient. Let me take a moment and do some math to show the insane MPGe of eBikes (feel free to skip to the next heading if you hate numbers and just want to take my word for it).

Math Time!

MPGe Math
48V * 14Ah
= 672 Wh
672Wh / 1000
= 0.672 kWh
0.672kWh / 33.7 kWh/gal
= 0.02 gallons
25 miles/0.02 gallons
= 1,250 MPGe

The Radrover eBike is one of the better selling eBikes in America and yet most people have never heard of it. It has a 48 Volt (V) 14 amp hour (Ah) battery pack. These numbers mean that its battery holds 0.672 kilowatt hours (kWh) total energy. The EPA estimates that 1 gallon of gas is equivalent to 33.7 kWh so this battery has the equivalent energy of about 0.02 gallons of gas. That’s about 2.5 fluid ounces, which would be the tiniest gas tank ever! This miniscule amount of energy propels the bike 25-45 miles on a full charge depending on how much you pedal.

Lets assume no pedaling so the bike is 100% powered by its electric motor. This gives it the low end of 25 miles of range per charge. Divide 25 miles by the 0.02 gallons of gas equivalent of the battery and you get an insane 1,250 MPGe for this bike. And this is for a nearly 70 lb eBike with super fat off road tires. A much smaller GoCycle Gx can go 25 miles using just a 0.3 kWh battery pack giving it nearly 3,000 MPGe! No car can come close.

Still Room to Improve

We’re still just at the beginning of the eBike revolution. There’s a lot of room left to improve their motors, batteries and the electronics that control them. The improvements to this tech that are being spurred by electric cars should trickle down to eBikes eventually. I expect in a decade or so we’ll see lots of eBikes weighing under 30 lbs which will make them easier to handle and even more efficient.

The electricity that fills their batteries is also getting cleaner with renewables starting to replace fossil fuels in much of the world. In upstate NY, home of the lowest emissions per kWh in the U.S., a Radrover produces the same emissions as a gas car getting over 2,700 MPG! To put this in perspective, just one solar panel on my roof generates enough electricity to propel a Radrover nearly 15,000 miles each year.

Emissions are low even when charging from the grid in the place that produces the most emissions per kWh in the entire U.S., Honolulu Hawaii. There it produces the same amount of emissions as a gas car that gets over 400 MPG. It probably goes without saying, but it is a safe bet that there will never be a production gas car that gets 400 MPG.

What About Kids/Cargo?

Madsen Bucket Bike
Madsen Bucket Bike

One reason many people don’t consider eBikes is that they don’t think they can haul enough. These people probably haven’t looked into cargo bikes and trailers much. After doing some research I bought a used Madsen bucket bike to chauffeur my kids around town with. It can hold 600 lbs of weight so it also works to haul groceries, bags of cement, whatever you can throw in it.

A Carla Cargo Trailer Loaded with tons of stuff

A Madsen can’t really fit 4×8 sheets of plywood, but Bikes at Work makes a trailer attachment just for that! You can even go really fancy and build a Carla Cargo trailer. With its own integrated electric motor and brake this trailer can effortlessly pull huge loads behind any old bike.

There are cargo bikes and trailers that can handle pretty much anything you can throw at them. Add an electric motor and they’ll glide effortlessly along while getting around 1,000 MPGe. Their up front prices may be in the thousands but they make up for this by having next to no operating costs. Just look at all these crazy cargo hauling contraptions!

How Much Do They Cost?

2020 eBike Prices
$ 500 Swagcycle
$ 800 Sondors
$1100 Ride1Up 500
$1500 Radrover
$2700 Super73-S2
$3300 GoCycle GX

High cost is a big part of why there still isn’t an eBike in every garage. The prices of eBikes can vary wildly depending on price, quality and features. A tiny, but powerful, Swagcycle is just $500 while a fancy GoCycle GX costs $3300! Of course you can also build your own eBike to get the exact price/performance ratio you really want to.

With so many new eBikes coming out these models and prices will be outdated very quickly. There are also lots of sales on the old models and around Black Friday that can save you hundreds more. Check out the eBikes section at Electrek to see the latest models if you’re considering buying one.

While all of these bikes may seem expensive when you compare them to cars they’re downright cheap. Maintenance costs for eBikes are just a few bucks a year for things like brake pads, tires and chain oil. Even if you pay a fancy bike shop to do it it’ll probably cost under $100/year.

Fuel costs for these bikes are so low they’re almost non-existent. In the U.S. we pay between 9 and 30 cents per kWh and it can be even cheaper if you install your own solar panels. Even at 30 cents it costs less than 1 penny per mile and at 9 cents it’s just 1/4 of a penny. If you pay $2.50/gallon and drive a 30 MPG car you’r paying over 8.3 cents per mile. If you ride an eBike for 100 miles instead of driving that car you will save over $8 on fuel alone.

Payback Time!

Of course $8 is a lot less than the $1100 purchase price of a Ride1Up 500 series. You’d have to ride that bike nearly 14,000 miles to pay for its cost on fuel savings alone. But of course there are more costs to driving than just fuel. There’s maintenance, depreciation, insurance, etc. When the IRS added all this up they figured driving a car cost 57.5 cents/mile in 2019.

