The Millbrook System Case Study

• System Size: 5.1 kW
• Annual Output: Approximately 6,500 kilowatt-hours (kWh)
• Location: Philadelphia, Pennsylvania
• Initial Installation Cost: $16,000
• Panels: 12x Jinko 425W
• Inverter: 1 Solaredge inverter paired with 12x power optimizers

The initial cost of $16,000 for a 5 kW system in Philadelphia can be significantly offset by various incentives available as of May 2025:

1. Federal Solar Tax Credit (Residential Clean Energy Credit):

• Incentive: 30% of the eligible system cost.
• Calculation: 30% of $16,000 = $4,800
• Note: This is a non-refundable tax credit that directly reduces your federal tax liability. If the credit exceeds your tax liability in a given year, it can typically be carried forward to future tax years. This credit is set to remain at 30% through 2032.

2. PECO Rebate:

• Incentive: $500
• Note: While specific, broad PECO solar rebates can fluctuate, a $500 rebate, potentially tied to specific equipment or a limited-time offer for grid interconnection, directly reduces the upfront cost.

3. Solar Renewable Energy Credits (SRECs):

• Incentive: Pennsylvania’s Alternative Energy Portfolio Standard (AEPS) mandates that a certain percentage of electricity sold by utilities must come from renewable sources, including solar. For every 1,000 kWh (1 MWh) of electricity generated by a solar system, one SREC is created. These SRECs can be sold on a market, providing an additional income stream.
• Annual SREC Generation: 6,500 kWh / 1,000 kWh/SREC = 6.5 SRECs per year.
• Estimated SREC Value: The current market value for 2025 Pennsylvania SRECs is approximately $26.00 per SREC.
• Annual SREC Income: 6.5 SRECs * $26.00/SREC = $169 per year.
• Note: SREC prices can fluctuate based on supply and demand in the market. PA SRECs have a useful life of three years, meaning they can be sold in the year they are generated or the two subsequent years.

4. Net Metering (PECO):

• Mechanism: PECO’s net metering program allows solar system owners to send excess electricity generated by their panels back to the grid. For every kWh fed back, the customer receives a credit on their bill at the full retail rate. If the system produces more electricity than is consumed annually, PECO will pay the customer for the excess at the end of the metering year (typically May 31st).
• Benefit: This directly reduces or potentially eliminates monthly electricity bills, providing significant ongoing savings.

• Gross Installation Cost: $16,000
• Less Federal Solar Tax Credit: -$4,800
• Less PECO Rebate: -$500
• Less Year 1 Energy Savings: -$1335
• Less Year 1 SRECs: -$169
• Net Upfront Cost: $16,000 – $4,800 – $500-$1335-$169 = $9196

Electricity Bill Savings:

• Average residential electricity cost in Philadelphia (PECO): Approximately $0.2055 per kWh (as of June 2025, includes generation and delivery charges).
• 3% annual utility rate increase is factored into the calculations to present payback.
• Annual production: 6,500 kWh
• Potential annual savings from self-consumption and net metering: 6,500 kWh * $0.2055/kWh = $1,335
• Note: Actual savings depend on household electricity consumption patterns and how much of the generated electricity is directly consumed vs. sent to the grid.

SREC Income:

$169 per year

Total Annual Financial Benefit:

$1,335 (Electricity Savings) + $169 (SREC Income) = $1,504

Estimated Simple Payback Period:

• The net upfront cost ($9196)  is recouped in 6.5 years assuming only a 3% annual utility rate increase and no change in SRECs.
• Note: This is a simple payback calculation and does not account for potential larger future electricity rate increases, SREC price fluctuations, or the time value of money. A more detailed financial analysis would incorporate these factors.

Environmental Impact:

• A 5 kW solar system producing 6,500 kWh annually significantly reduces reliance on fossil fuels and lowers carbon emissions. For context, generating 6,500 kWh from solar is estimated to reduce CO2 emissions by approximately 2.55 metric tons per year in Pennsylvania (based on regional energy mix). This contributes to cleaner air and a more sustainable energy future for Philadelphia and the broader region.

Investing in a 5 kW solar system in Philadelphia presents a compelling financial and environmental proposition. With an initial investment of $16,000, substantial incentives like the 30% federal tax credit and a $500 PECO rebate bring the net upfront cost down to approximately $10,700. Coupled with significant ongoing savings from reduced electricity bills through PECO’s net metering program and additional income from selling SRECs, the system offers an attractive simple payback period of around 6-6.5 years. Factoring the system cost, maintenance costs, panel degradation and typical utility rate increases, the system is expected to save this customer $35,000 over 25 years!

Beyond the tangible financial returns, the positive environmental impact of reduced carbon emissions provides a significant long-term benefit for the homeowner and contributes to a more sustainable energy landscape for Philadelphia.

As energy costs continue to rise, this solar investment provides a hedge against future utility rate increases and demonstrates a commitment to clean energy.