Investing in Solar

Curious to know what an investment in solar looks like?

Customers invest in solar for a variety of reasons, but if you’re interested in when you might recover your investment, you should be aware of possible changes that may impact your payback. Your investment will likely take longer to recover due to anticipated changes to how Idaho Power credits customers for excess energy sent back to the grid and the value of that credit. If you make a solar investment looking only at the current compensation structure, you are unlikely to have an accurate payback estimate.

Why are things changing?

Idaho Power is requesting changes to its on-site generation offering that are a step toward ensuring fair prices for all customers. Idaho Power is seeking approval of a compensation structure that accurately measures an on-site generator’s use of the electrical grid, and an excess export energy credit rate that will result in a fair and accurate valuation of customers’ exported energy. For all customers with non-legacy systems, Idaho Power is asking the IPUC to implement changes starting January 1, 2024, including:

  • A change from net monthly to real-time net billing, which would better measure customers’ actual reliance on the electrical grid.
  • A change in the excess exported energy credit from a kilowatt-hour (kWh) credit, valued around 10 cents for residential customers, to a time differentiated financial bill credit ranging from approximately 5 to 20 cents per kWh, that would be updated annually.
  • A modification in the eligibility size cap for commercial, industrial, and irrigation customers.

Who will future changes apply to?

The IPUC determined that any future changes will impact customers interconnecting a new or expanded system after Dec. 20, 2019, for residential and small commercial customers and after Dec. 1, 2020, for large commercial, industrial and irrigation customers.

How can possible changes impact payback?

The example below shows a customer who uses an average amount of energy per year and installs a standard system with a life of 30 years. This customer would see a simple payback period of 13-17 years under the current compensation structure if they pay cash for the system. However, that payback period increases to 19-24 years for that same customer with net billing and a lower excess energy credit rate. If the system is financed, the simple payback period extends further. If the investment is evaluated using a discounted payback method, which is more accurate for evaluating the financial value of a project, it may not pay back over the life of the system regardless of whether it is financed or paid for in cash.

Example for using solar on-site generation to match about 75% of a home’s energy use under current and proposed future compensation structures.

illustration of a medium sized house


Average Monthly Energy Use: 950 kWh

Average Monthly Bill: $105

Solar System Size: 6 kW

Average System Life: 30 years


Compensation Structure
Compensation Structure
Measurement Interval Net Monthly Real-time Net Billing
Excess Energy Credit Value 8-12¢ 5¢ off-peak
20¢ on-peak 
Estimated Break-Even Point
(Simple Payback) if Paying Up Front in Cash
13–17 years 19–24 years
Estimated Break-Even Point
(Discounted Payback) if Paying Up Front in Cash
20 to 30+ years. Financial loss if payback is greater than 30 years. Financial loss. Does not payback within 30 years.
Estimated Break-Even Point
(Simple Payback) if Financing with 20-year Loan
23–29 years Financial loss. Does not payback within 30 years.
Estimated Break-Even Point
(Discounted Payback) if Financing with 20-year Loan
25 to 30+ years. Financial loss if payback is greater than 30 years. Financial loss. Does not payback within 30 years.

The estimates and assumptions used in the payback scenarios are generalizations. Your actual payback will differ based on your energy needs, solar system size and cost, loan interest rate, tax credit eligibility, and any changes to Idaho Power’s compensation structure. You can view your monthly and annual energy needs on Idaho Power’s My Account. For a personalized estimate of solar, Idaho Power recommends researching professional installers and getting multiple bids.

The payback scenarios shown above used the following inputs:

  • Home’s energy use: 11,350 kWh per year (~950 kWh per month) with energy use highest in winter and summer for heating and cooling.
  • Solar PV System Size: 6 kWDC solar array (a common size for Idaho Power customers) in Boise. Production based on representative residential customer generation customer bills and compared to estimates from National Renewable Energy Laboratory’s (NREL) PV Watts Calculator, using the calculator’s default settings.
  • System cost: $3.00 to $4.00 per watt based NREL S. Solar Photovoltaic System and Energy Storage Cost Benchmarks, With Minimum Sustainable Price Analysis: Q1 2022 ( The cost for the example 6 kW solar system is $18,000 before tax credits and deductions.
  • Tax credits: 30% federal tax credit and full Idaho state tax deduction.
  • Energy costs: Idaho Power’s pricing for Schedule 1 (residential service) with seasonal tiered rates from approximately 8 to 12¢/kWh, and average kWh cost of approximately 10¢.
  • Utility bill increases: 1% per year based on Idaho Power’s energy fuel costs as noted in the current Integrated Resource Plan (IRP).
  • Loan details: 20-year loan at 6.6% interest rate. Source: Google project sunroof. Credit realized first year.
  • Discount rate (required rate of return): 4.5%. This input should be based on one’s personal needs. When deciding your required rate of return, at a minimum, consider inflation and your loan interest rate to make sure you break even. Decide what is the best use of your money right now by comparing the expected returns from different investment options, like stocks, bonds, other purchases or simply saving for your future.
  • Excess Energy Credit Value: Time differentiated credit rate of 5-20¢/kWh for excess energy delivered to grid as proposed in case IPC-E-23-14.

Want to explore further?

Online solar estimators, such as Google’s Project Sunroof, are available to help customize system cost estimates and payback timeframes. However, these estimates are based on the current compensation structure and do not account for the changes being pursued with the Idaho Public Utilities Commission that would likely lengthen payback periods.

If you’d like to learn more about what an investment in solar would look like at your home, read our online FAQs, call us at 1-800-632-6605 or email

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