Earlier this year, I decided to look into solar power. There is a 26% federal tax credit this year for solar, and it had been about 4 years since I had last looked into getting solar for our house. Back in 2017, it was a bit more expensive and a bit less efficient, but the tax credit combined with some improvements in the technology made it an absolute no-brainer to add a solar array to our house.

In this post, I’ll talk about the financial reasons for getting solar this year, and then I’ll cover how solar works with City Utilities (CU) in Springfield.

Important note the first: solar only makes sense if you own your home and plan to live in it for a long time. Without those two things being true, you won’t get a sufficient ROI for them to make sense at this time in Springfield.

Important note the second: for serious, if you do decide to get solar, let me know so I can refer you to Simple Solar and we’ll get some nice rewards.

Solar Technology in Brief

I spent a few weeks learning about solar technology and just have a couple of things to share.

First, most companies here in Springfield use the same technology. When you’re comparing bids from different companies, what you’re really comparing is service level and cost because you’re likely getting the same product no matter what. The company I went with actually uses different panels and inverters compared to the others I got bids from, but the differences weren’t significant enough to be notable.

Second, if you decide to get solar, I recommend upgrading to microinverters. The installer may recommend a single-string array and I found the cost difference to be worth the upgrade.

The way a string works is that the lowest-producing panel in your array sets the limit for the entire array. In my case, I have 20 panels and that means if one of them is shaded and producing 50% of what a panel in the sun does, the entire array is going to be at 50%.

With microinverters (or a power optimizer setup, which is similar), each panel produces electricity independently and sends it to your house. This means the array can produce more power overall and is more efficient.

It was about $2000 more to upgrade to microinverters, which added something like $3 to my monthly payment.

Guaranteed Return on Investment

To calculate your own ROI, you’ll start with a bid from a solar company. You need to two pieces of information from them:

  1. How much solar energy you’re likely to generate with the array that they suggest.
  2. How much the array and installation will cost.

As always, I recommend getting 3 bids, but I found that Simple Solar was the best in town. If you want to get solar, please let me know so I can refer you!

Once you’ve got that info, you can figure out your annual potential savings compared to your cost. This will give you your eventual return on investment.


You can plug the numbers you get from a solar company into the spreadsheet I used to figure this all out. The tabs are:

  • UtilityUsage: An export I pulled from City Utilities.
  • Average monthly kWh: A pivot table to provide some averages taking into account billing cycle length.
  • Monthly utility costs: A pivot table to provide some averages for the different utility types (electricity, gas, sewer, and water).
  • Usage Qty vs Month: Manually entered numbers from the first tab so I could get a nice chart to help visualize electricity usage correlated with temperature during the month (similar to a report that CU provides through their website).
  • ROI Analysis: This is where the magic happens.

The ROI Analysis tab is the one where you’ll put the numbers from the solar installer.

  • A1: The kW system size.
  • A3: Average cost of electricity in your town. In Springfield, this is currently $0.10.
  • B6-B17: The solar installer will likely provide this, but if not, you can get it yourself by visiting https://pvwatts.nrel.gov/ and putting in your address and the system size.
  • D1: The initial cost of the solar array plus installation as quoted by the company.
  • D3: The final cost of the array. With the financing I got, it’s $89 per month for 20 years so I just put that in as this total.
  • D5: Estimated electricity increase per year. CU claims this is 2%, but some historical review and educated guesses suggest that it may hit 4% in the future.

Once you have all of this entered, you’ll get two neat pieces of information. Column J will tell you your ROI based on year. Our microinverters have a 25-year warranty and some people estimate that the panels will last 40+ years. For me, J31 is the cell I look to for my return on investment.

The first-year savings calculation off to the right gives you some estimates of what to expect in the first year.

Financial Conclusions

I view our solar array as part of our investment portfolio similar to a bond. Bonds are typically used to reduce volatility, but they have a lower return in most years than equities do.

So here’s how I think about our array financially.

Through Simple Solar, we got a 20-year 1.49% loan, which is pretty phenomenal. Including the $3000 in interest we’ll pay over 20 years, and less the 26% federal tax credit (which we’ll pay to the finance company when it comes in), I’m paying $21,360 for our solar. Depending on how much the cost of electricity goes up in the future, we’ll hit break-even between years 7 and 13. Break-even means that the savings generated by our array (read: reduction in how much we have to pay CU for electricity) matches the cost of $21,360.

Then, once the array is fully paid off, we’ve obtained our full initial ROI. It’s like buying a 25-year bond that is worth 7% more than you paid for it once it matures.

This isn’t as good an ROI as a Series EE Bond, but it’s comparable to a total world bond ETF, and you get two key benefits. The first is that you’re helping the environment by consuming less electricity generated by a coal-fired power plant. The second is that it’s pretty much guaranteed (which a bond ETF isn’t), and it has the potential to increase in value if the cost of electricity goes up faster.

