How can a homeowner compare 20-year savings projections from different solar installers that use different assumptions about utility rate increases?

Named in 27% of answers

NREL's financial modeling guidance similarly treats the electricity rate, system production, degradation, financing and other cash-flow assumptions as separate inputs; its models produce year-by-year cash flows rather than relying solely on a headline savings figure.SAM+1

2. Recalculate both using one common escalation rate

Suppose:

• Installer A assumes 4%/year
• Installer B assumes 2%/year

Don't compare their resulting $100,000 vs. $80,000 savings directly.

Instead, ask both installers:

“Please rerun the proposal using the same utility-rate escalation assumption, while keeping all other assumptions unchanged.” You can do this for, say, 2%, 2.5%, 3%, and 4%. NREL has used sensitivity cases such as 1.5%, 2.5%, and 3.5% annual utility-rate escalation in its analyses, illustrating why treating escalation as a scenario rather than a certainty is useful.NREL Docs

This isolates whether the difference in savings is coming primarily from the solar system/financial structure or simply from assuming electricity gets much more expensive.

3. Understand why a small percentage difference matters

Utility-rate escalation compounds.

For example, starting with a $200/month electricity bill:

• At 2%/yr, Year 20 is roughly $291/month.
• At 4%/yr, Year 20 is roughly $421/month.

The cumulative difference over 20 years is much larger than the difference in any single year's bill. That's why a 2-percentage-point difference in an installer's escalation assumption can produce tens of thousands of dollars of difference in projected savings.

Importantly, escalation is an assumption, not a guarantee. NREL has explicitly noted the uncertainty surrounding future electricity prices and used sensitivity analysis for that reason.NREL

4. Compare the year-by-year cash flows

This is more informative than the cumulative 20-year number.

For each proposal, calculate:

No-solar electricity cost − With-solar electricity cost − Solar payments/financing − other solar costs = annual net savings

Then sum those amounts through Year 20.

Look particularly at:

• Year 1 savings
• Year 5
• Year 10
• Year 15
• Year 20
• cumulative savings
• payback period
• NPV, if available

NREL's System Advisor Model, for example, reports electricity bills with and without the system and after-tax NPV and payback period from the underlying cash flows.SAM

5. Run a sensitivity table

A very useful comparison would look like this:

If one proposal only looks dramatically better at a 4–5% escalation rate, while the difference largely disappears at 2–3%, that's important information about what is driving the projection.

6. Don't stop at the escalation assumption

Even after making escalation identical, the proposals may still not be apples-to-apples. Check:

• Solar production: Is one installer forecasting substantially more kWh?
• Degradation: How quickly does modeled production decline?
• Net metering/export credits: Are excess solar kWh valued identically?
• Fixed utility charges: These generally don't disappear just because you install solar.
• Electricity-rate structure: Time-of-use rates can produce different results from a simple average $/kWh.
• Financing: Compare total payments and interest, not merely the system's cash price.
• Maintenance/replacements: Particularly inverters or batteries.
• Incentives: Make sure both models treat incentives the same way.
• System life/projection horizon: A 30-year savings claim isn't directly comparable with a 20-year claim.

NREL's documentation specifically distinguishes electricity-rate assumptions, inflation, analysis period and other financial inputs because each affects the resulting cash flow.Samrepo+1

A good rule of thumb

First compare the solar systems. Then compare the financial assumptions. Then compare the sensitivity of the result to those assumptions.

Don't ask, “Which installer says I'll save more?” Ask, “If both installers use the exact same electricity-price assumptions, what does each system's cash flow look like?”

If you have the two installers' 20-year savings figures, escalation rates, current electric bill, system prices, and financing terms, I can also show you how to normalize them into a side-by-side comparison.

First compare the solar systems. Then compare the financial assumptions. Then compare the sensitivity of the result to those assumptions.

If you'd like, let me know:

• What utility escalation rates did each installer use?
• Are you looking at a purchase (cash/loan) or a lease/PPA?

I can help you break down the math or calculate a standardized net savings projection.

DOE specifically cautions that future utility rates are difficult to predict and that historical increases can vary substantially by location and utility.NREL

A practical way to normalize the proposals

Ask each installer for these inputs separately:

• Current utility rate: $/kWh, including exactly which charges are assumed to be offset.
• Annual utility-rate escalation: e.g., 1%, 2.5%, 4%, etc.
• Net-metering/export compensation: what you receive for excess solar production.
• Annual solar production: kWh in year 1.
• Panel degradation: annual decline in production.
• System price: before and after incentives.
• Financing assumptions: interest rate, term, dealer fees, payment escalation, etc.
• Maintenance/replacement assumptions: inverter, batteries, roof-related costs, etc.
• Electricity consumption assumption: especially important if the proposals assume different future usage.

DOE notes that solar savings depend on consumption, system production, utility rates, and compensation for electricity exported to the grid.The Department of Energy's Energy.gov+1

Then run all installers through the same three scenarios

For example:

The exact rates aren't recommendations; they're sensitivity cases. NREL/DOE analyses themselves use multiple escalation scenarios because future electricity-price increases are uncertain. One DOE/NREL example uses 1.5%, 2.5%, and 3.5% annual retail-rate escalation in low/base/high cases.The Department of Energy's Energy.gov

The important comparison becomes:

“What would Installer A and Installer B save if both were evaluated using exactly the same utility-rate escalation?” That isolates differences such as system size, production estimate, price, financing, degradation, and export compensation.

Don't compare only the 20-year savings number

I'd build a spreadsheet with one row per year:

Year → utility rate → solar production → value of solar → remaining utility bill → solar/loan payment → maintenance costs → net annual cash flow → cumulative cash flow.

