You are an excellent candidate for a solar electric system if your electric bill is over $75 per month, you pay more than $0.12 per kwh for electricity, your state offers substantial rebates for solar electric systems, and you have good solar exposure.

Making Solar Electric Systems Pay Back Fast

Barry Cinnamon | Akeena Solar

Making Solar Electric Systems Pay Back Fast

You are an excellent candidate for a solar electric system if your electric bill is over $75 per month, you pay more than $0.12 per kwh for electricity, your state offers substantial rebates for solar electric systems, and you have good solar exposure.

We will give you a $10 bill every month for 30 years if you install a solar electric system for your home.

ho wouldn't want to "go solar" under these circumstances? But solar electric systems do not always pay back this fast. Although the environmental benefits of these systems are substantial, our industry risks a backlash if we oversell their economic benefits. Over the past few years Akeena Solar has installed over 100 grid-tied solar electric systems in the San Francisco area. Based on this experience we have learned how to accurately portray and maximize the economic benefits of these systems for our customers.

In the $10 monthly savings example described above:

  • Total system cost, including equipment, shipping, sales tax, design, engineering, local building permits and installation, were $27,514
  • The customer rolled the costs of the system into their refinancing. After tax payments on this loan were $59 per month
  • Monthly electric savings were $69 per month

As you can see, the $10 monthly savings is a real number. And future electric cost increases will increase these monthly savings. Surprisingly, there are a very few factors that make the biggest impact on your long term savings. Here they are:

  1. Does your state offer substantial (over $10,000) rebates and tax incentives for solar? California, New Jersey, Massachusetts, New York, Pennsylvania and a few other states offer rebates and tax incentives that are enough to offset 40% or more of the cost of a system. Many states offer smaller rebates, but since systems typically cost in excess of $25,000, small rebates don't make a big enough economic difference for many customers. But watch out: state rebates are considered taxable income by the IRS.
  2. Do you pay high electric rates (12 cents per kwh or more)? Your dollar savings will be proportional to the amount of money you pay for electricity. A solar electric system will immediately begin to offset your highest rate tier consumption. Taking advantage of Time of Use rates or Electric Vehicle rates may generate additional dollar savings for the exact same system kwh output. For example, since rates at the top tier in California are in excess of $0.24 per kwh, savings for a system in California will be twice as high compared to Nevada for identical system output.
  3. Does your site offer good solar exposure? A due south, unshaded, sloped roof is usually best. A little bit of shading in the winter months usually does not have a great impact. But if you have substantial shading mid day during the summer months your system output can be dramatically lower. Moreover, substantial shading may disqualify you for rebates in certain states. In many cases an unshaded east-facing or west-facing roof will outperform a partially shaded south-facing roof.
  4. Does your site offer a fairly simple solar installation? Simplicity means lower cost for you and your installer. Complicated installations - such as mounting modules in different locations on your roof, installing on delicate roof surfaces, or hillside ground mounts - can add substantially to your total system costs. Unexpected costs, such as high building permit fees or complicated town planning department procedures, can dramatically increase the total cost of your system.
  5. Can you install a system that will be maintenance-free for 30 years? Do it right the first time and you can enjoy 30+ years of maintenance-free power. Shortcuts - such as mounting points between rafters, exposed wiring, or poor wire connections - will inevitably cause poor system output or roof leaks in five to ten years.
  6. Can you qualify for a low interest home equity loan or low refinancing rate? If you borrow the money for your system in this way you can deduct the cost of the interest on your taxes. The higher your tax bracket the higher your savings.
  7. Will the system be installed for business use? The 10% Solar Federal Tax Credit and Five Year Accelerated Depreciation substantially improve the economics of solar for company use. If you have a qualified home office you may also be able to apply a portion of these business credits.
  8. Design the system carefully to maximize the power output from all components. First, since your inverter is the most expensive component, you should install sufficient PV modules to fully utilize the inverter's capacity. For example, the popular Sunny Boy 2500 inverter can take up to about 3000 watts of DC input. Less than about 2500 input DC watts and you will be underutilizing the inverter's capacity; more than 3000 watts and the inverter will divert and waste some of this capacity. Second, you should make sure that there are no weak links in your installation (such as undersized wire or modules that are always shaded by obstructions).

Remember that 30 year expected life for a solar electric system? To achieve this you will have to be very careful in your choice of components, installation techniques and contractors if you want your system to last that long. Some things to keep in mind:

  1. Components - All moving parts break. Faster than you may expect. Ventilation fans are unlikely to last more than 10 years. Tracking collector arrays will require regular maintenance.
  2. Installation Techniques - Anything other than stainless steel, aluminum or galvanized steel will corrode in fewer than 10 years - faster in a coastal environment. Unpainted wood supports will rot. Exposed PVC pipe (even UV-resistant) will crumble after several years.
  3. Contractors - Find a contractor whose references check out, and has the skills to run his or her business profitably. Make sure your contractor has the appropriate licenses, and carry sufficient liability and workers compensation insurance. What good is a five year system warranty if your contractor is unprofitable and cannot stay in business?


Based on the over 1000 solar feasibility analyses that we have done over the past few years, you are an excellent candidate for a solar electric system if your electric bill is over $75 per month, you pay more than $0.12 per kwh for electricity, your state offers substantial rebates for solar electric systems, and you have good solar exposure. Take advantage of these generous incentive programs, do the right thing for the environment, and start saving your $10 a month right away

About Akeena Solar

Akeena Solar provides customers with an unsurpassed combination of solar design expertise, financial analysis and quality installation. Their growing list of satisfied commercial and residential customers is a reflection of the care and attention they pay to every project. Akeena Solar's philosophy is simple: we believe that producing clean electricity directly from the sun is the right thing to do for our environment and economy.

About Barry Cinnamon

Barry Cinnamon is the President of Akeena Solar. He started his career in solar energy in the late 70s as a researcher into new flat plate and concentrating collector designs. During the early 80s he designed and installed active solar, passive solar and ground coupled heat pump systems. His work in solar energy system computer modeling led him into the software industry, where he founded several successful software publishing companies before returning to the solar industry. Mr. Cinnamon earned a BS Degree in Mechanical Engineering from MIT and an MBA degree in Marketing and Finance from Wharton.


The content & opinions in this article are the author’s and do not necessarily represent the views of AltEnergyMag

Comments (0)

This post does not have any comments. Be the first to leave a comment below.

Post A Comment

You must be logged in before you can post a comment. Login now.

Featured Product

Canadian Solar - HiKuBlack - Black Backsheet & Frame (Mono)

Canadian Solar - HiKuBlack - Black Backsheet & Frame (Mono)

Aesthetic appearance for residential systems: With black backsheet & black frame, Power range 380 ~ 405 W, Low power loss in cell connection. Enhanced reliability: · Low temperature coefficient (Pmax): -0.34 % / °C, LID LeTID less than 2.0%, Lower hot spot temperature, Better shading tolerance.