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How much will I save and what are the costs?

In southern California the average residential customer with an air conditioner can have an electric bill from $200 to $600 per month. The typical home will require a 2 to 6 kWh system to get relief from these increasing bills. The following table provides simple estimates.

*Summary:

Size:  4.2 KW
Gross Cost:  $36,200
LADWP Rebate: $14,719
Federal Tax Credit: $10,860
Net Cost:  $10,621
Monthly Savings $191
Payback in years 5 years


For example, if your electric bill is $600 per month, you could use 4.5 kW system. Let's say the approximate cost is around $9 per watt to install, so this comes out to about $9/watt times 4,500 watts = $40,500. DWP is offering rebates that comes close to 45% of the system cost. This system can reduce your electric bill by 34% so the $600 per month reduces to about $395/month ($600 minus 34% or $205).  This savings of $205/month equates to $2,457 per year. If the rebate on our $40,500 system is about $16,434, this leaves $24,066 to make up. The Federal Government allows you a 30% tax credit, reducing your cost to $11,916. If we are saving $2,457 per year in electric bills, the $11,916 divided by $2,457/year = 4.9 years to break even. With a minimum of 25 years of useful service, the next 20.1 years will save you $61,791. Wow! If you financed the $11,916 for 5 years at 7%, your monthly payment would be $235; for 10 years, the payment is $138. On a 5 year loan, your monthly electric bill and loan payment would be about $30 more than your electric bill before the solar panel installation. On a 10 year loan, your electric bill and loan payment would be about $67 less than before.

Simple Solar Panel System Cost & Savings Table
           
Current Utility Costs          
Monthly Utility Bill $200 $400 $600 $800 $1,000
Annual Cost $2,400 $4,800 $7,200 $9,600 $12,000
30 Year Cost $72,000 $144,000 $216,000 $288,000 $360,000
           
System Cost          
kW Output Desired 1.5 3 4.5 6 8
Installed Cost, approx $13,500 $27,000 $40,500 $54,000 $72,000
Less: CA Rebate, approx $5,478 $10,954 $16,434 $21,912 $29,213
Less: Federal Tax Credit $4,050 $8,100 $12,150 $16,200 $21,600
Total System Cost $3,972 $7,946 $11,916 $15,888 $21,187
           
New Utility Costs          
Monthly Utility Bill $132 $264 $395 $527 $636
Annual Cost $1,581 $3,162 $4,743 $6,324 $7,632
30 Year Cost $47,431 $94,862 $142,293 $189,724 $228,965
           
Utility Savings          
Monthly $68 $136 $205 $273 $364
Annual $819 $1,638 $2,457 $3,276 $4,368
30 Year Savings $20,597 $41,192 $61,791 $82,388 $109,848
(less system cost)
           
System Breakeven Years 4.9 4.9 4.9 4.9 4.9
Home Value Appreciation $17,500 $30,000 $45,000 $60,000 $80,000

* These results are approximate only. Your individual results will depend on the position of your roof, the tilt of the roof, shading and your current electric demand and use.


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Email:  Emil K. Kalil, Ph.D.