solar person jumping for joyI bet if you could pre-buy your car’s gasoline or your home’s heating oil at a 40% discount for the next 25 years, using a low-cost loan if needed, you would jump. So why haven’t you jumped at the chance to make your own solar electricity at a 40% discount for the next 25 years? Probably because no one ever explained it this way. Let me try.

Note that I’m not talking about a solar lease. I’m talking about a solar electric system you buy – your own little power plant. You get all the financial benefits and incentives, for a no-maintenance product that we guarantee for decades.

I assume electricity is important to you. You use it to light your home, run your appliances, charge your phone, etc. But what are you actually paying for it? Dive into your electric bill and you’ll quickly drown in line items like Generation Charge, Distribution Charge and Transmission Charge.

The simplest way to calculate what you’re paying is to divide the dollar amount of your monthly bill by the number of kilowatt-hours (kWh) you used. Your monthly usage is easy to find on most bills, except with Eversource, which apparently has stopped providing that data. If your bill is $120.00 and you used 600 kWh, your price per kWh is 20₡. If your electricity provider is a municipal utility, the rate is probably lower.

solar electricity calculation

But is $0.20 the rate you’ll pay next year? Of course not. Electric rates change regularly due to inflation*, the seasons, and the price of the fuels used to generate electricity. Prices usually go up (in fact Eversource just proposed a rate hike), as this chart for New Hampshire rates shows.

 

If you don’t like being held hostage to unpredictable but generally rising utility rates, you should be running to the closest solar installer. (OK, that’s just a saying; really I’d like it if you called us, at 978-567-6527.)  Solar is:

  • Reliable & Long-Lasting: We couldn’t offer a 20-year warranty on our solar installations if they weren’t reliable (and if we didn’t trust our own work). (Fun question: What else can you buy that comes with that long a warranty?)
  • Predictable: We can estimate your system’s electricity production with a great degree of accuracy for 20 years or more. In fact, we also guarantee your system’s production; if it under-performs, we’ll pay you for the difference. (Fun question: How many other products have guaranteed results? Not your car’s gasoline, and not your home heating oil…)

What does this have to do with electricity prices?

Imagine a solar energy system that cost $40,000, and produces 231,000 kWh over 25 years**. First, you have to deduct 30% from the price to reflect the federal solar tax credit you get for your solar. After Uncle Sam pays you $12,000, your system price drops to $28,000. I’ll be conservative and stop there, even though most likely your price will drop further thanks to state solar incentives.

Let’s apply the formula again:

For the next 25 years, you effectively pay 12₡ per kWh of solar electricity, or 8₡ less than today’s electricity price. That’s a 40% price reduction. And that price does not go up, because you own the power plant.

It gets better. Because your solar system’s production drops only about 0.5% per year, but electricity rates historically go up about 2% a year, you save more than 40% for the 24 years after that.

So I ask again: If someone – say a Solar Consultant from New England Clean Energy – says they can save you 40% on the cost of your electricity for 25 years, are you interested?

Here’s our number again: 978-567-6527. Note that we serve central, MetroWest and southeastern Massachusetts (including the Cape), southern New Hampshire, and all of Rhode Island. We look forward to hearing from you.

*As of this writing, the US inflation rate is about 1.7% per year. From 2006 to 2015, Massachusetts electricity rates rose 2% per year. In 2005, they went up 24%. Rhode Island and New Hampshire have similar numbers.
**Assumptions: 8.2-kilowatt solar array on an 85% roof, 0.5% degradation rate.

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