We recently installed solar panels capable of generating 4.2kW on our home's rooftop. Solarcity ran a solar discount program in our town, Mountain View, earlier this year where if more than 60 households sign up, everybody gets a discount. Ours amounted to 5.6%. In addition, we also received a 25% rebate from PG&E. The rebate approval process took a while and caused us to miss the summer sun so we are really looking forward to next summer. PG&E it seems, didn't believe we need 4.2kW based on our historical usage (even though the historical numbers came from small individual apartments before my fiance and I combined our household). We will get a small income tax credit next April too. All in all, it added up to $11,800 in savings. The upfront cost was still $25K -- a rather steep price if you will.
The math is that if our bill is $250/month, and the total cost if $20K, we will have saved on electricity bill from the 8th year onwards.
Monetary payback aside, having solar panels is a most satisfying experience! It reduces our cognitive dissonance about using electricity responsibly (given that the grid system today mainly runs off of coal and other non-renewable sources). Our meter now runs backward! It is the most satisfying thing to watch. The next step is to figure out which non-electric appliances we can convert/replace to leverage this free source of power. The plan all along is to get a plug-in electric car (we'll have to convert our old car probably since there is none we can afford on the marketplace). Having solar also makes me feel *much* better about using my electric blanket, buying an electric space heater, buying an air-conditioning unit, and leaving the lights/appliances on. It frees my conscience up. An additional step we might take is to convert to passive solar water heater. Ahh... doing good the environment actually helps me live better! As someone who is constantly feeling cold, the solar system helps me justify using appliances that provide warmth via electricity. Sweet. Now if only our heating system does not run on gas...!
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So, it sounds like you're a) doing simple-payback, rather than a NPV calculation, and b) assuming that your $250 savings will stay constant over time rather than rising with the price of electricity. Bear in mind that energy prices have been rising quite steeply over the past few years (on the order of 15% per year).
Assuming that the value of your electricity rises at a 15% annualized rate, and assuming a 10% annual discount rate (pretty high, IMHO), you reach breakeven for $20k at 71 months, and for $25k at 86 months. The exact numbers will vary on those two assumptions -- higher energy inflation or lower discount rate means faster breakeven. I can send you the Excel sheet I used for these calculations, if you like.
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