An $1100 eBike pays for itself in under 2,000 miles using the IRS cost per mile estimate. With a 10 mile each way commute it’d take less than 100 days of riding to pay for this eBike. Even if you drive every time the weather is bad you could still get this done in one year and the eBike will probably last well over a decade. The return on investment (ROI) of an eBike can easily be over 100%/year if you use it enough. The only other investments that can consistently return that much are Ponzi schemes.

If you’re trying to have a profitable life it’s important to choose the right tool for the job. If a eBike can handle a significant number of miles you use a car for then it is likely a worthwhile investment. This is true if you have to spend extra for a cargo eBike or a trailer or you run a cheap electric car that costs half the IRS per mile estimate.

Will the Battery Last?

One part of an eBike that might not last a whole decade is the battery. Batteries are rated in charge cycles which describe how many times they can be fully charged and discharged. An eBike battery should last hundreds of charge cycles, maybe even 1,000. If you get 25 miles of range from a full charge then going 1,000 miles would take 40 full cycles. If you get the full 1,000 charges from your battery it will take you 25,000 miles!

Given the stresses eBike batteries are placed under I don’t think 25k miles is likely. The temperature extremes and high current draws eBike batteries face will probably degrade them faster than batteries that live cushier lives. Still 5-10k miles is certainly possible. Also, if your eBike battery does die while you’re out riding you can always just pedal it home.

The other good news is that battery prices just keep falling. They have been dropping by around 20%/year for over a decade now. This is a big part of why eBikes from 10 years ago weren’t great values, their batteries cost 10 times a much! Right now a good eBike battery pack can be had for $500. By the time you have to replace the battery on a new eBike this will be substantially less. It’s crazy to think, but by 2030 an eBike battery may be cheaper than its tires.

Won’t it Be Stolen?

Another big fear with bikes is that they’ll get stolen. This is a sad fact of life in many places and will probably continue until we sort out a lot of deep underlying problems like drug addition and poverty. That being said the last time I had a bike stolen was in 6th grade and I’ve ridden thousands of miles since then. That childhood memory still haunts me though so I came up with a nearly free DIY GPS bike tracker. Its probably overkill, but it lets me sleep better at night.

Why Not Just Pedal?

Okay, so now you’re probably convinced that eBikes crush cars, even electric ones. How do they compare to regular old pedal bikes though? Surprisingly, it turns out that an eBike has lower emissions per mile than even a regular bike. How can this be?

Food vs Electricity

Potato Batttery
Electric Food!

To calculate the emissions of a bicycle you need to look at the emissions of the extra food a rider must consume to pedal that bike. This depends on what that food is and how fast the bike is going. The worst case scenarios, pedaling a bike really fast with meat heavy diet, gets around 50 MPGe. The best case scenario gives you 175 MPGe but it requires riding a bike under 10 mph and eating a low emission vegan diet, two things very few people do. My riding style/diet gets around 100 MPGe, which is better than any gas car but still well below a 1,250 MPGe Radrover.

Of course, the reality in America is that we eat for enjoyment and we often eat too much. The millions of dollars Americans spend trying to burn calories makes this pretty clear. We’re going to eat that delicious burrito for lunch whether we go biking or not. In this case is it really right to attribute the emissions of that burrito to biking? It was going to get eaten no matter what and all the bike did was keep it from being burned at the gym, or padding our waistlines. From this perspective a pedal bike actually has an infinite MPGe.

If biking is truly causing you to eat more food then adding electric assist to your bike will help both cut your emissions and save money on food. How much money it will save can also vary dramatically based on what you eat. If you bake your own bread for 25 cents a loaf an eBike won’t cut your grocery bill much. If you eat lots of steak, salmon and fresh vegetables then an eBike could easily save you $10/day on food. A cool feature of eBikes is that you can pedal as much as you want. If you have a crazy big lunch one day you can lower the assist level on your ride home to burn the extra calories.

Health Benefits

Bike Commuting

Pedaling a bike also provides a lot of health benefits from exercise. Getting some moderate exercise every day helps your body so much, and we know that more exercise is better (up to 90 minutes of exercise per day, after which we don’t have enough data to say for sure). At the same time we’ve also found that eBike riders get about the same amount of exercise every day as regular bike riders. This is because eBikers use their bikes more often and go further on them, while still pedaling some. You also use your core muscles to steer and balance an eBike even if you aren’t pedaling.

So What does Profit Greenly Ride?

With all this eBike evangelizing you probably expect that I ride one every day. If I lived in a bigger city I would certainly do this, but my town is downright tiny. Even with multiple trips around town it’s hard for me to ride more than 5 miles in a day. I want the exercise I get from those 5 miles to help offset my burrito habit so I still pedal them. If my kids get too heavy to haul around, or I get injured or something I can certainly see adding an electric motor to my bike in the future.

I did buy an eBike for my wife’s field work. This involves regularly visiting a nearby stream to collect over 60 pounds of water samples. She was renting a car for this for a whopping $40 a day! Even worse the closest it could be parked was a long walk away up hill from the sample sites. Her new Radrover and trailer setup can ride right down to the stream saving time and effort. By removing the $40 rental feel they will pay for themselves in just 40 uses. Considering that she’ll be collecting samples from this area hundreds of times over the next few years this seems like a no brainer investment. Hopefully this example will help you think of some task you currently do with a car that could be more profitably done with an eBike instead.

