Solar Power

Note: This is based on living in Georgetown, Texas. Other areas of the country may be different due to electricity rates, days of sunshine, incentives, etc. 
Click for larger image
In discussing residential solar power, there are many variables: The current cost of electricity, the size of your home, the size of the solar power unit, tax credits, inflation, financing costs, insurance, and maintenance, among others. I’ll examine some of these and attempt to project a break-even point on two different systems: 6.9 kW and 8.7kW. I’ll be using my home for this study: 2,100 square feet, single story, Energy star rated home built in 2017 occupied by two people. Our average electricity cost for the first 14 months was $129 per month.

Savings figures are provided by the solar companies, based on their estimates of power generation for this area of the country.

Average cost

The cost of solar power has been coming down over the last decade. As of January 2018, the average cost of solar in the U.S. is $3.14 per watt ($31,400 for a 10 kilowatt system). That means that the total cost for a 10kW solar system would be $21,980 after the 30% Federal ITC credit (not factoring in any additional state rebates or incentives). There currently are no state or city incentives.

Current costs of electricity

The current average cost of electricity in Texas is $0.1144 per kilowatt hour. In Georgetown, I pay $.1205 per kilowatt hour, if you include Base Rate, PCA, TCOS and Tax. These costs are currently $20.00 for the base rate, $0.0939 for the cost of electricity, $0.0040 for PCA (Power Cost Adjustment) and $0.0019 for TCOS (Transmission Cost of Service). Tax is about 2 percent.


Assumption by the solar company: Electricity costs will increase an average of 4 percent a year.

Some data suggests that for Texas, according to the U.S. Bureau of Labor Statistics, prices for electricity increased an average of 2.87% per year from 2000 to 2018

However, according to the EIA, the cost of electricity in Texas was $0.1163 per kilowatt hour in 2009, higher than the current average of $0.1144.

Predicting the future is like driving down a country lane at night with the headlights off while looking out the back window.

Will electricity costs go up? We don’t know. Georgetown is using renewable energy sources; the assumption is that this locks in our costs in the future. But it might be safe to assume that we will see some increases.

However, if the cost of electricity goes up, you will still be generating the same amount of electricity from your solar panels. The monthly savings rate may go up based on price per kilowatt hours, but the ratio stays the same. For the 6.8kW system, this is about 68 percent generated; for the 8.7, this ratio goes may go as high as 90 percent from solar.

In other words, your cost of electricity may go up, but by a much smaller amount compared to not having solar.


The average cost of an annual inspection for a household rooftop solar system is approximately $150.00. The average cost of having your panels cleaned by a reputable solar installation company ranges from $10.00 – $20.00 per panel.
While solar companies offer warranties up to 20 or 25 years, we must assume some maintenance costs.

While this is very unpredictable, for the purposes of this study, I’m going to assume 10% of the cost of the system over 20 years.

Cleaning is an important key aspect of solar panel maintenance. The dustier your area, the more frequent inspection is recommended. This ensures that dirt, grime, bird droppings and debris do not block the sun from efficient absorption by the panels.

If you replace your roof, you must first uninstall the panels, have a roofing company replace the roof, then re-install the panels. This can be costly. Some companies offer this service during their warranty period free of charge. Ask about this additional service.

Solar panel modules typically come with a 20-year warranty that guarantee that the panels will produce at least 80% of the rated power after 20 years of use. The general rule of thumb is that panels will degrade by about 1% each year. Make sure you review your warranty so that it includes some type of guarantee that the panels will generate sufficient power for the life of the system.


A quick call to my insurance company indicated, for a $26,000 system, an increase of $43 a year. Yours may vary. I will not include this cost in my analysis.

Tax credits

Currently, Texas or the city of Georgetown do not offer any incentives. There is a tax credit of 30% for federal income tax through tax year 2019. This begins to phase out in 2020 (26%) and 2021 (21%), assuming Congress makes no changes.

For example, on a $20,000 system, your tax credit would be $6,000. This is not a deduction, but reduces your tax bill. If you owe $6,000 in taxes, you would effectively owe no taxes. If your tax bill is lower than the credit, you can roll over the unused portion of your credit to the next year.

Future value of investment

If I use the money invested for a solar power system in my investment portfolio, I need to consider what the price paid is worth 14 to 15 years in the future, which seems to be the projected break-even points. For example, $20,000 invested in a money market at today’s interest rate of 2% (compounded monthly) would be worth about $27,000 in 15 years. Invested with an annual return of 6% would result in a value of $49,000. In economic terms, this could be considered to be my opportunity cost. It doesn’t affect my break-even points, but should be considered.

