It’s time to do a check-up to see how things are going. I’ll spare you the backstory since you can review those previous posts, so let’s get right to the numbers, shall we?
Solar Panel Numbers
Year 2: July 2015 – June 2016
- Total Generated: $698.72
- Monthly Average: $58.23
- Annualized Rate of Return: 7.4%
Year 1: July 2014 – June 2015
- Total Generated: $699.46
- Monthly Average: $58.29
- Annualized Rate of Return: 7.4%
As you can see, there was about a $0.74 decrease from year one to year two. Probably a negligible margin of error. It appears that the system performed essentially the same between the two years. Still significantly lagging the original projections we had when we installed the system, but at least with no plunge in output.
Regarding output, one of the things that I was watching closely this past year was for decrease of panel efficiency. Solar panels are known to go down in energy output with age, and I was eager to see just how bad that dip would be. I’m glad to say that I haven’t seen any noticeable decrease in efficiency, but it will certainly be something to keep an eye on over the next few years.
Cumulative After 2 Years
So let’s take a look at the total that we’ve earned so far in the first two years of the system.
- Total Generated: $1,418.03 (this number includes $19.85 that was earned in the partial month that the system was operational when it first went online)
- Annualized Rate of Return: 7.5%
- Total Return on Investment: 15%
So after a little more than two years in operation, we have earned back 15% of the original $9500 that we spent to set up the system. At the current rate, it will take right around 13.5 years to make back the entire investment. Of course, if we included the increase in the value of our home, we likely have already broken even.
There are several ways to look at this investment. On one hand, it’s not a complete “slam-dunk” investment because 7.5% isn’t out of this world and it does take over a decade to pay for itself. However, on the other hand, it’s not a terrible investment either when 7.5% is close to what I would expect to make in an S&P 500 index fund plus I don’t have to pay any taxes on what I earn from my solar panels. Finally, in our particular situation, it’s of real benefit to us because it eliminates our monthly electric bill, a real boon now that we are a one-income household.
So far, we have no regrets for installing this system–it sure feels nice getting paid whenever the sun shines. However, it may not be the best option for everyone. I think that the federal tax credits for solar panel installation are expiring this year, and many incentives on all levels are being phased out. Even with the cost of solar panels coming down dramatically, I’m not sure how solar panels stack up now as a financial investment. Be sure to do your homework for your local area if you are interested.