Profit Wrap Up

If you went back in time and told someone from the 80’s that in under 30 years we’d have vehicles that could get over 1,000 MPG they wouldn’t believe you, but this is the amazing reality we live in. Even just thinking about how a bike like this generates less emissions per mile than on powered by your own muscles is kind of mind bending. Sure, it’s still a good idea to get some exercise, but if you’re using a car for short drives around town then you should really look into an eBike. It’ll help you profit greenly with lower total emissions and more money in your bank account. Happy riding!

Net Zero and Profit in 2 Easy Steps

The idea of having a net zero home, one that generates as much power as it consumes, is very exciting. Some people are interested in it to help save the planet, others like the idea of never paying another power bill, or the freedom of energy independence. For a long time, net zero homes were so expensive and complicated that they were simply dreams for most people. Finally, technology has improved so much that retrofitting your old home to become net zero can be both simple and profitable. With two simple updates I was able to make my regular old house net zero. These updates cost a bit of money up front, but in the long run they will both more than pay for themselves. In this post I’ll explain how I did it, and how you can to.

The Two Keys to Net Zero

In the old days, retrofitting a home to be net zero generally required making lots of changes to the house. You’d add insulation to the ceiling, walls and floor, air seal everything, update the windows, install a new HVAC along with a ventilator (this pumps fresh air into your well sealed house so you don’t suffocate), update appliances, replace your lighting and who knows what else. This is all great stuff to do to a house, but the sheer number of tasks, along with the cost of it all has put it out of reach for most people. Luckily, nowadays you can turn most houses into net zero houses with just two changes. All you need to do is install a super efficient heat pump, and a big fat solar array then BAM, your home becomes net zero.

Step 1. Get a Big Fat Solar Array

Solar is the first key to easily converting your home to net zero and making money while doing so. A lot of people overestimate the price of solar because it used to cost a lot and they haven’t rechecked the prices recently. It turns out that the price of panels has been falling steadily for decades now. Even if you did the math on solar and found it wasn’t profitable for your home just a few years ago, it may well be so today. The price of installing solar on a home dropped over 60% from 2010 to 2017! All these price drops, along with the federal tax credit for installing solar means that if your roof gets decent sun you can now probably make money by putting panels on it. How much money depends on a lot of factors, which I delve into in my solar ROI post, but the key thing to realize is that solar panels now essentially pay for themselves and beat pretty much all “safe” investments.

WARNING: The Federal Solar Tax Credit (also called the Investment Tax Credit, or ITC) has dropped from 30% of total install cost in 2019 to 26% in 2020. It will drop again to 22% in 2021, and then be gone for residential systems in 2022. Even if solar costs keep falling as they have, a system installed in 2021 with the 22% tax credit will be cheaper than a system installed between 2022 and 2026, maybe longer. Unless you have a lot of faith that congress will extend this credit, you should install before 2021 ends!

Efficiency Improvements Vs Solar

Because solar can now pay for itself, cost concerns shouldn’t limit the size of your array. Having a higher energy demand simply allows you to make a larger profitable investment in solar. Back when solar prices were higher and people were essentially losing money for every panel they installed, it made economic sense to do lots of efficiency upgrades to keep arrays as small as possible. Now, most people are better off simply building a bigger solar array instead of making lower ROI efficiency improvements.

An efficiency improvement only makes economic sense if the same money spent on solar will generate less energy than that improvement will save. It’s surprising how often solar wins in this calculation. For example, I know many people who have installed new windows in their homes. It’s pretty common to spend thousands on this, often over $10k. If that same money were put into panels instead, they would produce far more energy than those new windows will save. There are still some efficiency improvements with high enough ROIs to be worth doing, like upgrading bulbs to LEDs, adding insulation to a very poorly insulated attic, and DIY caulking and spray foaming to seal air leaks. In general, though, the price of solar has dropped so low that simply building a larger array is now usually the most profitable choice.

Where To Put Your Array

There are some limits on the size of an array your house can support though. Here in the northern hemisphere, you want to put all your panels on the south side of your roof because the tilt of the Earth means that the sun is shining more from that direction. If your roof doesn’t have that much southern facing space, or it is shaded by trees or another building then that might limit the size of an array you can profitably install.

Of course, you can always think outside of the box and install an array somewhere other than your existing roof. Building a new shed, outbuilding, or car port with a sunny, south facing roof will cost more money, but it can give you a nice space to add more panels and increase the usability and value of your home. If your outbuilding is more than just a frame with solar panels on it then it may not be the obvious economic slam dunk of putting panels on your existing roof. But, this is because you’re adding a usable building as well as solar, so you have to factor that in.

Step 2. Get an Efficient Heat Pump

A heat pump is the one high ROI efficiency improvement that usually makes a bunch of sense to pair with a solar array. Read my Heat pump ROI post for more details.

Average Home Energy Use by $ in PA. Heating and Cooling are over 50%.
Average Home Energy Use by $ in PA. Heating and Cooling are over 50%.