Power Generation by Solar

Based on estimates provided by two solar companies, for a 6.8kW system, the annual solar production would be approximately 9,300kW. For an 8.7kW system, the annual production is 11,800kW. I currently use about 12,300kW per year.

Selling power back to the city

I contacted the Georgetown Utility System (GUS) and received some information from Chris Foster, the Manger of Resource Planning and Integration.

Selling electricity back to the grid:

"GUS recently adopted updated codes, effective Oct. 1, 2018 (last revision was in 1997). Previously the utility did not charge a separate connect fee for installing the solar system, but going forward we will at $300 per installation. The fee is intended to recover the cost of the meter, inspection, etc. and is a one-time only expense."

"For installations of 10kW or less, we currently net meter at our retail rate of $0.0939/kWh, which is moving to $0.0958/kWh in January. For installations above 10kW we only net meter on an ‘avoided fuel cost’ rate which changes every year. That rate is equitable to the wholesale energy rate the City would have otherwise paid the ERCOT market for if the homeowner didn’t generate the energy, and for the past year it was $0.03516/kWh. If you’re hearing about different rates that we pay back, please check to see if that customer is actually a Georgetown Electric customer. Our City limits extend well beyond our electric territory, and both the retail market to our east and PEC to our west net meter at significantly different rates."

Foster said in his email that there is currently no plan to provide rebates on solar systems. "We’re working with Bloomberg to design a program where the utility is able to rent a homeowner’s roof in exchange for producing power that the utility uses for the benefit of the entire system instead. That pilot program is expected to be launched in January."

He stated that the last rebate program did not reach intended goals and and led to unintended structural problems on the distribution grid.

You can find more information about this program from Impact Magazine: Georgetown won $1 million to capture and store solar energy. Here’s what happens next

This would change the break-even point if you collected credits during low usage months. A future update will take that into account. Of course, credits would be lower during low usage months because there are fewer hours of sunlight in January, so based on one set of figures I received for a 6.8kW system, the credits were minimal in the winter. An all electric home would certainly change the numbers. 

Resale value

According to most sources I could find, the resale value of solar panels when you sell your home could be about $3 per kilowatt. So this may mean you could recoup about 90 percent of the cost if you sell your home. See the Texas Energy Examiner for a discussion of this issue.

Environmental considerations

You are reducing the amount of electricity you're pulling from the electric grid, so this would be a good thing. Each homeowner will have to decide if it's worth the cost to contribute to this effort.

Other considerations

Trees may be a factor, as well as the age of your roof. Any legitimate contracter can answer these questions. Also, if you belong to an HOA, there might be restrictions, but an HOA cannot legally prevent you from installing solar panels.

Break-even points

Based on average monthly savings of each system ($85 for 6.8kW and $109 for 8.7kW) the break-even points are between 12 and 16 years based on the total cost of ownership for each system, with the current incentives (only Federal tax credits).

My thinking on this goes like this: I think the 4 percent inflation estimate is high. But regardless of what it is, a solar system will still generate the same amount of power. The way I figured it is if I use 12,000 kWh a year, and the system quoted (a 6.9 kWh system) generates a total of 9,200 kWh, according to their estimate, I'll save that 9,200 * .12 a year, which equals $1,104 annual savings. This was a $20,000 system, which after tax credits was about $14,300, so I'm looking at a 12-13 year break-even.

I can't seem to get it below 10 years, no matter how optimistic I am about how I am about costs.

Solar Estimate, a web site which is probably dedicated to generating leads, puts the average break even point at a little more than nine years. So it might be worth a look if you're thinking about solar, if you don't mind having a few companies contact you, which might be a good thing. You should get three proposals before you decide.

On the plus side, solar may reduce my exposure to inflationary pressures, assuming that electricity costs will go up, which is a possibility.

Also, if I sell my house, I could probably recoup some of the cost. Age of the system might be a consideration.

For my situation, I don't think solar will be a very good investment at this time, but you should evaluate your own set of conditions before making a decision.

Solar is not for everyone, but for many it may be a good investment.

Here's some resources to get you started.

Texas Solar Energy Society
Native Solar
TriSMART Solar
Momentum Solar


  1. I am the rep from Native Solar, I used 2.5%, not 4% as was stated on the proposal. It is realistic by the history.

  2. One of your competitors used 4 percent, which I thought was too high. In my financial planning, I also use 2.5% as average inflation long-term.

  3. Interesting article. There is a good solution:


Thanks for the comment. Will get back to you as soon as convenient, if necessary.

Top Five Consumer Cyber Security FAQs

By Equifax Business, technology, environmental and economic changes are a part of life, and they are coming faster all the time. All of thes...