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Guys -- you all seem to be neglecting the recent developments in solar financing.
(Disclaimer -- I do work for SolarCity http://solarcity.com/ [solarcity.com], a leading installer of residential solar arrays in the SF Bay Area and beyond. I won't make a totally shameless plug here, I'm trying to be fair to the other good and clever solar companies out there. A rising tide lifts all boats!)
By bringing in a 3rd party commercial owner via an Operating Lease or Power Purchase Agreement (PPA) structure, the customer can save money from solar on Day 1.
The 3rd party (an investment fund, or perhaps the solar company themselves) owns the system and claim the full range of available incentives. Commercial owners can take accelerated depreciation on the system, and can utilize the full 30% federal tax credit , and they also get whatever state/local/utility incentives are available as per usual. The customer would have ZERO down-payment, and makes monthly payments over a period of ~15-18 years. There is no lien on the house. The tax investor receives a reasonable return on their investment over time, the installer makes reasonable margins on the installation, and the customers can save money from Day 1. Everybody wins!
So to use the parent submitter's house as an example of what we can do -- For a $400/month average bill in Sunnyvale, CA, we might recommend a 7.7 kW DC system. Assuming the customer had decent credit (720 FICO), we would require no down payment, and then charge monthly lease payments of $216/mo, for 15 years. The monthly payments do go up at 3.9% per year (we could alternatively have 0% escalation, but of course that would require a higher starting payment and so it's harder to show savings right away... there are many possible variations here. Also remember that local PG&E utility rates are increasing at >5% per year on average).
With this 7.7kW system, they might expect their average monthly bill to go from $400 to $99 per month. Add the $216/month payment, and their new average monthly electricity cost is (216 + 99) = $315/month, for immediate savings of ~$85/mo!!
The installers offering these plans usually include full service/maintenance for the life of the lease, including replacement of the DC/AC inverter if necessary.
The customer is given the opportunity to purchase the system after years 6/10/15, or if they have to move or sell their house. The panels are warranted by the manufacturers to last 25+ years at 80-90%+ kWh output, so a long-term buy-and-hold strategy is solid. Or, if the customer looks around in 15 years and sees a better/cheaper technology, or just doesn't wish to renew or buy out), they are free to end the lease and we'll remove the panels at our cost.
The customer who understands Net Present Value (NPV) calculations can easily demonstrate that this offers far superior savings compared to either a) doing nothing, or b) purchasing the system for cash.
So before you all roll your eyes about solar being a poor investment with a many-year paybacks, please consider such alternative financing approaches.