do solar panels for commercial buildings make sense for me-min

How Much Do Commercial Solar Panels Cost?

Commercial solar panels cost is determined by your cost per watt, the size of your commercial solar system, the equipment you choose (panel type, inverter type, etc.) and many other factors.

This article breaks down commercial solar cost according to:

As described below, economies of scale, your geographic location and other factors will affect your up front and lifetime cost of solar.

Commercial Solar Panels Cost In Dollars Per Watt

While every project is different, consider the following national cost per watt benchmarks from NREL and SEIA.

The National Renewable Energy Laboratory (NREL) and the Solar Energy Industries Association (SEIA) estimate national averages for commercial solar panel costs of $1.45 – $1.56 per watt in 2021.1

2021 commercial solar panels cost NREL

These numbers are national averages and the actual cost of commercial solar per watt varies from state to state. 

The cost includes what a solar contractor charges for installation, for solar modules, inverters, design, etc. and is measured in kilowatts of direct current (kWdc). 

Commercial solar costs less than residential solar in dollars per watt… This is because of economies of scale which become meaningful when buying solar for larger commercial systems. 

How much do commercial solar panels cost per watt

Back in 2019, Greentech Media provided the following estimate for residential, commercial and utility scale systems:

  • Residential solar cost per watt = $2.92-$2.962
  • Commercial solar cost per watt = $1.54-$1.56
  • Utility scale solar cost per watt = $0.99 – $1.03

In the examples below, I use a conservative estimate of $1.75 for the “all in” cost per of solar per watt for a commercial solar system.3

Commercial Solar Panels Cost Factors

commercial solar panel cost factors

Every commercial solar project is different in terms of up front cost and lifetime cost because of real estate factors and tax incentives, such as the ITC.

As described below, you can use a free tool called PV Watts to estimate the cost of your commercial solar system.4

PV Watts uses cost factor to calculate your commercial solar system including the following:

  1. Geographic location
  2. Solar panel efficiency and loss factors
  3. Roof compass orientation (aka azimuth)
  4. Hours of direct sunlight per day
  5. Annual kilowatt hours (kWh) of electricity usage
  6. The cost per kilowatt hour (kWh) you pay for electricity

In addition, you should consider your tax appetite, ownership or lease structure for the building you occupy. 

If you are leasing a building or space, you may be able to take advantage of community solar without needing to own a system.

How To Determine Commercial Solar Cost Using PV Watts

Your geographic location and the size of your solar system have a big impact on the cost of commercial solar panels.5

You can use PV Watts to easily estimate how much sun your building gets. 

PV Watts was developed by NREL to estimate the energy production and cost of energy of photovoltaic (PV) energy systems all over the world.

PV Watts uses your building’s address and meteorological data to estimate the amount of sun it receives on a daily basis.

Just enter the address of your building in the “Enter a home or business address” field on PV Watts.

Click “GO”.

Do solar panels for commercial buildings make sense 1

After you hit “Go” the next page will show you the “Solar Resource Data” for your building’s location in longitude and latitude. 

You will see your building’s location on a Google Map. It will also display your building’s proximity to the National Renewable Energy Laboratory (NREL) National Solar Radiation Database (NSRDB) site.

Do solar panels for commercial buildings make sense for you 6

You shouldn’t have to edit this page unless you want to move the location on the map… To proceed click the right arrow that reads “Go to System Info”.

The System Info page (shown below) is where you will enter your preferences and draw the system on your roof. 

Do solar panels for commercial buildings make sense for you 5

By default PV Watts assumes a DC system size of 4 kilowatts (kWdc) – however this will change for your commercial building when you draw your solar system in Step 2 below. 

NOTE: Before you draw your system in Step 2 above, you will want to choose the Module Type (i.e. whether you want “Premium” panels, “Standard” panels or “Thin Film”). 

Do solar panels for commercial buildings make sense?
Select the "Module Type" for your commercial solar panels.

As described below (under Solar Panel Efficiency Factors), “Premium” panels will cost more and produce 25% more energy than “Standard” panels. Solar panels are measured, or rated, in terms of DC, or direct current in watts of power. When a solar installer refers to a solar panel as being a “300 watt panel” or a “280 watt panel”, those watts are DC watts they’re referring to. The size of the panel and the panel’s efficiency are two separate factors to consider.6

Once you have chosen the type of panels you will use, click the map icon on the right under where it reads “Draw Your System“.

This will pull up a Google Map satellite image of your property, as seen below (you may need to adjust the map to get the roof you want in view).

Click a point on your roof, then click another point and PV Watts will start to draw a polygon.

