Path-Q Solar
What happens to solar savings if electricity rates stay flat for many years?
Answer
If electricity rates remain flat, solar can still save money by offsetting purchased electricity, but projected savings will usually be lower and payback longer than forecasts that assume rising rates. The effect depends on the system cost, production, self-consumption, export treatment, and financing.
Key points
- Current avoided electricity purchases still provide value even without rate increases.
- Flat rates reduce the value of future savings and can make high-cost or financed systems less attractive.
- Exported electricity may be worth less than on-site consumption, depending on the applicable credit rules.
- Compare flat-rate, moderate-growth, and adverse cases rather than using one escalation assumption.
What it depends on
- Installed cost and financing
- Solar production and self-consumption
- Fixed charges and export treatment
- System life, degradation, and maintenance
Risks and trade-offs
- A forecast dependent on rising rates is vulnerable if rates stay flat.
- A system may still reduce exposure to future increases but does not guarantee savings against every financing structure.
- Oversizing can worsen economics when exported energy has limited value.
Information you may need
- Current bills and rate components
- Itemized system and financing cost
- Production and self-consumption estimate
- Flat-rate and alternative rate scenarios
Your next step
What to do next
Ask for a payback and cash-flow forecast with zero rate growth, not only the installer’s preferred escalation assumption.
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SQ00176