Solar ROI – My 4 to 6 Year Solar Return On Investment

I first wrote this post on the evening of December 25, 2015. That day my own rooftop solar system produced 32.11 kWh of energy, suggesting a 4 to 6 year solar ROI. Merry Christmas! Now, after a full week of solar energy production, my solar enthusiasm has continued.

My own home’s solar energy system was installed late last month and received final inspection and permission to operate (PTO) from SDG&E just a few days before Christmas.

Christmas day brought the gift of sunshine, and with that my roof produced over 32.11 kWh of electricity between sunup and sundown. At current SDG&E rates, that is close to $13.44 worth of energy — not bad for a Winter day.

While remarkable, the Christmas day energy production was no fluke. On 6 of the past 7 days the system produced over 30 kWh of energy. The following graph from December 29, 2015 illustrates Net Energy Metering in action. The 31.82 kWh produced during daylight hours that day actually exceeded net demand to service the household’s total electric needs during the 24 hours of that day.  The bars above the center line represent energy drawn from the utility to service the needs of the household, while the bars below the line show the energy sent to the grid during daylight hours.


Here is Net Energy Metering in action. Shown here is my energy draw from the grid shown in 15 minute increments above the line, compared with the excess energy produced beyond my needs during daylight hours.

Lest you think this was a fluke, the next day’s production also exceeded demand by an even greater margin.

It is noteworthy that the sun is low this time of year, and the days are short. In summer the production should be substantially greater. The experience of this first full week of solar generation suggests that my personal investment in solar will likely pay off in a very big way!

Solar Observation:  My Solar ROI

I did a little math, applying this first week’s energy production to SDG&E’s current tiered rate structure. If this energy production is representative of what I can expect over the course of a full year (which I’m guessing is actually low, considering it is now Winter), and if my October electric bill was average for my annual consumption, (which I think is probably close), then I will save $3,749.76 over the coming 12 months on electricity. Your mileage may vary, of course, depending upon your energy consumption, and other unique circumstances. But these are my personal numbers, and I am thrilled by my solar energy system’s performance.

By the time you calculate the 30% tax incentive from the solar investment, and add in an inflation factor to account for SDG&E’s future rate increases, my system will pay for itself in between 4 and 6 years, depending upon just how much higher SDG&E rates go in that period of time. What other investment can you imagine, that will produce a 4 to 6 year return on investment, and then continue to return that investment over and over again for the next 20 years or more? The solar ROI is amazing!

Historically, SDG&E electric rates have increased between 300% and 500% over the past 15 years. The lower number is based on their standard Domestic Residential tier rate, and the higher percentage is on SDG&E’s top tier residential rate. If they keep increasing prices that pace, my return on investment (ROI) will be even quicker.

Seeing actual energy production from my own rooftop over the past week, proves beyond any doubt that going solar just may have been the smartest financial move I’ve ever made. My personal solar ROI will likely be within 6 years, and even quicker if my local utility continues to raise electric rates as they have historically done. Yours could be more or less, of course, depending upon your unique circumstances. My household generally uses close to 1,000 kilowatts per month. That typically puts me into the higher rate tier with SDG&E, meaning I pay between 18 and 42 cents per kWh.

If you are ever going to go solar, there is no time like the present. Delaying the decision to go solar cost me thousands of dollars in wasted energy costs over the past 6 years. The stakes are even higher now for you, if you live in Southern California, given that the end of Net Energy Metering (NEM) as we know it is coming very quickly. Those who get in now, under the current NEM rate tariff, will be grandfathered into the current plan for 20 years. Those who delay may not fare so well.


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