said by Jack_in_VA:
Spread out like you posted it would be $43/mo. Upfront it would just take that long for the ROI on initial investment. Assuming his rates stay the same it will take him 300 months to start realizing the full $63.60 reduction of his $143/mo Duke Power bill.
I see. Okay, take the ROI one of two ways, but not both.
makes the up front $13K investment. Since the panels have a 25 year (300 Months) lifespan, it would take him the $43/Month to recoup the initial investment over that period. The investment itself performs. However, the asset also depreciates down to zero over 25 years. So his principle investment of $13K goes to $0 over 25 years. A performing asset that depreciates.
If it produces $64/Month, it pays for itself in ($13,000/$64) 203 Months or 16.9 years. The balance of the 25 years is 97 Months x $64 = $6,208.00. Of course if it's expressed your way, it's $6.2K profit/300 = $21 per Month. You are indeed correct in that respect.
[caution, the following is me thinking aloud/rambling]
This is very interesting however in that a "cash" investment depreciates over time as well due to inflation. But never down to zero. I would first need to determine what a fair discount rate (rate is the return that could be earned on an investment in the financial markets with similar risk) is. The discount would be equivalent to a 10-year CD earning a 2.3% yield.
IOW, if ke4pym
took his $13K and put it into this CD. In 10 years, the CD would be worth $16,358. $3,358 in earned interest - or $28/Month. So if ke4pym
put his $13K into this CD, and in 10 years he cashes out, takes the profit as an offset for his previous 10 years electricity cost, and comes out $9/Month ahead for an extra sum of $1080. And he still has his entire principal balance, whereas his Solar system would have depreciated down to about $8,000.
But that CD just keeps up with inflation (2.7% over the past 10 years), as $16.3K in 2022 would buy exactly what $13K does today. Conversely, if we apply an inflationary rate to energy based on the previous 10 years, that rate has gone up 44%! (see: »metricmash.com/inflation.aspx?co ··· ode=SEHF
B.) This means in 10 years, assuming present trends, ke4pym
's electric rate will be .1584¢/kWh and the new calculation would be:
7,000 x 16¢ (kWh) = $1120/year or $93.33/Month - not $63.00/Month - which in turn accelerates his ROI.
It's late and I can't do the calculus for this ongoing rate increase model over the 25 life of the system. But off hand I'd say somewhere around the 8 year mark would pay off the initial $13K, and the remaining 17 years could be close to $15,000 in overall savings vs. the ROI on a 10 year CD.
I will try to find or build a calculator that takes all of this into consideration.