Are Solar Panels A Worthwhile Investment?

You’ve probably noticed solar panels popping up on more and more rooftops lately. That’s not just your imagination — the cost to go solar has dropped so much in recent decades that it’s finally cost-competitive with fossil fuels.

In many cases, switching to solar can save homeowners thousands over the long term.

Last year, I decided to make the leap myself. My thinking was pretty simple:

• I wanted to drive one of my fixed costs (electricity) as low as possible.
• I also wanted to lower my carbon footprint.

Now that I’ve just crossed the one-year mark since flipping the switch, I can share the full story — the options I considered, the math behind them, the actual first-year results, and what I wish I’d known.

My Initial Options

When I started, I called a few vendors for detailed quotes. Two came to my house, measured my roof, and gave me multiple scenarios.

Option 1 – Net Metering

• How it works: Your utility meter spins forward as usual when you draw power from the grid (like at night or on cloudy days) and spins backward when your panels produce excess electricity.
• Rate: You get credit at the same retail price you pay for electricity (in Rhode Island, $0.172/kWh — which is high compared to most states).
• Incentives: Qualifies for a state Renewable Energy Fund grant.

Here’s the math they showed me:

That would drop my annual electric bill from about $1,450 to $330 — a $1,120/year savings. That’s a cash-on-cash return of 8.5% ($1,120 ÷ $13,154).

It was a tempting option — low upfront cost, decent ROI.

Option 2 – Renewable Energy Growth Tariff Program

• How it works: All the electricity my panels produce would go straight to the grid, and I’d be paid a fixed rate for it.
• Rate: $0.3475/kWh for 15 years — almost double what I pay for electricity.
• Incentives: No state grant, but the higher locked-in rate was enticing.

Their math:

They estimated my system would produce over 6,500 kWh/year. At $0.3475/kWh, that’s more than $2,200/year in payments — about a 12% ROI.

Which One I Picked

While the Net Metering program’s low upfront cost was appealing, I went with Option 2 for the higher ROI.

Once we signed the paperwork, it was a six-month wait before the panels were installed, inspected, and turned on. Patience required.

The Actual First-Year Numbers

For context, here’s how that stacks up against other investment returns right now:

• Best savings account: 1.75%
• Best 1-year CD: 2.75%
• Total stock market index: 9.71%

If you know of another almost-guaranteed way to earn double-digit returns with low risk, I’m all ears.

Why the Utility Pays Above-Market Rates

You might be wondering: Why would my utility company pay nearly double the going rate for electricity? I asked my solar rep, and here’s what I learned:

1. Regulatory Requirements – National Grid must prove that a certain percentage of its power comes from renewable sources.
2. Avoiding Peaker Plant Costs – Solar reduces the need for expensive plants used only during high-demand times.
3. Shifting Capital Costs – Utilities avoid upfront plant costs; they just pay for actual power produced.
4. Cost-Plus Model – As regulated monopolies, they pass costs to consumers while keeping their margin.
5. Lower Transmission Costs – Local generation reduces grid stress and energy loss.
6. Rates Are Dropping – Years ago, they paid $0.44/kWh. My locked rate is $0.3475. Current contracts are under $0.30.

Other Benefits of Solar

Beyond the numbers, going solar has brought other wins:

• Higher home value — a “negative electricity bill” is attractive to buyers.
• Supporting local jobs.
• Protection against future electricity price hikes.
• Reduced carbon footprint.
• And honestly? It’s a great conversation starter.

Is Solar Right for You?

Ask yourself:

• Is your electric bill high? Over $75/month is a good starting point for looking into solar.
• Are your electricity rates high? Northeast, California, and Hawaii tend to have the highest — better ROI potential.
• Do you get good sun exposure? South-facing roofs produce best.
• How will you finance it? Cash is ideal, but loans and even leases can work in some cases.
• How old is your roof? If it’s due for replacement within 5 years, do that first.

Getting the Best Deal

When I started, I assumed Solar City (owned by Tesla) would be my go-to. They’re the biggest in the business, and I’m a Tesla shareholder.

Surprise: they weren’t the cheapest or the most knowledgeable about local programs.

I got a better price and better guidance from Newport Solar — who my state’s energy department actually recommended.

Pro tips for shopping:

• Get multiple bids.
• Ask neighbors or friends with solar who they used.
• Check your state’s list of approved vendors.
• Use resources like DSIRE or energysage.com to compare offers.

What I’ve Learned After a Year

• The process takes time – For us, about 7 months from order to flipping the switch.
• Curb appeal concerns were overblown – Guests rarely notice the panels unless we point them out.
• Production estimates are optimistic – We produced 6% less than projected (6,129 vs. 6,500 kWh).
• Starting sooner would have been even better – Higher rates and tax credits are slowly disappearing.

Final Thoughts

Going solar has been one of the smartest financial and environmental moves I’ve made.

• 11%+ ROI
• Lower, predictable bills
• Smaller carbon footprint

If you’ve been on the fence, I’d recommend starting your research now. Panel prices are still falling, but incentive programs are phasing out. The sooner you lock in, the better your long-term return will be.

Related Articles

• Tips to Keep Your Electric Bill Low
• What Is House Hacking?