From a whole house perspective, heating and cooling are usually the top energy uses. A lucky few can avoid this by living in a tropical paradise where their home’s climate can be controlled by cool ocean breezes. For the rest of us, upgrading our HVAC system to be all electric and super efficient is the next key to making our homes net zero.

Even just a few years ago this wasn’t possible for people who lived in colder climates. Heat pumps made in the 90’s and even early 2000’s just couldn’t put out enough heat when the weather got cold. But now heat pump technology has gotten so good now that they can efficiently heat homes even in cold places like upstate New York.

There are plenty of other ways to cut down the HVAC use in your home. The simplest is to just turn down the thermostat, but there’s always a limit to how far people are comfortable going with this. The other options that have been recommended for years involve air sealing, adding insulation and updating your windows. Those can all still be great choices, and if your house is in really bad shape you might need to do some or all of them. But, the amazing price and efficiency of modern heat pumps crushes most of these other options.

Upgrading to an efficient heat pump can cut the HVAC energy use of your house by more than HALF! The only way upgrading your windows will cut your home heating bills in half is if your current windows have multiple gaping holes in them. If this is true for your home, I recommend investing in some duct tape stat! Otherwise upgrading all your windows will generally cost more than buying a new efficient heat pump, so why do them first? Heat pumps have the added benefit of working as efficient air conditioners as well as heaters.

The ins and outs of how heat pumps work and why they can be well over 100% efficient are best saved for another post (or you can watch this detailed video). The key thing to know is that a good heat pump can pull over 3 Watts of heat into your house while using just one 1 Watt of electricity. Old electric resistance heat adds slightly less than 1 Watt of heat for each Watt of electricity and oil and gas furnaces are even worse. This means that a heat pump can cut the size of solar array needed to make a home net zero by a lot. The price for that heat pump is almost certainly lower than the panels it is replacing, or other traditional energy efficiency improvements like windows or insulation.

Finally, because a heat pump runs on electricity, your solar panels are able to power it. This means that you can power your own HVAC, the biggest power consumer in your home. Oil and gas furnaces rely on someone else delivering that fuel to your house. You have to pay whatever price they’re charging, and if they don’t deliver, you’re left in the cold. With a heat pump and solar combo your roof is creating the power you need to heat your home.

The one issue with this is that solar panels often create less power in the winter than a heat pump needs. Most people in the U.S. can essentially use the electric grid as a giant battery to store the extra power they generate over the summer until they need it in the winter. This is complex enough that it deserves its own post as well, so I’ll just keep to the financial side here. If you’re in a net metering state you can size your solar array so its total annual generation matches the total annual consumption of your home and pay $0 for electricity. If your state is one of the few that doesn’t yet have net metering then this guide is probably not the best way for you to go net zero right now.

Real World Numbers

House Stats:
Built: 1960s
Sqft: 2200
ACH: 0.32
Attic: R38
Walls: R3
Windows: Old

My family moved into a regular old house in central Pennsylvania over a year ago. It was built in the late 60s and while it has decent air sealing, its insulation is lacking and most of its windows are original. A deep energy retrofit would have improved all of these areas, but it would have cost more than my heat pump and solar combined and our house still would have pulled more energy from the grid than it produced.

Putting a big solar array on our roof cost $24k after tax rebate and upgrading our old oil furnace to a high efficiency heat pump cost another $15k. These two updates allowed us to generate over 11,000 kWh in 2019 while only consuming 10,000 (those extra kWhs are for an EV we’ll get some day). We made $1,382 from our solar panels and saved around $1,000 with our heat pump, so $2,382 in total. That’s over a 6% return on investment (ROI). Of course both of these amounts are not taxed so if you factor in a 15% long term capital gains tax the ROI goes up above 7%. There are plenty of stocks that returned over 7% last year, but they could all well lose money this year. Our solar panels and a heat pump on the other hand will keep returning this much money year after year unless there’s a huge drop in electricity prices, which is very unlikely.

Why Not Just Do Solar And Old Electric Heat?

We could still heat our home with electricity using those old resistive electric heaters (like the inside of a toaster). This would be far less efficient than our heat pump and probably pull and extra 6,000-9,000 kWh more. We’d need to install more solar panels costing $13k-$20k to generate this extra electricity and the resistive heaters themselves would cost over $1k to install. This means we’d be spending $14k-$21k to heat this way instead of the $15k we paid for our heat pump. The $15k we spent seems like the lower priced option, and I’ve discovered a few tricks for my heat pump that should make it even more efficient next year. Also, our roof is already full of solar panels and we don’t have an obvious place to put more.

Step 2a. Convert All Appliances to Electric

If you already have an electric hot water heater, stove, and dryer then you can skip this. If any of these are powered by gas though. the solar panels on your roof won’t be able to power them and you won’t be able to be truly net zero. Converting them to electric is the final step in making it so the energy you produce can power your entire home.

If you want to still cook with gas there has been a lot of progress on generating biogas from food scraps, but it’s still a niche technology. This post is all about making the net zero conversion easy so I’ll leave the biogas stuff for another day.

Won’t Converting From Gas Lose Me Money?

