One Year After Solar The Real Numbers Nobody Tells

I have a client named Mike. He’s a retired engineer, which means he’s both the best and the worst kind of person to work with. Best because he loves data. Worst because he questions everything. We installed solar on his house in Lakewood about fourteen months ago. 8.4 kilowatts, 22 panels, facing south, no shading. A nice clean system. Mike kept a spreadsheet of every kilowatt‑hour his panels produced, every kilowatt‑hour his house used, and every dollar his utility billed him. He sent me the file last week. Subject line: “The real numbers.”

Mike’s system cost $24,000 before incentives. After the 30% federal tax credit, that dropped to $16,800. Colorado also had a small state credit at the time, another $1,000. So out of pocket was $15,800. That’s the first number nobody likes to talk about. Solar is not cheap. Even after incentives, you’re writing a check for five figures.

But here’s the number Mike cares about. In his first year, his panels produced 11,230 kilowatt‑hours. His house used 9,800 kilowatt‑hours. So he produced 1,430 more kilowatt‑hours than he consumed. On an annual basis, he’s a net producer. That’s the goal.

His utility charges about $0.12 per kilowatt‑hour for supply plus another $0.04 for delivery and fees, total around $0.16. If he had bought all 11,230 kilowatt‑hours from the utility, he would have paid about $1,800. Instead, he paid $0 for electricity. But wait. He still paid something. His utility has a monthly “customer charge” of $15, plus a “grid access fee” of $8, plus a “meter fee” of $3. That’s $26 per month, or $312 per year, just to be connected. He also paid about $80 over the year for net metered charges on months when his production was low — December and January, when the sun is weak and the panels are covered in snow.

So his total out‑of‑pocket for electricity in year one was $392. Compared to $1,800 without solar, he saved $1,408. That’s an 8.9% return on his $15,800 investment. Not bad. But here’s the part nobody tells you. His payback period isn’t $15,800 divided by $1,408, which is about 11 years. Because his savings aren’t constant. Utility rates go up. In the past year, his utility raised rates by 6%. So next year, his avoided cost will be higher. And the year after that, higher still. By year ten, his savings might be $2,000 per year. By year twenty, maybe $2,500.

I’ve run the numbers on Mike’s system for 25 years, assuming 3% annual rate inflation and 0.5% annual panel degradation. Total lifetime savings: about $48,000. Net profit after subtracting his $15,800 cost: $32,200. That’s a solid investment. Better than most bonds. Worse than a good year in the stock market, but also way less risky.

Now here’s the ugly part. Mike’s neighbor installed solar from a different company three months after Mike. Same roof orientation, same size system. But the neighbor paid $28,000 before incentives. Same equipment. Same labor. Just a different salesperson. His payback period is 15 years instead of 11. He’ll still come out ahead over 25 years, but not by as much. That’s the dirty secret of solar. The price varies wildly. You have to shop.

The other number nobody talks about is net metering. Mike’s utility offers 1:1 net metering. That means when his panels produce a kilowatt‑hour during the day, he can use it later at night without paying again. One kilowatt‑hour exported equals one kilowatt‑hour imported. That’s generous. Many utilities, especially in California under NEM 3.0, offer much worse terms. They might credit you only $0.08 per exported kilowatt‑hour while charging you $0.30 per imported kilowatt‑hour. That destroys the economics of solar unless you add batteries.

Mike doesn’t have batteries. They would have added another $10,000 to his cost. With 1:1 net metering, batteries don’t make financial sense. The grid is his battery. He exports during the day and imports at night at no extra cost. That’s why his system works so well.

But if you live in a place with bad net metering, the math changes completely. You need to store your own power and use it when the sun isn’t shining. That means batteries. And batteries cost money. A Tesla Powerwall is about $9,000 before installation. You might need two if your house is large. Suddenly your $16,800 system becomes $35,000. The payback period stretches to 20 years.

I’m not saying solar is bad. I have solar on my own house. But I want people to go in with open eyes. You need to know your utility rate structure. You need to know your net metering terms. You need to know your roof’s orientation and shading. And you need to get multiple quotes.

Mike got three quotes. One was $24,000, one was $27,000, and one was $35,000. All for the same 8.4 kilowatt system. He chose the middle one because the company had better reviews. The $35,000 company was a national brand with high overhead. The $24,000 company was a two‑person operation that seemed sketchy. The $27,000 company was local, established, and gave him a ten‑year workmanship warranty. He paid a little more for peace of mind.

One year in, the system has performed exactly as projected. Within 2% of the initial estimate. That’s rare. Usually solar production is 5‑10% lower than the sales pitch because of shading, dust, or inverter losses. Mike’s installer was conservative. He estimated 10,900 kilowatt‑hours. Mike got 11,230. That’s the kind of installer you want.

The numbers nobody talks about also include the time value of money. Mike paid $15,800 upfront. That money could have been invested in an S&P 500 index fund. Over 25 years, that fund might have grown to $100,000 or more. So his opportunity cost is real. But Mike is 64 years old. He wanted a fixed cost for electricity. He didn’t want to worry about rate hikes when he’s on a fixed income. Solar gives him predictability. His electricity cost is now $32 per month in fixed fees plus whatever the utility raises those fees to. That’s it.

I asked Mike if he would do it again. He said yes without hesitation. Then he added, “But I’d tell people to check their net metering policy first.” That’s the advice I give everyone.

If you’re considering solar, here’s what you need to do. First, get your last 12 months of electric bills. Calculate your annual kilowatt‑hour usage. Second, look up your utility’s net metering policy. Is it 1:1? Or is it net billing with different import and export rates? Third, get at least three quotes. Don’t trust the first salesperson. Fourth, run the numbers yourself or use a calculator. Fifth, decide if you’re okay with a 10‑15 year payback. If you plan to move before then, solar probably isn’t for you.

I have a tool that does the solar ROI math for you.

The Home Energy Bill Breakdown tool can help you figure out your baseline usage before solar.

And for people in states with time‑of‑use rates, the Time‑of‑Use Rate Optimizer can help you decide if a battery makes sense.

Mike’s final thought in that email was simple. “I’m happy. But I’m also glad I didn’t listen to the guy who said I’d save $200 a month from day one. That’s not real. The real savings are slow and steady.”

That’s the truth about solar. It’s not a get‑rich‑quick scheme. It’s a get‑poor‑slowly scheme. You stop sending money to the utility. Over time, that adds up to real wealth. But you have to be patient.

If you’re willing to wait, and if your utility has fair net metering, solar is a great investment. Just don’t believe the hype. Run the numbers yourself.

— Jim Patterson

P.S. Mike still sends me his spreadsheet every month. I look at it. He likes to know someone is watching. I don’t mind.