Solar is definitely worth it, and particularly if you qualify for the 30% Federal Rebate.  The Inflation Reduction Act, signed into law in August 2022, increased the system rebate to buyers from 26% to 30%.

I researched four solar companies: Sunrun (Costco); Green Power, Suntuity Solar and Solar Me and compared their initial phone quotes across product, price and financing terms. All options offered net savings over the 20-25 year financing term.

I then had the three lowest cost options (all but Sunrun) come to my home and do a detailed survey of my roof so that they could fine tune their product and price offers. All three installers proposed Hanwa Q.Peak Duo G10 solar panels, but with slightly different placing. In my particular case, Suntuity and Solar Me offered the most savings, with Solar Me winning by almost $9,000 (see option II in table below) due to its 1.39% financing.

Best Pricing Comes Down to Financing Terms

Different installation companies use different financing companies (Sunnova and Dividend are two of largest), and just like a mortgage company, each solar finance company typically has multiple financing options. However, if your experience is anything like mine, you will be quoted different installation prices for different financing options. This makes things very confusing, but what the finance companies are essentially doing is making you pay up for lower financing rates. From one installer, I received an “all cash” price of $48,000, and a 0.99% financing price of $73,000. What I was not told, but inferred, was that that the $25,000 pricing differential for 0.99% financing represented the cost of getting such a low rate (at a time when the Fed Funds rate is at 3.25%). Make sure you get that “all cash” rate to use as a benchmark and to understand what you are paying for the financing options. Unfortunately, solar panel sales people are not regulated in the same way as mortgage banks or mortgage brokers. 

Make sure that you understand the all cash price vs. pricing for financed installations. When your all cash option is cheaper than the financed purchase, that difference is what you are paying to get whatever low interest rate you are being quoted. Whomever is providing your quote may not understand this, as they do not work with the bank and don’t know what goes into the cost or monthly payment calculation, buy you need to understand this difference as a buyer.

Summary

In the table below, I share a summary apples-to-apples comparison and show you the net present value of savings of Option 1 vs. Option 2 (Solar Me). All options offered significant savings, but when overall panel quality and pricing are similar, it is the financing cost that differentiates from one provider to another.

As you can see from the table below, Option 1 is slightly more expensive on a cost per Kw basis (line 15), but Option 2 more than makes up for that with the 1.39% financing (vs. 1.99% for Option I). Both options save over $35K in NPV over 25 years, but Option II generates $8,694 in incremental savings vs. Option I. In the end, unless system costs on a per Kw of production basis are dramatically different, go with the lower cost financing.

Payback is in the 9-10 year range on a NPV basis. This considers the fact that if you sell your home and pay off your solar panel loan, you will continue to receive monthly the SREC benefit (see below) until the end of the 15 year term. This means that if you plan to remain in the home for at least 9-10 years, you will get your full investment back, and assumes that you will pay off the solar loan yourself upon time of home sale.

Many would argue that the value of your home increases significantly just because of the solar panels and lower associated energy costs. The 9-10 year break-even should be viewed as a worst-case scenario and assumes a buyer gives you no credit for the panels. As a home seller, you also have the option to transfer the solar loan to the new buyers of your house. Just complicates the sale somewhat, as not everyone will be interested.

What you need to consider:

1. Current average annual electric bill. See your latest utility bill. Note that solar will only reduce your electric costs, not gas.
2. Current annual usage of kilowatts. Most likely available on your latest utility bill.
3. Current annual cost per kilowatt hour. Simple math annualizing (1) above, and dividing by (2) above
4. Proposed system:
   1. Yearly production: How many Kw of power the system generates each year. Ideally, you want the system to produce as much, or slightly over your current annual usage. Some states will limit how much you can sell back to the utility company. In NJ, system production can be ~102% of current annual usage.
   2. Proposed production vs. proposed production.
   3. System cost. Note that as part of the Inflation Reduction Act which was signed into law in August 2022, the federal government will rebate 30% (up from prior 26%) of your system cost as long as your system is going on a primary or secondary home. Check specifics for investment properties.
   4. Loan terms. The vast majority of systems are purchased with financing. You can purchase the system outright for cash, but since (energy savings + SREC credits – loan PMT) will most likely make your net monthly payment significantly than your current utility bill, most will opt to finance.
5. Value of SREC (solar renewable energy credit): The monthly value that your state assigns to each megawatt of energy produced by your solar panels. For example, if system generates 17,693 kWh, that equates to 17 SRECS (you don’t get partial credit for the 693 kWh). In the state of NJ, for example, each SREC is worth $90 per month, and the credits continue for 15 years (as long as you do not remove the system). You continue to receive the SRECs even if you sell your home, as long as you also pay off the solar loan.