It is true that gas was pretty dang cheap in 2019. You could get a therm of gas for just over $1.00 in the U.S. last year. It takes about 29 kilowatt hours (kWh) of electricity to equal the energy content of 1 therm of natural gas. If your kWh comes from a utility, it probably costs around 11 cents, so $1 of gas has the same energy as $3.19 of electricity. If you install solar you’re probably reducing your true cost per kWh to around 7 cents (possibly less) so for you it’s only $2 for an equivalent amount of energy. A good heat pump powered by this cheap electricity beats a gas furnace because it delivers 3x more heat from the same amount of energy.

There are heat pump hot water heaters that can beat gas hot water heaters by a similar amount, but they aren’t for every home. Most draw heat from air inside your house so they need a bigger area than many homes have set aside for a hot water heater. This also means that they are taking energy your heat pump added to your home during winter (Sanden makes one that pulls heat from outside). On the flip side, in summer they give your home some free cooling, which makes a ton of sense in warmer areas.

Even regular old electric water heaters may be able to beat gas if you have low total gas usage. These units may be only 10-25% more efficient than a gas model so you might assume the lower price of gas beats them. This ignores the gas monthly fee though.

$1/therm*(1+75% fee)
= $1.75/therm
1.75/29 kWh/therm
= $0.06/kWh
= $0.075/kWh
= 1.071
1.071 - 1*100
= 7.1% more

In a previous house I paid $16/month for gas service and used around 550 therms of gas per year. This monthly fee increased my true cost per therm by 35%. Over half of that gas went to the furnace so if I had replaced that with a heat pump the monthly gas fee would have increased my true cost per therm by 75%. In this case an 80% efficient gas furnace would actually cost 7% more to run than a solar powered electric resistance unit (see math on the side if you want to check my work).

Once you get rid of the gas hot water heater, all you have left is a gas stove and dryer. These appliances will have math similar to the resistance hot water heater above, except their lower energy usage means the monthly gas fee will increase the true cost per therm for them even more. If you’ve accepted that it’s a good financial choice to convert your hot water heater then it’ll be an even better financial choice to replace your dryer and stove.

In the end, replacing these appliances gives a lower ROI than solar panels and a heat pump. Getting them done is still a financial benefit though. Doing so also eliminates combustion in your house, improving every day indoor air quality and eliminating the risk of your whole family dying of carbon monoxide poisoning. You can go fancy with a heat pump hot water heater, condensing dryer and induction stove, or you can just use the regular old resistance heat models. Either way you’ll make money and get a house that is entirely powered by the sun.

Step 3. Profit!

Hopefully this post has shown you how it can be both easy and profitable to convert your home to be net zero. Just get solar panels and a heat pump and profit. If you don’t already have electric appliances then it’s a tiny bit more complicated than just these two steps, but not by much. If, in the future, you better insulate and air seal your home, you may find your solar starts generating more power than your home uses. All you have to do to solve that is buy an electric vehicle to use the excess. This is something most everyone will be doing in the coming decade or so anyways, so it’s fine to expect it. Hope this has helped you, and if you have any questions or want to share your own story of going net zero please do so in the comments.

If College Endowments Value Profit Why Aren’t They Installing Solar?

Recently, there’s been a big push to get colleges and universities to sell their fossil fuel holdings. This divestment movement has often hit resistance from administrators who say that their endowments should be invested to produce the maximum return on investment (ROI). What if it turned out that those endowments were already not maximizing their ROI because they weren’t investing in solar panels to power their schools? University endowments are hurting both the world and their bottom lines by this inaction. Read on to find out why.

How Endowments Work

Endowments are huge piles of money that colleges and universities have managed to sock away over the years. They generally came from alumni donations, and their growth is spurred by their schools’ tax exempt statuses. These piles of money are invested in various stocks, bonds, etc. with the goal of getting good but stable returns. Some percentage of this return may go back into the endowments, but most is used to help fund the schools. The dream scenario for a school is to be 100% funded by its endowment so that it wouldn’t need to collect tuition or beg alumni or government entities for money, but the reality is that spending will always increase well before this happens.

The Crazy Huge Pot of Money

There is a crazy amount of money in school endowments. There are more than 100 U.S. schools with over $1 Billion in their endowments and the top 10 endowments total over $200B on their own. Most schools spread their investments across a myriad of stocks and bonds. More aggressive endowments like Yale even invest directly in startups.

Yale is considered one of the top endowments with over $30B in assets and average returns of over 10% annually for decades. Other endowments look in awe at Yale’s results and often try to follow their lead. Yale has innovated by really spreading their money around, as you can see in the chart on the right. Though they have less in the way of bonds and cash than many other endowments have held in the past, these assets still amount to 7% of their portfolio – over $2B – which I probably don’t have to mention is a TON of money. Cash has almost no ROI and bonds offer only around 3-4%, but both provide stability to the endowment as a whole. They won’t go up in value a bunch, but they won’t drop either. The thing is, solar panels and other provide a greater return with even less risk.

How Solar Beats Bonds

The fact that solar panels have a higher ROI than bonds is the key thing that endowment administrators are missing. I go over the math of this for a residential home in PA in my solar ROI post. The basic gist is that if the price to install a solar panel is less than the value of the energy it will produce over its lifetime then it will have a positive ROI. This seems like a low bar, but it’s reasonable considering that over $16 trillion is currently invested in bonds that guarantee they will return less than you invest in them. These bonds are invested in to reduce overall risk, but there is still a chance that they will not pay out. Solar also has risks, but they are low too.

