This Excel spreadsheet is the result of a reader asking for help creating a simple method of determining the break-even point for a solar power installation. It involves taking out a loan and applying the expected savings on the utility bill against the loan payments.
The critical variables are:
- How much will initially be saved on the electric utility bill.
- How much will the electric utility bill increase on average each year going forward.
At what point in the future will the cumulative savings on the electric bill have paid for the cumulative cost of the loan, and how much will the cumulative savings be after that.
I imagine the initial savings from the installer can be fairly accurate, however the average annual increase in the electric bill in the future may be more problematic. Even if you have historical evidence of past utility bill increases, applying an assumed increase for the next ten or more years may be risky. There are potentially new discoveries and methods of cheaper power generation to consider, plus better ways to store electricity, such as improvements in battery storage.
The only caveat for entering inputs in this spreadsheet is that Tax Rebates (if any) must be entered as a negative number, and only yellow cells are input cells.