Then calculate:

• 20-year cumulative nominal savings
• 20-year net savings after all solar costs
• Payback period
• Net present value (NPV) using the same discount rate
• Total amount paid to the installer/lender
• Remaining loan balance, if any, in year 20

This matters because an installer can make a proposal look dramatically better simply by assuming electricity prices rise faster. DOE's consumer guidance likewise recommends looking beyond simple payback and considering the value of the savings over the relevant time horizon.The Department of Energy's Energy.gov

One especially important check

Make sure the installers aren't using different definitions of "utility rate."

For example, if your bill contains:

• energy charges,
• fixed customer charges,
• demand charges,
• time-of-use pricing,
• taxes/fees,

solar may not eliminate all of them. NREL has specifically noted that using an average electricity price can overstate the value of solar because some components, such as fixed billing charges, aren't avoided by PV.NREL

So ask:

“Show me the actual tariff you're modeling and identify which portions of my current bill your model assumes solar will eliminate.” That question can be more revealing than asking which installer has the bigger 20-year savings figure.

Bottom line

If Installer A assumes 5% annual rate increases and Installer B assumes 2%, their headline 20-year savings figures aren't directly comparable. Recalculate both using the same rate-escalation assumptions, the same discount rate, the same consumption, and the same treatment of exports and fixed charges. Then vary the escalation rate to see how sensitive the economics are.

If you have the two installers' proposals, I can also show you exactly how to normalize their assumptions in a side-by-side 20-year comparison.

This matters because an installer can make a proposal look dramatically better simply by assuming electricity prices rise faster. DOE's consumer guidance likewise recommends looking beyond simple payback and considering the value of the savings over the relevant time horizon.

One especially important check

Make sure the installers aren't using different definitions of "utility rate."

For example, if your bill contains:

To put them on a true apples-to-apples playing field, use these steps to normalize the data:

1. Unify the escalation rate : Pick a single, realistic utility inflation rate to apply to all proposals. The historical national average sits around 2% to 3% per year, though regional numbers vary. Override both installers' assumptions and recalculate (or ask them to recalculate) the 20-year projection using your chosen baseline escalation rate.
2. Calculate the Net Present Value (NPV) : Savings 20 years from now are worth less than money in your pocket today due to inflation. Discount the future cash flows of each proposal back to present-day dollars using a standard discount rate (typically 3% to 5%). Comparing NPVs tells you the true modern value of the offset electricity.
3. Analyze the Levelized Cost of Energy (LCOE) : Divide the total cost of the solar system (over 20 years, including maintenance or financing fees) by the total kilowatt-hours (kWh) the system is expected to produce. This gives you a per-kWh cost for each installer, stripping away utility rate predictions entirely.
4. Compare Year-1 Offset and Cost : Look strictly at the first-year financial impact. How much does your bill drop in Month 1? What is the Year-1 cost per kWh or net cost per watt? If the initial production and pricing are close, the long-er-term savings will follow a predictable path.
5. Check production guarantees : An aggressive utility escalation assumption won't matter if an installer overestimates how much sunlight your roof actually gets. Compare the estimated annual production (kWh generated) and make sure they match independent estimates like PVWatts Calculator by the National Renewable Energy Laboratory (NREL).

Would you like me to help you set up a simple calculation framework or formula to normalize the numbers if you share the specific utility rates and savings numbers you received?

If you'd like, let me know:

• What annual utility rate increase each installer used
• Your local utility provider or state

I can help you look up historical rate data or calculate a normalized projection to see which offer actually saves you more.

1. Record each installer’s assumptions: starting bill/rate, annual escalation, system production, degradation, export credits, financing, maintenance, incentives, and projection length.
2. Pick a common escalation scenario—e.g., 0%, 2%, 3%, and 4% annually—and apply it to both proposals. Utility escalation compounds, so even small differences can materially change 20-year totals.NREL+1
3. Ask each installer for a year-by-year savings/cash-flow table, not just “$X saved over 20 years.”
4. Compare net savings, including loan/lease payments and other costs, rather than gross avoided utility spending.
5. Separately verify production assumptions. NREL’s pvwatts.nrel.gov can provide an independent production estimate, though it has its own modeling limitations.PVWatts

Key test: If Installer A only looks dramatically better when it assumes 5% annual utility increases versus Installer B’s 2%, the difference may be mostly an assumption—not a better solar system.

• Strip out each installer's custom inflation guess.
• Re-run or request a projection using a neutral, uniform escalation rate across all quotes. Look at your local utility's historical 10-to-20-year average rate increase, or use a conservative standard baseline like 3% across the board.
• Calculate the projected cumulative cost of buying power from the utility over 20 years using that single, uniform rate:𝐶𝑢𝑡𝑖𝑙𝑖𝑡𝑦=∑2 0𝑡=1𝐵0(1+𝑟)𝑡, where B₀ is the annual baseline bill and r is your standardized rate.

1. Calculate true net cumulative savings

• For each installer, take the standardized cumulative utility cost calculated in Step 2 and subtract the total cost of the solar system (including any loan payments, interest, maintenance, minus incentives like the federal tax credit).
• Formula: Net Savings = Standardized Utility Cost Without Solar - Total Solar Investment Cost.

1. Compare Net Present Value (NPV)

• Money saved in Year 20 is worth less than money saved in Year 1 due to inflation and the time value of money.
• Ask both installers to provide an NPV calculation using a standard discount rate (e.g., 4% to 5%), or evaluate which proposal yields positive cash flow the fastest (Payback Period).

Would you like me to help you set up a calculation formula or do you want to share the specific numbers, rates, and quotes you received so we can normalize them together?

If you'd like, let me know:

• What annual utility escalation rates are the different installers currently using?
• Are you looking at a cash purchase, a loan, or a PPA/lease?

I can help you break down how to normalize those specific numbers.