The polygon you draw in red will be an estimate for the size of your commercial solar PV system. 

Do solar panels for commercial buildings make sense for you premium-min
Premium Solar Panels produce 25% more electricity.
Do solar panels for commercial buildings make sense for you
Standard Solar Panels produce less electricity than "Premium" ones.

The images above show two red outlines for the roof of the hypothetical owner-occupied, manufacturing building in New York. On the left (top) are “Premium Solar Panels” and on the right (bottom) are “Standard Solar Panels“. “Premium” panels are more efficient, per square meter, than “Standard” ones.

Note the significant difference it makes in solar system capacity when choosing “Premium” vs. “Standard” solar panels, above.7 

The “Premium” panels are capable of producing >25% more energy DC (608.2 kWdc vs. 480 kWdc) than the “Standard” panels.

PV Watts estimates the rectangle on our building above as being 3,201 square meters and 3,200 square meters (… I couldn’t get them to match exactly!)

Solar Panel Efficiency Factors

Most solar panels are only around 15-20% efficient.

A general rule of thumb is that on a clear day, at high noon, solar energy hits the Earth’s surface at around 1,000 watts per square meter – PV Watts uses this 1,000 watts per square meter rule by default. 

As such, at 15-20% efficiency, a 1 square meter solar panel – under the best conditions – will only produce 150-200 watts of DC power per square meter.

The solar panel array drawn on your roof with PV Watts will be in square meters – and it will assume 1,000 watts of DC power per square meter – in perfect conditions.

As described above, PV Watts lets you choose from three types of solar panels, each with different efficiency ratings.

  1. Standard (crystalline silicon/glass): 15% efficiency
  2. Premium (crystalline silicon/glass with anti-reflective coating): 19% efficiency
  3. Thin Film (thin film/glass): 10% efficiency

By default PV Watts selects “Standard” as the solar module type in the calculator.

module type and solar panel efficiency

However, I chose “Premium” because they are the most productive solar panels.8

The label on the back of a solar panel indicates an efficiency number which is the rated watts DC energy output of a solar panel is based on the most ideal conditions of available.

In general the more efficient the solar module, the greater the cost per watt.

Array Type

PV Watts lets you choose the array type for your solar PV system. A commercial solar array may be fixed or responsive.

As shown in the image from PV Watts below, responsive solar PV systems will track the sun throughout the day, following the sun’s arc, and move along one axis (azimuth) or two axes (azimuth and tilt).9

tracking from PV Watts

PV Watts assumes that your system will be fixed. There are two options for fixed: “Open Rack” or “Roof Mount”.

An example of an open rack solar PV system can be seen in the photo below where the panels are installed on an angled rack system on the roof. 

Open racks allow air to flow underneath and around the solar panels which helps keep them at a nominal operating cell temperature. Solar panels are more productive when they are cooler. 

open rack solar system example

As mentioned above, in this example, PV Watts estimates this solar system to have an area of 3,201 square meters, capable of producing 608,200 watts (608.2 kilowatts (kWdc)).

Roof Compass Orientation - Azimuth

The orientation of your roof and the angle position of your panels has an impact on how much energy your solar system will produce.

Azimuth is the angle clockwise from true north describing the direction that the array faces.

An azimuth angle of 180 degrees is a perfect south-facing array… An azimuth angle of zero is a north facing array.

The ideal angle for a solar array in the northern hemisphere is 180 degrees south. In the southern hemisphere a 0 degree angle is ideal.

You can estimate your azimuth angle using Google Earth or an online azimuth calculator or a simple compass rose as an overlay on a snapshot of your building’s roof.

Hours of Direct Sunlight Per Day

The hours of direct sunlight per day your solar panels receive is determined by your geographic location as well as your building roof orientation, panel angle, weather, climate, shading, etc.

The amount of solar radiation received as the sun rises and sets each day will be unique for every building’s location.

For example, in a place like Arizona you could get 6 or more hours of direct sunlight per meter squared per day under perfect conditions. In the midwest you might get 5 hours per day. On the east coast you would get even less.

5 hours of direct sunlight per day x 365 days equals 1,825 hours of direct sunlight per year (5 x 365 = 1,825).

1,825 hours of sunlight per year hitting a 300 watt solar panel produces 547,500 watt hours (1,825 x 300 = 547,500).

(kWdc)Remember that 1,000 watts of electricity = 1 kilowatt. And 1,000 watts of electricity produced for one hour = 1 kilowatt hour (kWh).

You can convert the 547,500 watt hours to kilowatt hours by dividing by 1,000.

