Going solar...revisited

Ok...so I wanted to revisit the "going solar...is it worth it" and look at my assumptions.  Well...one assumption was the 25% energy usage.  If I want to maximize my tax deduction, then I should try to get the largest system for my money because the ROI will follow this assumption.  Well...the maximum tax deduction is limited by the NC Renewable Energy Personal Tax Credit.  This credit is 35% of the installed cost up to a maximum of $10,500.  So...if I want to maximize this then my system would need to cost:  $10,500/0.35 = $30,000.

So...if I play with the solar-estimate.org calculator, that means my system could be a maximum of about 3.8 kW or roughly 46% of my estimated average annual electricity usage.

Now what's interesting is that the ROI for the system is highly dependent on how you finance the system.  I noticed that the default borrowing is set to 30-years...aka a mortgage.  And what's interesting is that the more you borrow...the better the ROI.  So if you borrow 50% of the cost (they estimate ~$11,000 after tax credits) at 6.5% over 25-years, then the ROI is 4 years.  If you borrow 100%, then the ROI is zero years.  Why is this?  Well...the annual loan payment is less than the sum of the utility savings+NC Greenpower incentives +  Duke Energy RECs.   As the loan life shortens to say, 5 years, then the ROI creeps up to 10 years.

So essentially what this is says...is if you can refinance your home or purchase your home with some extra cash for the upgrade and put on a solar system, then you'll be golden with zero to one year ROI.   The best loan terms I could find were 15 years loans on Home Equity.  Other than that most loans are limited to 5 years.

Of course, as my wife says....this is all dependent on if you can even put this on your roof.   Who knows what our homeowners association would say about the panels.  Lots of folks out there can be ignorant...