The first thing that people ask when I tell them that we installed a solar array on our house is: “how much did it reduce your electric bills?” Now that I’ve had a full year of utility bills, I’m going to lay out how much we’re paying now versus our historical electric bills.
Keep in mind that there are a lot of different factors at play, but there’s no doubting that the savings are substantial in spite of different weather, usage and billing rates. So let’s get to the numbers!
From August 2012 through July 2013 (my billing cycle runs from the 20th of the month), my total electric bill was $1614. Keep in mind that our house runs mostly on heat pumps, so that also includes much of my heating bill. We also have a pool, hot tub, second fridge, and freezer – we’re not living a super low-impact lifestyle, as much as I’d like to. But what we do have is all very efficient at what it does.
How do past years compare?
- 2013: $1,614
- 2012: $2,792
- 2011: $2,388
- 2010: $2,662
- 2009: $2,330
- 2008: $2,549
- 2007: $2,654
Average of non-solar years: $2,562
Saving in first year: $948
We also made a few dollars in SRECs (solar renewable energy credits) bringing the total to just around $1,000.
The cost of our solar array, including state credits, was about $13,000, so the system has a “simple payback” of about 13 years. Keep in mind that this is an overly simplistic analysis, but it’s close enough. You’d have to compare costs in your own state for a fair analysis.
In a later post, I’ll delve into these numbers more rigorously, showing my actual consumption and total kilowatt hours produced and our electric rates, but for now, solar is working and it’s saving me about $1,000/year in electric bills.
It’s tough to have solar make money for you if you don’t live in a net metering area.
Possible if you can adjust and get time of use metering in certain areas – daytime power is expensive and your generating then.
Since you either have to scale back the install, or go with expensive batteries, it is hard to make up that loss. Once you buy the expensive Inverter and the costly install, a bit larger inverter or a few more panels are not much extra.
For now I’m running a small baseline solar generation. Calculated how much my home uses at its minimum -ie some things can’t be turned off, and then used a microinverter and a couple panels that generate that max. It’s payoff is about 15 years as my tax credits were limited with a self install.
It was also a small investment under $500.
So for this year you grossed about 7.3% on your $13,000 investment. Of course, your investment depreciated by about $650 (simple depreciation over 20 years) so your net return was about $300 or about 1%. That’s not horrible…about what you get leaving cash in a bank…but it’s not great either. Add the $7,584 you’d make during the 8 years between payback and full depreciation, prorate it across 20 years and the net is $679 a year or 5.22%. That’s respectable return in this economy and that’s not counting any “free” electricity you’d get after 20 years if the system was still working or the net kharma you get from helping to save the world!
Thanks, great analysis Dave! That’s a lot better than I would have done 😉
That definitely matches earlier numbers I ran and it doesn’t even include anything for electric rate escalation. I figure better than 5% return is a good deal – makes it a no-brainer for me.
Did you opt not to have a size of system installed that reduced your average electric bill to $0 (a system that would support ~$2,500/yr) for a reason? Size/footprint? cost?
A couple reasons…
– My available roof space perfectly accommodated that sized array
– Net metering where I live isn’t really net metering. If I generate excess, they don’t pay me market value. So I’d end up “losing” money during months where usage is low, like April, May, October and November.
My 5.01 kW UpDate (Jan,Feb,Mar,Apr,May,June 2013) Total Power Bill minus $49.88! We run about $1,500 per year.
My install is at http://tackyted.com/solar/ for more info and charts links