There is no interest on money "lost" by "not investing the monthly electric bill."

The comparison is as follows. You take $10,000. You could either put it into a solar
power system, or the S&P 500 (Annualized 11% return over its history.)

Put it into a 2000 watt solar system ($5/watt installed) and you will get about 4,000 KWH of power in a year here in California. You get those kwh without paying the $520 you would typically pay at 13 cents/kwh to the power company. However, you make no money. At the end of the year own a solar panel worth perhaps $9,500 (5% depreciation.)

In the stock market, at the end of the year you have stocks worth $11,000. You take out $520 and buy electricity from the power company. You now have stocks worth $10,480. (I have simplified this, payments are actually every month slightly reducing things but the main point remains the same.)

So two situations. One you have a non-liquid asset worth $9,500, and in the other you have a more liquid one worth $10,480.

After two years, with the solar panel you own a panel worth $9025, or you have stocks worth $11,113.

Do you see where this is going? The solar panel never "pays for itself" compared to putting the money into the market and buying off the grid, unless the grid goes way up.

Now if you don't trust the market, there's something far simpler, which is to consider your mortgage. Paying that down returns 7% guaranteed, though I am not counting for mortgage interest tax deductions which alter that.

A solar panel is an investment like any other. It "returns" the value of the electricty it generates, and it depreciates in a slightly harder to predict fashion. But even if it doesn't depreciate *at all* it still only returns the value of the electricity it generates.

Now there are complexities which change this equation, involving predictions of changes in the cost of grid power, taxes and rebates, and predictions of changes of the cost of solar panels. (If panels get cheaper, your panels immediately lose a lot of their resale value, perhaps almost all of it if the new tech obsoletes the old.) So no model can be perfect. But generally solar isn't there yet. It's getting there, and is close to being there with rebates and tax breaks. Indeed, it is there compared to California Tier III electricity rates and/or for corporations who can use all the tax breaks. It is not nearly there for ordinary home-owners paying anywhere near the USA average electricity rate of 9 cents/kwh. But it will be, some day.