Solar Risks

  1. The solar panels stop making electricity
  2. No one will buy the electricity they produce
  3. The price of electricity drops

Luckily these risks are all very low. Most panels are warrantied to keep producing power for 25 years or more so it is very unlikely that they’ll stop working. It is also cheap to buy insurance for the rare case of them being destroyed by something like a tornado and its price can be factored into the initial ROI calculation. School’s don’t have to worry about the risk of no one buying their power because their operations have a large power draw already. They can simply guarantee that they’ll sell the power to themselves. They can even install less than 100% of their current demand to reduce the risk that they’ll lack a market for their power further.

The biggest long term risk for solar panels is that the price of electricity drastically drops. If that happened the electricity that the panels produce will drop because a kwh of electricity will be worth less. This could drop their return below their cost so it is a real risk. That being said electricity prices have been rising for decades. Our increased understanding of the dangers of climate change is only going to raise prices further. In the end it’s far more likely that prices will continue to rise and that solar panels will produce more monetary value in the future. Buying a bond is making a bet that the issuer will still be able to pay you in the future. While it is very unlikely that a bond issuer like Germany goes bankrupt in the next 30 years, I think that is more plausible than the average cost of electricity going down over that time frame. Solar panels are a bet smart investors should be happy to make.

A Couple Caveats

The math for solar ROI also changes for large institutional size installations. For example a big institution may have negotiated a lower electricity price than regular residential customers pay. At the same time the price to install a solar panel in a large commercial array is about 1/3 less than what smaller residential customers pay. Many universities also don’t benefit from the tax breaks for solar because they don’t pay taxes. This hasn’t kept other smart entities from sharing the tax credit with a for-profit company and still reaping the benefit. When you add it all up solar is still likely cheaper than grid power for many large institutions which means it will have a positive ROI.

Where Are The Huge College Solar Arrays?

If solar is so much cheaper than grid power then why aren’t we seeing huge arrays being deployed at a bunch of schools? Well, this is starting to happen. For example, Penn State is projected to save $14M over the next 25 years by contracting to buy 25% of their electricity from a new solar farm. This is with almost no investment on Penn State’s part so the ROI is essentially infinity. If they did invest some of their endowment money to own part of the solar farm company themselves they could capture much of the profit that company is making and encourage building an even bigger array. The ROI on this would almost certainly beat the low ROI of bonds.

Over Caution = Loss

Penn State thinks they’re being “cautious” with their move into solar by still buying most of their power from the grid. But, as the huge savings from solar start materializing the school will hopefully realize that their “caution” is actually leaving tens of millions of dollars on the table by not going 100% renewable. This will continue being true until policies around renewable energy become more stringent. Schools would be smart to install their large solar arrays now while the rules are still quite favorable and bank on being grandfathered in.

The Money’s There

The cost of installing a solar array to replace 100% of a school’s electricity with renewables is far less than the value of many school endowments. In the case of Yale it is far less than just their investments in low return bonds. Remember that Yale has over $2B in cash and bonds right? Yale is in Connecticut where the total solar investment in the entire state is only around $1.7B and that’s enough to power around 90k homes.

The price to install solar has fallen so far that Yale’s $2B of cash and bonds could nearly triple the amount of installed solar in the state. Of course Yale doesn’t even have 13k students and they live in dorms that use less energy per person than regular houses. Yale would only have to move a small fraction of the money they have in cash and bonds into solar to get 100% of the school’s electricity from renewable sources. This solar would almost certainly have a higher ROI than their cash/bonds while also helping mitigate climate disruption. So what’s the problem? Are they dummies who don’t know how to maximize their returns? Are they soulless ghouls who want to spur on climate change? I’m hoping it’s neither of these.

Fear of Physical Assets

I think the real thing that is holding up investment in solar is a fear of physical assets. Finance people often want to just buy shares of companies. They want to read a prospectus rather than research the value of a hard asset. If they did do a bit of research into solar PV they’d realize that owning a solar array is barely more complicated than owning a share of stock. Yes, they’ll want to hire a good company to install it, and pay for insurance one it but once that’s done there’s next to no maintenance. They could hire people to clean snow/dust off the panels, but honestly the array will probably produce a profitable amount of power without this. So what’s really left to fear?

Why Doesn’t Yale Start a New Trend?

The administrators of Yale’s endowment have said that “what endowment investing [is] all about: perpetual institutions and their long-term health”. The scientists and economists employed by Yale understand that not transitioning to renewable generation will create long-term instability for the entire planet, which obviously includes Yale. The university already has a plan to become net zero by 2050, but that is a long time away. Every day they wait to move money from bonds to solar means more carbon emitted and more dollars lost. When will the directors of Yale’s endowment and others wake up to the fact that building renewable energy to power their schools will return more than their current “safe” investments? When will they start pushing the university to install renewable generation as fast as possible just for the economics of it? When this happens will it start a trend among other school endowments the way so many other Yale investment strategies do? Will some other school beat Yale to the punch and show the world how renewable energy lets them profit greenly? I don’t know the answers to these questions, but if you work in school endowment investment I hope you’ve got a team of people looking into this now.