547,500 watt hours/1,000 = 547.5 kWh

A 300 watt solar panel receiving 5 hours per day of direct sunlight will produce 547.5 kWh of electricity.

However, PV Watts estimates that this building will get 4.72 hours of sunlight per day because it is located in New York where it receives less solar radiation. 

With an area of 3,201 square meters of solar panels, this commercial solar system is capable of producing 608,200 watts (608.2 kilowatts (kW) DC) at an angle of 175 azimuth. 

Other Solar Panel Efficiency Factors

Other factors that can impact solar panel system efficiency (or losses) include soiling, shading, snow, mismatch, wiring, connections, light-induced degradation, nameplate rating, age, system availability and temperature coefficient.10

Annual Kilowatt Hours (kWh) of Electricity Usage

Look at your utility bill to see your annual electricity consumption in kilowatt hours – then compare it to the results you get from PV Watts. 

If you own and occupy a commercial building, you may be able to offset a significant amount of your electricity usage with solar. 

If a tenant pays the electricity, your common electricity charges can be offset or you can create a “green lease” so that both you and your tenant benefit from solar. 

If there is excess electricity produced, you may be able to sell the electricity produced to others, as in the case of selling renewable energy certificates (REC) or providing community solar.

The Cost Per Kilowatt Hour (kWh) You Pay For Electricity

Under the “Retail Electricity Rate” section, enter the commercial cost per kilowatt hour that you currently pay for electricity from your utility in the “Rate ($/kWh)” field.

Do solar panels for commercial buildings make sense for you 7-min

PV Watts uses your current cost per kWh for electricity to calculate the amount of money you can save per year by using commercial solar.

You can look up the rate for commercial electricity on your utility bill or through a site that aggregates energy suppliers, like this one

II. PV Watts Results Page

PV Watts results page

Now that you have entered all your information into PV Watts, click the right pointing arrow to “Go To PV Watts Results“.

This page shows you an estimate of how much electricity your commercial solar system can generate. 

You will see four columns on this page with yearly estimates from PV Watts: 

  • The 1st column shows the list of months of the year.
  • In 2nd column is PV Watts’ estimate of the amount of solar radiation in kWh per square meter per day (kWh/m2/day). 
  • The third column indicates how many kWh of AC energy (after being converted from DC power) the system is capable of producing per month. 
  • The 4th column shows the $$ value of all those kWh at the rate you are otherwise paying to your utility.

PV Watts estimates that this building in New York will receive an average of 4.72 kWh per meter squared per day. 

Do solar panels for commercial buildings make sense for you 3-min

The 608,200 kWdc system will generate 804,079 kWh of AC energy which is worth $95,685 over one year.

Now we know the size of our commercial solar system, and how much electricity we can potentially save per year…

But this tells us nothing about how much commercial solar panels cost or whether commercial solar is a good investment. 

As such, we need to know the cost of commercial solar per watt… And how much a 608,200 kWdc commercial solar system will cost to buy. 

We also need to know what solar tax incentives may be available that we can apply to further reduce our up front cost.

Tax Benefits And Financial Incentives

how much do commercial solar panels cost?

Based on the estimates from PV Watts above, we can estimate that this solar system will produce around $95,685 per year for the commercial building owner… 

And the up front investment for commercial solar is $1,064,350.

However, there are three important tax benefits available to commercial solar investors to consider: 

1. Solar Investment Tax Credit (ITC)

In 2022 the federal solar investment tax credit is valued at 26% for commercial solar…

This percentage changes every year, so be sure to check the SEIA website for the current percentage benefit.

You can use this solar net present value calculator to estimate the value of the ITC and your commercial solar panel purchase. 

As such, the up front cost of $1,064,350 will be reduced by 26% ($276,731) so the new cost of commercial solar is $787,619 in the current year of 2022.

HUGE improvement..!

2. MACRS Accelerated Depreciation

Established in 1986, the Modified Accelerated Cost Recovery System (MACRS) is a method of depreciation in which certain investments, such as commercial solar, can be recovered. 

More information on MACRS and solar is available from SEIA

Qualifying commercial solar energy equipment is eligible for a cost recovery period of 5 years.11

3. Bonus Depreciation

Bonus depreciation may also be available to you. 

This ranges from 50%-100% which may be combined with MACRS. The rules regarding applying MACRS and/or bonus depreciation are complex, so consult with a tax professional.

These three tax benefits can make a meaningful difference to you and increase the net present value of commercial solar investments.

Your Ideal Rate of Return (Hurdle Rate)

Hurdle rate and net present value

A hurdle rate is your ideal rate of return

This will affect how you calculate the cost of commercial solar panels.

Your ideal rate of return is the minimum rate of return you require for new investments. 