The last thing to note is that I’m probably not going to pay off the array early. I had originally planned to, but the 1.49% rate is just so good and I can get a much better return investing that money. If I had $20,000 today and put it into the market for the next 19 years, it’d likely grow to about $72,000. That’s compared to the $3,000 in interest that we’ll pay by holding the loan for its entire life. There’s not a really good financial reason to eat the opportunity cost of $52,000.

How City Utilities Works with Residential Solar Arrays

One of the things I learned when investigating solar power in Springfield is that no one person really knows how it works end-to-end. None of the solar companies knew how CU’s net metering program works. CU didn’t know how to accurately calculate solar production or cost or ROI (the stuff up above). I probably talked with 4 different people at CU over the last few months and learned different things about net metering each time. I suspect there’s someone else in Springfield who knows all of this, and maybe they’ll comment here and introduce themselves, because until they do it’s also possible that I’m the only one with this secret knowledge.

“Net Metering” can be summarized as CU’s program for buying back the extra electricity that you produce. Here’s how it works on a second-by-second and monthly basis:

  1. Your solar array produces electricity. Meanwhile, your house is using electricity.
  2. In any given second:
    1. If you use less electricity than your array produces, you send some electricity into the grid.
    2. If you use more electricity than your array produces, you pull some electricity from the grid.
  3. Over the course of the month, CU keeps track of 4 pieces of data:
    1. kWh Delivered: This is the amount of electricity that your property used from CU during the billing month.
    2. kWh Received: This is the amount of electricity that your system sent back to CU during the billing month.
    3. kWh Produced: This is the amount of electricity that your system produced during the billing month.
    4. Net kWh: This is the difference between the Delivered and the Received for the billing month. 
  4. So, if your end-of-billing-cycle net kWh is positive, you get a credit on your bill. It’s only about 1/5 what you pay CU for electricity, but it’s something. If your end-of-billing cycle net kWh is negative, you’ll have to pay CU for the net amount.

This means that, if you generate 20 kWh on day1 and use 40 kWh, your net usage is -20 kWh. On day2, if you generate 40 kWh but use only 20 kWh, you’re back to a net usage of 0, provided those days are during the same billing cycle.

CU’s current reporting doesn’t indicate any of that well. It only shows kWh Delivered and kWh Produced, which suggests to the viewer that they’re always net positive. That’s because kWh Received is actually the amount that offsets Delivered, and Received is a subset of Produced. Part of Produced actually gets used by your property, and Received is the remainder that is sent to CU.

Also, there’s a connection fee for being part of CU’s grid of about $12.50 per month. Your credited amount won’t be anywhere near that, so you’re always going to have an electric bill.

Confused yet? This took me about 4 months to figure out because I had to get a couple of bills from CU and exchange some more emails with them. They’re now updating their reports so they better communicate the above.

What about batteries?

This is perhaps the most important thing to understand about how CU handles solar. Because of the above, the grid effectively acts as your battery whenever the power is working. You can’t roll over positive net kWh from one billing cycle to the next, but that’s not all that important.

Right now, batteries cost almost as much as a solar array. In other parts of the country/world, where electricity rates are variable (for instance, having free electricity at night with more expensive electricity during the day), batteries make a ton of sense. But in Springfield, where we have a low cost for electricity and it’s the same cost 24 hours a day, they’re not as worthwhile.

Having a battery as part of your solar power system would keep the power on when the grid is down. Without a battery, when the grid goes down, CU automatically shuts off your solar array too because otherwise it might send electricity into the grid. This would be dangerous for anyone working on the lines to restore power. With a battery, they can turn off the grid, and your house would consume whatever electricity it needs, store the rest in the battery, and then any extra is just lost until the grid comes back up.

For us, we don’t lose power often, and never for more than 4 hours, so they’re not worth the cost to me.

Also, batteries can only handle a certain load. Your battery won’t likely power your air conditioner or furnace. It’s just enough to keep the refrigerator running and the lights on.

I may invest in a solar generator at some point. They’re a fraction of the cost of a battery and would let us plug in our refrigerator and a few other things for the few hours or days we might need. But when batteries come down in cost, I’ll add a couple to our system. That’s another reason I paid for the newer and nicer microinverters: we can add batteries later without having to upgrade anything else.

So is solar really worth it?


7% guaranteed return (provided our house doesn’t burn down) is nothing to sneeze at, and we’re helping the environment at the same time. If you own your house and will live there for a long time, it’s absolutely worth looking into solar power.

If you find that your house won’t be able to produce any electricity due to too much shade, then obviously, don’t get a solar array. But if you can, not only should you, but right now is the absolute best time. You’re not likely to get a better federal tax credit in the future, and Missouri isn’t the type of state to give tax credits for renewable energy. It seems unlikely that CU will offer their own incentive either.

So one last plug: if you want to find out if solar will benefit you, let me know and I’ll put in a referral to Simple Solar because they do great work, have fantastic financing available, and we’ll get a nice referral benefit.

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