Most solar installation companies provide financial projections to homeowners estimating what their savings will be twenty or twenty-five years after the time of installation.  But how do you know if these projections are accurate? This article will let you in on what goes into Solar.com’s calculations so you can ask the right questions and go solar with confidence.

1. What Rate Increase Was Assumed In My Projections?

When calculating solar savings, you are looking at what you will be paying to go solar vs. what you otherwise would have been paying to the utility for the next 25 years. Utility rates will inevitably rise over the next two decades and this must be accounted for in any kind of financial analysis you receive from a solar company.

What is not certain is what this value will be in your analysis, since the actions of the utilities over the next decades with regards to rate pricing cannot be predicted.

Solar.com uses historical trends in utility rate hikes to make the most accurate prediction for what you will be paying for your energy over the next twenty-five years. However, an installation company could assume that your utility rates will increase at a much higher rate than they historically have and thus make your overall lifetime savings look more attractive.

Therefore, it’s very important when evaluating a financial model from an installation company to investigate what the historical rate increases are for your particular utility and make sure this corresponds to the assumption made by the installer.

2. What Degradation Factor Was Assumed For My System?

Solar module degradation is defined as the quantification of the decline of power produced by a solar module over time. Overall, solar panels are extremely resilient as they do not have moving parts – however, they will inevitably decline over time due to a variety of external environmental factors.

Manufacturers will list the expected rate of decline of their equipment on their specification sheets, or in their performance guarantee. Typical degradation rates of modern solar panels fall around 0.7% per year, but some premium modules can have degradation rates as low as 0.35% per year.

Some installers may argue that a system will not degrade as quickly as it is expected and opt for a low degradation rate when creating financial projections, ultimately making the overall system’s production higher and the lifetime savings of the system more appealing.

It’s important when evaluating financial projections from installers to look at the specification sheets of the equipment used and confirm that an appropriate degradation rate was assumed.

3. What Incentives Were Included In My Projections?

Federal and state governments, as well as some utilities and non-governmental organizations, offer financial incentives to homeowners who have made the switch to solar. Financial projections are based on the net cost of the system (after incentives) so it is very important to understand what incentives have been included in your projections, and whether you as a homeowner will qualify to receive them.

The federal investment tax credit is the most well-known and widespread incentive, offering thirty percent of the gross cost of the system back to the homeowner in avoided personal income taxes. Many other financial benefits exist however and may be included in your estimated savings without applying to you. It’s important to ask installers what incentives were included in your projections and research the terms of those programs yourself.

Solar.com’s website features an online savings calculator that can give you preliminary financial projections after volunteering some basic information about your home and energy consumption. If you like what you see a Solar.com representative will get in touch with you and provide some more in-depth and accurate savings estimations so you can go solar with confidence. Ready to see your custom savings projections? Get Started here!