Estimating a Solar System’s Benefit to Your Home, Business or Non-profit

While there are MANY factors to consider, AIRE believes the following 5 (ranked in order of importance) are the most critical:

  1. The price paid for the solar system

    Purchasing a solar system is equal to buying ALL the electricity the solar system will produce over its 25 – 30 year lifetime on day one – avoiding the rising cost of energy made more expensive by general and energy inflation. The more you pay for the solar system, the more you pay for the electricity produced by the solar system.

  2. The value of the energy produced by the solar system

    The energy produced by a solar system is worth more when consumed onsite – offsetting more expensive energy purchased “at retail” with inflation and utility profit margin included. AIRE recommends sizing solar systems to ensure all the electricity produced by the system will be used onsite, as Utilities will not (in most cases) buy solar electricity from you at the same price/rate they sell it to you. (Rule of thumb is they’ll give you 50 cents for your dollar’s worth of energy. They way in which they credit you is also prone to be in the utility’s favor. The credit/value a solar electricity producer receives from their Utility for the solar electricity they generate is often called “Net Metering.”

  3. The way your utility “treats” solar. Some charge you a fixed fee simply to have it.

    You will need to check with your utility to see if it charges a fee to have solar. Call it a “solar tax,” “solar penalty,” “solar punishment fee” or whatever, but if your utility charges one it can drastically and adversely affect your economic benefit. (Of course, you’re still producing non-greenhouse gas emissions electricity!) You can web search your utility’s rates/riders to see if they impose a solar fee. Utilities typically don’t make this information easy to find, so start by searching “renewable energy rates” and follow the trail.

  4. The means by which you will pay for the system. In other words, the terms of finance used to purchase/develop the solar system
  5. Qualification for the tax-based “coupons” offered for the purchase of a solar system

    6. The “coupons” offered for the purchase of a solar system are tax based. Businesses paying federal taxes can purchase a solar system for 50% – 60% less than non-profits, as non-profits cannot gain these funds from their tax bill. Individuals paying federal taxes and purchasing solar systems for their homes will pay less for the system, thanks to a (currently) 26% tax credit offered by the Federal Government. Businesses receive the same 26% tax credit and accelerated depreciation when purchasing a solar system. The credit is scheduled to decrease to 22% in 2023 and 0% for residential in 2024, 10% for commercial. Your state may also have a tax incentive. For example, North Carolina once had a 35% state tax credit, but no more. Finally, as a general rule, tax credits are easier to create than they are to take.

  6. The useful lifetime of the solar system

This calculator is for estimation purposes only. AIRE’s intent is to illustrate the relationships between the costs and benefits of a solar installation. DO NOT PURCHASE OR FINANCIALLY PARTICIPATE IN A SOLAR SYSTEM BASED ON THIS CALCULATOR ALONE. See this post for an example of the calculator’s use.