Was Solar Worth It? The Numbers After Two Years
It’s hard to believe, but we’ve had our rooftop solar panels for over two years now.
Which means we now have two years of data to analyze as we consider whether or not home solar energy was really a wise financial decision for our family.
Overall, our rooftop solar panels have performed exactly as expected.
Our monthly electric bills are a fraction of what they used to be. In fact, we’ve spent less on electricity over each of the past two years than we did during August of 2016, when we incurred our most expensive monthly bill ever.
During our first full year with rooftop solar panels, our power consumption declined by 0.3% from the prior year- and our electric bill dropped by 84%!
And over the past year, we used 5% more electricity than we did two years earlier – but our electric bill still plunged by 88%!
The savings have definitely been impressive.
Two years into our solar experiment, the money we’ve saved compared to our average pre-solar electric bill has paid back 17.2% of what we invested into our rooftop panels. That puts us on target for the system to pay for itself in less than 12 years.
Of course, this assumes we won’t need to put any more money into our home solar energy system. So far, that’s been the case, as our system has been maintenance free.
However, we’re likely to need a new inverter after about a decade, which will push our eventual payback period out a bit further. And after our initial ten year agreement with our local utility expires, the terms under which we supply power to them are subject to change. It’s hard for me to believe they’ll be more favorable for us than they are today, and it’s possible our savings could be smaller.
All of which is a long-winded way of saying we’re still far from reaching break-even on our investment!
We recognized payback would take a while when we had the panels installed, and acknowledged that from a purely financial perspective, it wasn’t clear rooftop solar was a great investment in our state.
But I’m still happy we made the decision.
I enjoy paying a tiny electric bill every month. Especially when the weather is unseasonably hot – as it has been recently – and our air conditioners are running almost constantly.
Our home is also likely worth more with solar panels, as a buyer would be able to take advantage of the system to keep their electric bills much lower than at an identical house without solar energy. A recent article at money.com noted Zillow estimates solar panels increase a home’s value by 4.1% across the U.S. That type of increase to what I think our home could sell for would more than cover the cost of our rooftop panels after tax incentives.
While we’re a long way from breaking even, we make progress every month, and are doing a little bit to reduce our reliance on non-renewable sources of energy. I’m sure I’ll appreciate our small utility bills even more when we finally reach early retirement and financial independence and I no longer have a bi-weekly paycheck!
Steveark
July 6, 2019It has to make sense from a “doing the right thing” standpoint for someone in order for it to make sense. A 12 year payout is just not competitive with investing in the stock market. In my work world we would never do any project that took over three years to pay out because projects always entail risks, just like installing solar does. But, again, if it feels good then paying out isn’t necessarily all that important. I’m not a solar advocate because of the infeasibility of supplying the bulk of the nations power due to the huge space requirements and lack of a viable storage technology but that’s just my opinion. Technology can possibly improve storage options but the efficiency of panels is very close to the limits imposed by physics already.
ROMT
July 6, 2019There are definitely locations where the payback period for solar is shorter than what we are experiencing, and there are certainly some people who purchase solar panels regardless of the cost simply because they believe it is the right thing to do. But I had to do a fair amount of mental gymnastics to justify the purchase when thinking about the numbers. Ultimately, I thought about cutting expenses as we prepared for potential early retirement. To lower our prospective electric bill in perpetuity by the same amount I expect the solar panels to, I could have either purchased our home solar energy system, or put aside more than twice as much money as the solar panels cost to cover those bills in the future. In that, admittedly convoluted lens, solar made sense. Your point about a 12 year payback for solar not being competitive with long-term returns from the stock market is spot on. But we already had a significant portion of our net worth in the market, and investing in solar provided us with a very different risk profile that may be completely uncorrelated with the financial markets. Your point about storage options is spot on also. With the current technology, it would have cost more than our entire solar energy system to purchase enough battery storage to power our home for a day or two. There were no mental gymnastics that could have justified that expense to me relative to the cost of a portable generator!