May 25, 2014

Are Solar Panels a Good Investment? (3rd look)

Apparently its been four years since I took my 2nd look at solar panels.    I've heard lately that the cost of solar panels has dropped so I'm looking again.

A calculator  [dead] at to get a rough estimate of the cost and savings.   They use a cost of $6 per W for the solar installation.

I figured the costs at $4.5 / W and then figured the federal, local and utility incentives myself.   I used a local calculator to figure my electricity savings.   The results for me are :

KW system cost incentives NET elect save ROI
1.5 $6,750 $5,925 $825 $217 26%
2 $9,000 $7,900 $1,100 $289 26%
2.5 $11,250 $9,875 $1,375 $361 26%
3 $13,500 $11,850 $1,650 $433 26%
3.5 $15,750 $13,175 $2,575 $506 20%
4 $18,000 $14,200 $3,800 $578 15%
5 $22,500 $16,250 $6,250 $723 12%
6 $27,000 $18,300 $8,700 $867 10%

One of the local incentives has a maximum pay out so the returns max out at about 3 KW installation for me.    A lot of the incentives we get locally are not available to most people.  My state and local utility are pretty generous with the incentives.   If you only get the 30% federal tax credit then your ROI would work out to only about 3.4%.  

For me at least in my area it seems solar installations are definitely now worth it financially.    Of course the math differs depending on local incentives from your state or utility.    If you don't have generous state or utility incentives then the ROI may turn out to be just 3.4% range which isn't a great investment.



  1. Jim, Surprised there are no PPA's available in your state.

    We're 10 months in to our PPA so far, saving $25 a month. The ROI is technically 'not defined' as our initial investment is ZERO.

    There are pros an cons to PPAs. I've listed many of them here:

  2. gubMints,

    We do have PPA's here. I've considered going that route. But I'd really prefer straight forward ownership of the panels. Especially if the returns are as good as they seem now.



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