The dashed lines represent the cost per kWh of residential rooftop solar assuming $1.50/Wp installed, and different return requirements as indicated. The yellow line represents the variable price portion of the current residential rate escalated at 2% per year. The green line represents an escalation of 3% per year. The goal of the U.S. Department of Energy is an unsubsidized installed cost for residential rooftop solar of $1.50 per peak watt by 2020. The goal looks very achievable.
What kind of return would you need to install rooftop solar? Your current return on checking and savings accounts is less than 1% per year.
If you can install rooftop solar at the DOE target price, your savings will be based on the utility costs you avoid. If you believe being green and fighting climate change is very important, you might settle for earning 4% on your investment over 20 years (includes a return on and return of investment). At the other extreme, it might take 8% over 10 years to get you to invest.
In Boston, if costs drop to $1.50/Wp by 2020, in 2020 you will be able to earn 8% over 10 years even if utility variable prices only grow at 2% per year.
Given current installed costs of $4.50/Wp in the Boston area, federal tax credit of 30%, state tax credit of 15% up to $1,000, and five year SREC revenue of 20¢/kWh, if you have a south facing roof, you can earn 8% return over ten years now. If you are NSTAR or National Grid, what is your plan?