Should You Invest in Solar Power?
In 2020, we saved almost $2000 on our electrical bill because we added solar panels on our home in 2019. But, was it a good financial deal? As an advocate for addressing climate change I wanted to personally walk my talk, but I am also financially frugal, so I didn’t want to do something that was not financially sound. So, I constructed an elaborate Excel spreadsheet with what I thought were conservative projections of electrical production, credits we would get on our electrical bill, the deterioration of production capacity, likely raises in cost of electricity, etc. The results were that our investment would generate a pre-tax 3.46% internal rate of return in 20 years and a 7.09% IRR in 30 years. Wow, for a fixed income investment comparable to buying a bank certificate of deposit, that looked great. So, how has it turned out? The first year’s actual production was 95% of that projected. The credit on our electrical bill available through net metering was a bit lower than expect