Wednesday, March 4, 2020

Second Annual Return on Investment (ROI) Calculation

Using the following investment formula:

ROI = (Gain from investment – cost of investment)/cost of investment

It is easy to calculate ROI for the second year of solar usage.  

First, the cost of the investment: 
(I will assume $23 for home insurance as it was the year before since my insurance company did not break out insurance for the solar array separately)

Home insurance                                                 $23.00
12 HEL monthly payments                            $1781.40
(Mar. 2019-Feb. 2020)
electricity costs to JCP&L                                 $33.10

This cost is balanced by the money received from the sale of 8 SREC’s = $1764.00

Let’s assume that my electrical costs for Feb. 2019 – Feb. 2020 would be the same as what I paid for electricity in 2017 (before I had my solar array), which was $1124.21.  My gain from investment is:  $1764.0 + $1124.21 = $2888.21

Plugging into the formula shown above gives us:

            ROI = ($2888.21 - $1837.50)/$1837.50 = 0.572 or 57.2%

Now that we have gotten past the initial costs of the first year, this investment in solar energy is really starting to pay off!

Another way to look at it is that without solar, I would expect to pay $1124.21 for electricity.  With solar, I had a total cost for the second year of $1837.50 - $1764.00 = $73.50.   My net gain is $1124.21 - $73.50 = $1050.71. 

It’s like having someone give you an extra thousand dollars a year.  No, it won’t make me rich, but it is definitely a welcome addition to my annual budget.

As before, my solar array produced slightly more than 8000 kWh as expected (8 SREC’s were obtained and sold).  We got smarter at monitoring our electrical usage and put our Halloween and Xmas decorations on timers this year, as opposed to 2018 when they were on pretty much 24/7.  It did make a noticeable difference in our electric bill.  We had a slight excess in kWh at the end of our solar year (Feb. 2020), so JCP&L gave us a credit of $3.30 (excess kWh are credited at the wholesale rate, which is a lot less than the retail rate that consumers pay for electricity).

Lastly, I will note that our solar array has not required any attention or any kind of repair thus far.  Celebrating two years of trouble-free operation!

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