Ultimate Solar Calculator “App” Helps You Choose: To Own or Lease?

Date: 4 Sep 2014 | posted in: Energy, Energy Self Reliant States | 4 Facebooktwitterredditmail

Note: the “Ultimate Solar Calculator” has been updated and simplified. Stay tuned for an updated complex version of this same calculator.

A few weeks ago I wrote about the comeback of solar ownership relative to leasing, as the cost of rooftop solar PV continues to fall and new financing options make ownership easier than ever.

Is owning a solar panel right for you? Find out now!

The calculator below lets you compare (leasing) apples to (ownership) apples, and the chart below the calculator shows the value of your solar investment over 15, 25, and 30 years.

The default inputs are good estimates based on ILSR’s research, but you can customize the comparison extensively. The key elements in the ownership v. leasing comparison are in orange, but other options (like nearest city) will make the actual numbers accurate to your location.

Scroll below the calculator for explanations of the inputs.

Keep in mind that solar panels typically carry a 20-year warranty, but most panels are expected to continue producing electricity for 30 years or more.

The Ultimate Solar Calculator from ILSR

Embed this calculator on your website

Calculator Terms

Solar project size, cost, and electricity production

  • Annual kWh – the estimated amount of kilowatt-hours of electricity produced by the solar array each year.
  • Nearest city – (used to estimate the solar production)
  • Annual output degrade – the annual decrease in the solar production of the solar array, typically 0.5%
  • System size – the size of the solar array in kilowatts
  • Cost per Watt – the cost, including hardware and labor, to install the solar array per Watt of capacity
  • Total installed cost – self-evident, I hope
  • 30% federal tax credit – the cash value of the 30% federal tax credit (available through 2016)
  • State tax credit – state tax credit, if applicable
  • Utility/State rebate – utility or state rebate, if applicable

Economic Assumptions

  • General price inflation – estimated inflation in prices, for estimating the long-term investment value
  • Discount rate – an economists calculation of the time value of money. Default of 8% suggests that you’d value 92¢ today as much as $1.00 next year
  • Real discount rate – discount rate minus inflation rate
  • Net metering rate per kWh – the price for solar energy produced, in dollars per kilowatt-hour. Typically the same rate as is paid for electricity from the utility.

Financing Terms

Leasing Terms

  • Down payment (leasing terms) – the down payment on the lease
  • Lease price inflation – the annual increase in the lease payment
  • 1st monthly payment – the initial monthly payment for the lease
  • Electricity. price inflation – the expected annual increase in electricity prices (historically 3%, but higher in many areas in the past 5-10 years)
  • 15-year buyout price – the price, in dollars, for a leasing customer to buy the solar array after the lease expires (if available)

Embed Code:
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Photo credit:  Derek Gavey

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John Farrell

John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power.