Hardware Store Gifts for Toddlers: Durable, Useful, and Fun

The holidays are here again. Americans will spend over $1 trillion in the next month. Much of this will be on worthless junk whose only purpose is to momentarily entertain our kids. If we gave gifts that actually replaced “regular” needed shopping we could save resources while still bringing our kids joy. This year try heading to the hardware store for presents that are fun, useful and money saving.

Radio Flyer Wagon vs Gorilla Cart

One of the most traditional gifts you can buy a kid is a good old Radio Flyer Wagon. The one I linked here costs just under $140 and would let you pull a couple of kids around happily. Alternatively, you could spend just $60 to buy a Gorilla Cart with a max load rating of 600 lbs! This saves $80 and removes the need to buy a regular wheel barrow or yard cart. The Gorilla Cart is far more durable, as the wood sides of Radio Flyers have a tendency to break when subjected to abuse from small children. It also has a fun tipping feature that easily lets you dump whats in it. Kids love helping dump a bunch of mulch out with it and then climbing in for a ride. They’ll also enjoy owning this useful thing and having adults ask their permission to use it. Honestly the joy they’ll get out of that alone is probably more than the Radio Flyer would ever provide them. Why spend more on something that is less durable, less fun and less useful?

Toy Snake vs Garden Hose

I discovered this idea while my kids played around with some friends after school one day. The kids found one of those flexible hoses and were running around holding it pretending it was a snake. They loved slithering it around trees, through a bike rack, wherever. Why buy them a fancy 100 inch long stuffed snake for $40 when you could spend just $30 on a 600 inch long expandable hose? You need a hose for your house anyways, and if it can double as a toy snake all the better. Intense toddler play could put a hole in the hose, but this is unlikely and it’d still be useful as a toy and bigger/cheaper than the alternative. Sure your kids will have to use more of their imagination to turn the hose into the snake, but isn’t this something we want to be encouraging as parents?

Actual Wood vs Expensive Block Set

You can easily spend $90 on this fancy block set. Or you could spend $9 on this 3 foot oak 2×2. Set up a stop block on your miter saw and cut that into 22 1.5×1.5×1.5 blocks in just a few minutes. You can buy a cheap saw+miter box for $15 if you don’t already have a saw. Buy a 6 foot oak 1×2 for $6.58 and you can make another 22 .75×1.5×3 planks. That’s just over 15 bucks for over 44 quality oak blocks.

A little more money gets you some sand paper and a few small cans of non-toxic wood stain from the store, the total will still be less than half the fancy blocks. For this project you may want lots of colors, instead of buying them all in big cans just get small “sample” size containers of each color for a few bucks from the paint store. If you’ve got a drill press you can easily put holes in these and add some rope or dowels to expand the possibilities of play. Bonus points if you get some older kids to help with this project.

Fancy Kids Step Stool vs Utility Stool

Another common kids gift is a small stool to help them get up to the sink in the bathroom. This is a truly great thing to have as it lets your kids become self sufficient sooner. Seeing a two year old climb up to the sink to wash her own hands is a beautiful thing. Just be careful, you could also see that same two year old splash water everywhere.

Fun times with a utility stool

As far as stools go amazon has some nice little fold up stools for really reasonable prices. This one sells for just $9.50. The only problem with them is that they only work for a very small window in your kids lives. Another option is to buy a stool that will continue to be useful for decades to come. At $25 this 2 step utility stool costs a bit more than the amazon one, but it lets kids get up higher and is useful for adults as well. The only thing I don’t like about it is that it can get in the way a bit because it doesn’t fold up, but that lets it hold up a lot better when covered with toys, so its not all bad.

This recommendation is a closer call than the others. If you feel like the adults in your house are often in need of a step stool then maybe consider spending more on the bigger adult model. If the stool will truly just be for your kids then get the cheap one and pass it on to another family when your kids outgrow it.

Leaf blower vs Anything

The final recommendation I have is that your kid would probably love an electric leaf blower. There are corded models out there (like this one) that cost under $20! Think of how many kids toys cost $20 or more these days? Think about how utterly useless most of them are. These cheap electric blowers aren’t the most useful but they can still do a lot of small jobs. They can blow dirt out of your car, dust out of your garage, and do some fine outdoor cleanup that brooms just can’t handle. On top of that kids LOVE them.

Leaf Blower and Gorilla Cart Combo!

Low powered blowers are actually better for kids because it makes them so light a 3 year old can hold them. Being electric you also don’t have to worry about mixing oil, pull starting, or noxious fumes. Just be sure and give the kids some ear protection if the one you get is loud. Kids can blow leaves, sand, water, even their friends’ hair. If you already have a battery powered mower then you might even be able to find a good deal on a cordless version that uses the same batteries (if you don’t already have an electric mower you should really give them a look, they’ve gotten amazingly good the past few years).

Wait, How is This Green?

