My $500 virtual solar panel experiment

Anthony Wu
Aug 8, 2017 · 5 min read

Aside from lazy Retweets of much smarter thinkers, I don’t otherwise run around IRL or the internet inciting individual action to address global warming. While I do believe in climate change (yes, the Al Gore kind), I think real progress will come when the solutions are:

  1. pragmatic
  2. easy to adopt
  3. and most importantly: economically sensible (save 💰)

One of the most obvious solutions is to generate your energy needs using solar panels, but as an urban dweller who has moved 7 times in 10 years and currently residing in an apartment building, investing in solar has not been an option until I recently discovered an interesting company called Arcadia Power.

The best way I could describe to the west coast peeps is: they’re like a Mint.com to your bank, but connects to your PGE account.

Arcadia Power, after you setting up an account connection to your local utility provider (e.g. PG&E), provides two ways for you to achieve more environmentally friendly energy usage:

  1. for a nominal fee, sell wind energy credits for your actual energy usage (think of this as an voluntary, altruistic effort to offset for your local utility’s non-renewable sources)
  2. for a upfront cost, sell you a share in a solar panel project somewhere else in the country, and credit you monthly savings from the power generated from those panels (this is the more pragmatic of the two, and the topic of this post)

Technically, this is called a virtual power purchase agreement (Google link)

From Arcadia Power’s community solar FAQ:

Community solar gives those who are unable or unwilling to install solar panels on their own roof the ability to subscribe to individual solar panels on a remote roof or property. In return for subscribing to a panel for a specified term, you will receive solar savings on your monthly utility bill. No installation, no home visits, and if you move, your savings move with you.


As of August 2017, the company has sold out of their first five installations, but has availability for their 6th installation in New Jersey, which can accommodate up to 3300 panels.

After some mental math and sleeping on this idea for several weeks, I decided to purchase $500 worth of panels in Passaic River, New Jersey, all the way across the country from where I live. I made this “investment” because I think Arcadia Power is solving an important problem, and I want to see companies like this succeed in the market.

The way it works (pdf link) is that the consumers/subscribers fund the panels up front, gets savings (as utility statement discount) from the panels each month for 10 years, and at the end of the 10 years the savings term ends and the panel benefits the host of the project.

This is what my subscription looks like at checkout.

For a few days, I scratched my head at whether this makes financial sense at all, but I finally figured it out: this is actually a relationship like the one you have with your mortgage lender, except in this scenario the consumer (me) is playing the lender role.

PAUSE: THIS IS NOT A INVESTMENT VEHICLE, YOUR PURCHASE IS NOT INSURED BY ANYONE IN CASE THE COMPANY GOES UNDER. TAKE THE MATH BELOW AS A FUN MENTAL EXERCISE ONLY.

The 💵 logic is basically:

  • the solar host, via Arcadia, borrows $500 from me and ($100/panel from other subscribers) to front the cost of this solar installation
  • this subscription will save me on average of $5 per month, every month, for the next 10 years (120 months)
  • you can consider your monthly savings as cash you can re-invest elsewhere
  • at the end of the 10 year subscription, I will have earned $120 x 5 = $600 of monthly credits applied to my local utility bill, at which point the host and Arcadia has “paid off the mortgage”
  • From $500 to $600, I earn a 20% total return over 10 years

Punching this math into Google search box, I can deduce this arrangement is the rough equivalent of earning 3.75% interest on my $500 over 10 years.

June 2018 edit: Thanks to reader strabbit, he/she pointed out that my mental model above is flawed because there isn’t compounding interest, and technically a principal isn’t being paid off. So a simpler model is to compare this to a CD, calculated via BankRate’s tool, you are earning the equivalent of a 1.85% CD over 120 months:

I accept that the CD comparison is valid.

Glass half empty analysis: one should be able to earn more than these interest rates on the market investing in index funds, so this is not to be construed as an investment vehicle.

Glass half full analysis: hey this is better than my 1% interest that I’m earning parking cash at the bank, and the bank isn’t actually solving the world’s problems in a real and tangible way.

Furthermore, if you’re a civically minded nerd, there are some considerations that make this more than a simple financial arrangement:

  • efficiency: your region may not be well suited to maximize solar generation, why not direct the investment to regions that enjoy much more ☀️?
  • public benefit: some communities may not be able to afford solar installations as an upfront expenditure, so this is actually a good way to invest in some community in the country in a tangible way that should be a win-win for all (see the founders’ mission statement)

So at the end of the day — what I’ve signed for is a feel-good investment that will save me real amounts of money. This is the kind of pragmatic solution that I think will incentivize more consumers to get involved in addressing climate change through individual actions.

I haven’t done the math on installing a solar panel over my own roof (on a hypothetical house I do not currently own), but I’m sure the ROI can be better than 3.75% per year on your investment. So, buying solar panels through Arcadia may not make sense if you can install on your own roof, but for those of you dwelling in city centers without an option to offset your energy use with solar savings, Arcadia Power provides one of the best, and possibly the only easy-to-adopt solution available today.

Obviously, you run the risk of this young company going out of business, but with enough people signing up, I hope that will not be the case. And if they do fail, I will applaud their effort and consider this a failed $500 startup investment.


Note: I am not in any way affiliated with Arcadia Power, but if you liked this analysis and would like to signup, you can save $25 on your first energy statement by using personal referral link: https://www.arcadiapower.com/anthony7276

Anthony Wu

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I know how computers work. Sort of. Maybe. I hope.

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