It assumes not only that you have various options as to where you invest your money, and that you want to achieve the highest rate of return that is reasonable for you to achieve.

Knowing your hurdle rate helps you choose the best investment when there are multiple investments to choose from.

A venture capital investor might want a return of at least 30% whereas your average stock market investor might be happy with historical rates of return.

Some common rates of return for the historical stock and bond markets and high-yield savings accounts are below:

  • Stock Market Historical Rate of Return: 11.69%
  • Bond Market Historical Rate of Return: 5.5%
  • High Yield-Savings Account: 2.35% 12

Once you have your hurdle rate, you compare that rate of return to your investment in commercial solar energy. 

To do this you use an investment calculation called Net Present Value.

Net present value considers your hurdle rate, your up front investment and your hold period so that you can choose between putting the $787,619 in the bank or investing the $787,619 in a commercial solar system that pays you around $95,685 per year.

Net Present Value vs. Simple Payback

Looking at the numbers using simple “back of the envelope” method, it appears that this system has a simple payback of 8.23 years ($787,619/$95,685 per year = 8.23 years).

However, a simple payback is a poor way to evaluate a commercial solar investment because it does not factor in the time value of money, opportunity cost (from alternative investments), other tax incentives (such as depreciation) and solar degradation.

Ignoring the time value of money may lead to your commercial solar investment being less profitable… 

Without profit your investment and business is unsustainable.

As such, when calculating how much commercial solar panels cost, we need to accurately model our potential return on investment (ROI).

A net present value calculation places a value on the time value of money. NPV acknowledges the fact that dollars today are worth more than dollars received at some point in the future.

You would always rather receive $1,000 today than $1,000 one year from now because you could invest the $1,000 today in the stock market or put it in the bank and earn interest on it to generate a compounded rate of return.

Commercial Solar Net Present Value Calculation

Money received in the future is worth less than money received today, the net present value method (aka “present value payback”) reduces the value of future money through a method called “discounting“. 

Discounting is the opposite of compounding.

The formula for net present value is NPV = FV/(1+R)N – i

You can use an online net present value calculator, or you can use the function for NPV in Microsoft Excel or Google Sheets.

Using NPV to determine whether solar panels for commercial buildings makes a lot of sense because solar panels can have a long, useful life. Indeed, solar panels can last for over 35 years. 

This means you’ll be waiting for a long time for some of those future cash flows. 

net present value formula

Just as compounding works so powerfully to grow money over time, discounting works powerfully in reverse to reduce the value of money that isn’t received until some date in the future.

These factors you need to consider when calculating net present value include:

  • NPV = Net Present Value (the discounted value of future cash flows)
  • FV = Future value (i.e. the amount you expect to receive at some point in the future)
  • R = Rate of Return (aka “Hurdle Rate”)
  • n = The number of each time period (or number of periods in the future)
  • i = Your initial investment

For this hypothetical building I use two scenarios: Example A and Example B. 

In both scenarios, I assume that the solar degradation rate is constant at 0.5% (half a percent) each year. 

Everything is constant except the hurdle rate. 

In Example A the hurdle rate is 11.69% and for Example B the hurdle rate is 5.5%, these are the historical stock market return from 1973-2016 and the historical bond market return since 1926, respectively. 

Solar panels are not a volatile investment. Since the value produced by solar panels for commercial buildings resembles the constant, steady stream of income produced by a bond, the latter hurdle rate could be more of a proxy. However, you can use whatever hurdle rate you want for your situation. 

As your hurdle rate is increased, your net present value is decreased.

In the net present value calculations below I show two numbers… the Net Present Value without tax benefits (without ITC, MACRS and bonus depreciation) and the Net Present Value after tax benefits (with ITC, MACRS and bonus depreciation). 

5) Example A: Hurdle Rate = 11.69%

In Example A, the higher hurdle rate produces a negative net present value without the tax benefits of the solar investment tax credit and MACRS accelerated depreciation and bonus depreciation. 

However, these tax benefits are real, so there’s no reason to assume that they couldn’t be used in this situation. 

Net Present Value (after incentives) with Hurdle Rate = 11.69% (historical stock market return 1973-2016)
NPV AI = $ 0
How much do commercial solar panels cost today?

In Example A, the Net Present Value is negative

A negative net present value indicates that you should NOT make this investment… 

However, the after tax benefits Net Present Value is a positive $108,000.82. 

A positive Net Present Value indicates that you should make this investment. 

As such, if you have tax appetite, but a high hurdle rate equal to 11.69%, an investor should consider this investment because of the positive net present value after the ITC, MACRS and bonus depreciation.

