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Total System Cost

What you will pay the solar provider, plus other things.

What you pay the solar provider, plus what you pay in interest to borrow that money, plus increased insurance costs, plus maintenance plan costs, for the total life of the system. Don't forget that your electricity provider is going to charge you a monthly fee also.

Note: this system assumes you are purchasing, NOT LEASING. If you lease your system, the cost calculation is completely different, and you must remember that leased solar REDUCES the value of your home.

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Tax Incentives

26% in 2021, 26% in 2022, 22% in 2023

This is a non-refundable tax credit. You must owe enough taxes to claim this credit. If you don't, you can carry it over, but we don't know for how long. As long as the solar tax credit is available, you should be able to carry over to that tax year.

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System Rating/Size

This is the total panel capacity. Be careful, it is not the actual productivity.

The system size is a number that your solar provider will give you which has almost no real value at all. It is not a good determiner of how much electricity you can produce. For example, I have a system rated at 12.075 kWh, and the most I've ever seen it produce in one hour is just over 8 kWh. Don't be so naive as to think that you will ever get your system size in actual production.

Your solar provider should give you a guaranteed production number for the year. That is the number you care about. System size is only used to calculate what you are paying per watt for estimation purposes.

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Net Metering Rate

This is what your electricity company will pay you per kWh.

Whatever electricity you generate and don't use immediately (if you don't have a battery) will be sold to your electricity provider for some price. This is a hot topic right now. We have it easy in AZ, and get a fixed rate of 10.45 cents/kWh for ten years.

The power companies don't want to pay you much for your excess, and are fighting to drop this number to almost nothing. As you can see, when it is low, your time to break even is very high. Be aware that net metering rates are likely to go down (maybe way down) and if you don't have an agreement of some sort you cannot bank on these rates being unchanged.

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Home Value Increase/Decrease

This could be 2% or 3% of the home value.

If you leased your system, this is a decrease (negative number). Remember, when you sell your house you must pay off your solar loan, if any. But, the buyer is getting a house with almost no electric bill.

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Years to Recover Costs

If you add up all of the costs of your system, and subtract all of the incentives, rebates, and what the system will earn each year, you can calculate how many years it will take for you to break even.

In other words, if you compare what you spent to buy solar, and what you would have spent if you did not buy solar, the question is, when do you start saving money? You start saving money when you have spent less than you would have spent otherwise.

There are only two ways to make solar pay for itself. 1.) When you sell power that you generate to the utility company. 2.) When you use power that you make instead of buying it from the utility company. How much your utility bill is, was, or will be is unimportant. It is a question of cash flow. My electric bill may be zero, but if I paid the solar company $300 that month, I'm still paying someone.