Curious to know what an investment in solar looks like?
The examples below show how a solar investment might look for three different sized homes. Factors like energy use, system size and cost, and how the project is financed will affect how long it takes to break even on your investment. Example for using solar on-site generation to match nearly 100% of a home’s energy use.
 The Jones’ House |
 The Zhang’s House |
 The Jackson’s House |
|
|---|---|---|---|
| Average monthly electric use | 500 kWh | 1,000 kWh | 1,500 kWh |
| Average monthly bill | $68 | $122 | $188 |
| Solar system size needed | 4 kW | 6 kW | 13 kW |
| Estimated upfront cost | $15,000 ($3.75 per watt) |
$21,000 ($3.50 per watt) |
$42,250 ($3.25 per watt) |
| Net cost after tax credit | $10,500 | $14,700 | $29,575 |
| Upfront Cash Payment (no financing, no interest payments)
Simple Savings Calculation |
|||
| Estimated breakeven | Not expected within 20 years | 17 years | 17 years |
| Total 20-year savings | -$356 (loss) | $2,560 | $7,250 |
| Net Present Value calculation (4.53% required rate of return) | |||
| Estimated breakeven | Not expected within 20 years | Not expected within 20 years | Not expected within 20 years |
| Total 20-year savings | -$4,165 (loss) | -$3,828 (loss) | -$6,622 (loss) |
| Loan (0% down, 6.6% interest rate, 20 year term)
Simple Savings Calculation |
|||
| Estimated breakeven | Not expected within 20 years | Not expected within 20 years | Not expected within 20 years |
| Total 20-year savings | -$5,012 (loss) | -$3.959 (loss) | -$6,145 (loss) |
| Net Present Value calculation (4.53% required rate of return) | |||
| Estimated breakeven | Not expected within 20 years | Not expected within 20 years | Not expected within 20 years |
| Total 20-year savings | $-5,227 (loss) | -$5,316 (loss) | -$9,671 (loss) |
The scenarios shown above used the following inputs:
- Average monthly bills are based on Idaho Power Schedule 01 (Residential Service) and Schedule 06 (Residential Service On-site Generation) as of 1/1/24. Future changes in rates will impact the estimated net savings and payback. This is an example only. Actual costs, system production, and tax credits will vary.
- Utility bill increases 1.81% per year based on historical data in Idaho Power’s Integrated Resource Plan (IRP).
- Breakeven is the point at which there is a net positive cash flow. It does not necessarily represent the time at which the loan is fully paid off.
- Results are evaluated within a 20-year time frame. Not Expected indicates that the breakeven point will not occur within 20 years.
- Simple savings and net present value are different ways of looking at the long-term value of an investment. Net present value is a useful financial metric for analyzing the profitability of investment decisions. Net present value seeks to capture the total value of an investment by incorporating the time value of money and comparing it to alternative uses of your money—such as earning interest in a Certificate of Deposit (4.25%)1, investing in 20-year U.S. Treasury bonds (4.53%)2, or investing in stocks (9.8%)3. In these examples, the net present value calculation assumes an investment in a 20-year U.S. Treasury bond with a 4.53% return. The analysis of these specific alternatives shows that an investment with a 4.53% return is more profitable than the on-site solar investment.
1 Current 2-year Certificate of Deposit rate at Idaho Central Credit Union as of March 2024 is 4.25%, Source: http://www.iccu.com/rates/accounts/certificates-of-deposit/
2 Current 20-year U.S. Treasury bond rate of 4.53% as of March 21, 2024, Source: http://www.marketwatch.com/investing/bond/tmubmusd20y?countrycode=bx
3 9.8% return as measured by S&P 500 performance from 2003 through 2023, Source: http://finance.yahoo.com/news/heres-average-stock-market-return-105500708.html
Want to explore further? Use our online solar calculator to start your estimate.
If you are considering an investment in solar or solar + storage, use our online Solar Calculator to understand the savings potential based on your rooftop characteristics, energy usage, available tax credits and rebates, and current utility export credit rates. Then, compare options to make an informed decision about investing in solar.
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If you’d like to learn more about what an investment in solar would look like at your home, read our online FAQs, call us at 1-800-632-6605 or email cg@yingla.net.