At this point you may be wondering to yourself “Why is a blog that’s supposed to help me save money and reduce emissions recommending I buy a bunch of stuff I don’t really need?” Well, you’re right, if you want to be living your best life you shouldn’t buy any of this stuff. With humanity rapidly approaching an amount of emissions that will disrupt civilization for centuries to come the best presents we can give our kids and grandkids are ones that will reduce humanity’s overall emissions. But, not everyone is ready to become an eco-hermit yet. I accept that few families are going to give their kids solar panels and heat pumps for Christmas. These would indeed be awesome gifts, but they’re pricey and kids can’t really play with them. So instead I tried to give some more realistic gift ideas.

My hope with this guide is to help get people thinking about gifts that can be fun and replace some other form of consumption at the same time. It’s an added bonus that these gifts also save money, which can eventually pay for larger improvements like solar. While you’re at the hardware store you can also spend some money to cut your home’s energy use. You will almost certainly save money and energy by buying LED bulbs, attic insulation, weatherstripping for doors and windows, window pane insulation, and spray foam for all the holes in your home. Maybe wrap these things up and put them under the tree for the adults in your life too?

DIY Old Phone Into Free GPS Bike Tracker

Riding a bike instead of driving is one of the most profitable life choices you can make, along with one of the greenest. It can literally save you tens of thousands of dollars over just a few short years and keep tons of carbon out of the atmosphere. All of this savings can quickly be erased if your bikes just keep getting stolen though. Today I’ll show you a cheap and easy way to help avoid bike theft, and catch the perps.

Continue reading

How the EV Transition Will Affect Car Prices

Cars are one of the major sources of pollution in the world and a huge drag on people’s wallets. Right now we’re at the start of a massive shift in car technology. If prices for batteries and EV motors continue their downward trends then new EVs will MSRPs similar to gas cars sometime between 2022 and 2024. This is really quite soon and as people start to understand that EVs have much lower maintenance and fuel costs than gas cars the transition may be quicker than many people are currently anticipating. How this will affect the prices of cars, both new and used is a very interesting question that has a direct impact on your financial life. Should you buy a used Tesla now? How about a hot new Dodge Hellcat or a “practical” Honda Civic? Read on to find out.

Continue reading

Solar ROI or: How I Learned to Liquidate Bonds Without Worrying and Love the Sun

When my family moved to PA we knew we wanted to generate our own energy with solar panels. We had a lot of evidence that made us think a solar array would be a good investment, even in cloudy central PA. Of course the broad findings of research don’t always hold true for every individual. In this post I’ll review how our solar system has performed over its first full year and what sort of return on investment (ROI) that gave us. Did our solar panels actually make us money, or were we bleeding out cash to be climate do-gooders?

Continue reading

Don’t Give Up on The Climate Just Yet

My uncle sent me this New Yorker piece about how we should all just give up on fixing climate change. I saw that the author was Jonathon Franzen, and while I couldn’t quite put my finger on anything he’d written the name rung a bell and this recognition gave me the initial impression that he must be a smart guy. After reading the article I’m convinced he’s an idiot and just the sort of science skimming pessimist that I can live without. He starts out by saying that “we’ve made essentially no progress” on climate when a more accurate statement would be that we have made a ton of progress, but have not yet substantially reduced our total emissions.

Continue reading

Heat Pump ROI – First Year Data

Upgrading an old oil furnace and AC unit to a new high efficiency heat pump has been one of the two keys to making my family’s home in PA produce more energy than it consumes (the other of course was adding a big fat solar array). Now that we’ve lived in the house for over a year I thought it would be a good time to look back at the data and see what sort of return on investment (ROI) this heat pump has given us.

Continue reading

What is Profit Greenly?

Hi, and welcome to Profit Greenly. I made this blog because I got sick and tired of all the misconceptions people have about the cost of going green. This hit me in the face when I did the math on how much solar panels would save me and realized that I was literally losing money every second I didn’t have them installed. I was just one of the many people who thought that going green meant losing money. It turns out that for many things that is an outdated notion. In this blog I’ll explore some profitable, environmentally friendly changes and explain how they can put you in the black, or should I say green?

In reality it’ll take more than just personal changes to really cut worldwide emissions. Bigger policy level changes like cutting subsidies for fossil fuels, dropping barriers for clean tech deployment, and increasing farming efficiency are all critically important. Individuals can help push these changes along by voting and participating in government, but this can take a long time. The huge savings these policy changes can create may take an even longer time before people see them in lower tax rates. The personal changes I’ll focus on here can all be done very quickly and start saving real money now. Doing them will also help show politicians how much these green actions can help, which may spur policy change.

I will categorize the changes I suggest into the four major ways the average person uses the most energy/money.

  • Housing
  • Eating
  • Traveling
  • Shopping

The category that’s most important for you depends on how you spend your money and what you’re willing to change. If you rack up thousands of frequent flier miles then Traveling might be a good place to start. If you can’t imagine life without spending hundreds of hours each year on a plane, but are open to going vegetarian then maybe start with Eating instead?

Whatever the case look at your own spending and think about what you’re willing to change to decide which category you should focus on first. There’s also a Thinking category that explores the thoughts behind making all these changes a bit more. It might help if you get stuck. I hope you’ll read along and learn how you can profit greenly too.

© 2020 Profit Greenly

Theme by Anders NorenUp ↑