Path-Q Solar
How should I compare a solar loan payment with my expected monthly bill savings?
Answer
Compare the loan payment with the portion of bill savings that is reasonably expected to occur in the same month, while separately accounting for any remaining utility bill and future changes. A payment lower than projected savings is not guaranteed positive cash flow because production and billing vary.
Key points
- Model monthly or seasonal production rather than dividing annual savings evenly across twelve months.
- Include the bill that remains after solar, including fixed charges and low-production periods.
- Compare savings under conservative, central, and low-production cases.
- Include loan fees, payment changes, degradation, maintenance, and replacement costs.
- Distinguish cash-flow break-even from lifetime payback.
What it depends on
- Loan payment schedule
- Monthly production and consumption
- Utility rate and export treatment
- Fixed utility charges
- System degradation and downtime
- Maintenance and replacement costs
Risks and trade-offs
- Seasonal production can create months when the loan payment exceeds bill savings.
- Rate changes or altered export treatment can reduce expected savings.
- A loan payment may continue after the system or property is sold, depending on contract terms.
Information you may need
- Loan amortization schedule
- Recent monthly bills or interval usage
- Monthly production estimate
- Expected residual utility bill
- All financing and operating costs
Your next step
What to do next
Build a month-by-month cash-flow comparison and stress-test it with lower production and different electricity-value assumptions.
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