6) Example B: Hurdle Rate = 5.5%

In Example B, the lower hurdle rate produces a positive net present value both with and without the tax benefits of the solar investment tax credit and MACRS accelerated depreciation and bonus depreciation. 

Net Present Value (after incentives) with Hurdle Rate = 5.5% (historical bond market return since 1926)
NPV AI = $ 0

In Example B, the Net Present Value is positive at $161,457.97.

A positive net present value indicates that you should make this investment…

The after tax benefits Net Present Value is an even higher positive number: $592,519.72.

A positive Net Present Value indicates that you should make this investment. 

As such, regardless of whether you have tax appetite, if your hurdle rate equal to or lower than 5.5%, an investor should consider this investment because of the positive net present value both before and after the ITC, MACRS and bonus depreciation.

Commercial Solar Panel Cost Summary

Use the process above and “PV Watts” to estimate the cost of commercial solar for your particular situation.

In this hypothetical solar PV investment scenario, it appears that solar panels do make sense when the tax incentives are taken into consideration. 

Of course your situation will be different. 

The age of your roof will affect your return on investment, depending on whether it should be replaced along with your commercial solar system.

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Footnotes

  1. Costs of commercial solar have increased in 2022 due to inflationary pressures, supply chain constraints and other factors.
  2. Recently Tesla announced that it was reducing the cost of residential solar installations to between $1.75-$1.99 per watt, installed, after the federal tax credit is taken into account.
  3. At a cost per watt of $1.75, a 608,200 kWdc commercial solar system has an up front cost of $1,064,350.
  4. I use PV Watts to calculate the cost of commercial solar for a hypothetical commercial solar system in New York State.
  5. The cost of commercial solar panels is influenced by your building's occupancy type, lease structure and your expected hold period. Commercial solar photovoltaics (PV) can provide benefits to both landlords and tenants... However, "owner occupier" benefits can outweigh tenant benefits. A report by the U.S. Department of Energy titled "Promoting Solar PV on Leased Buildings Guide" lists many benefits of commercial solar for owner occupiers. Some of these benefits include reduced operating costs, tax benefits, enhanced marketability, lower occupancy costs and improved tenant retention. Owner occupied buildings are ideal for commercial solar because, as the owner, you get all the benefits such as lower electricity costs, the tax advantagesincreased building value and potentially other financial incentives. Everything flows to your bottom line. Solar also makes sense for landlords who have tenants in a gross lease (aka "full service lease") structure. In a gross lease the rent is all inclusive, including utilities. With a gross lease, you as the owner can benefit from the above, and pass on some of the benefit to the tenants, if desired. As the owner you may be able to also command higher rents from your tenants if the building is rebranded and marketed as "green". Research has repeatedly shown that green buildings command a premium in rents over "non-green" buildings. A NNN "triple net lease" is the opposite of a gross lease. In a NNN lease the tenants pay all the utilities. However, a split incentive can occur when the building owner invests in commercial solar and but the tenant is the beneficiary. Building owners have developed a "green lease" to address the split incentive. Unless the landlord implements a "green lease" structure, where the incentives between tenant and landlord are aligned, a triple net leases can disincentivize a landlord from investing in solar. Another factor influencing the cost of commercial solar is the hold period of your real estate investment. When it comes to solar, the "buy and hold" investor may realize a positive net present value (i.e. a deal that should be done) from commercial solar. However, a short-term investor may get a negative net present value (a deal that is a loser).
  6. SunPower makes some of the most efficient solar panels available.  A SunPower commercial X-Series could be rated at 477 watts DC. While a single panel will be referred to in watts, full solar systems are measured in thousands of watts, or kilowatts (kW) of direct current. So you may see the abbreviation "kWDC" which means kilowatt hours in direct current.
  7. The sizes are not exactly identical - They are off by one square meter.
  8. Some solar panel manufacturers such as SunPower, manufacture solar panels that are  >20% efficient - and physically larger than 1 square meter - thereby capable of producing 300 or more watts of DC power per panel.
  9. Image from PV Watts.
  10. PV Watts defines each of these factors as follows: Soiling: Losses due to dirt and other foreign matter on the surface of the PV module that prevent solar radiation from reaching the cells. Soiling is location- and weather-dependent. There are greater soiling losses in high-traffic, high-pollution areas with infrequent rain. For northern locations, snow reduces the energy produced, depending on the amount of snow and how long it remains on the PV modules. NREL continues to work on improving the modeling of soiling and snow and is working to include historical datasets as available. Shading: Reduction in the incident solar radiation from shadows caused by objects near the array such as buildings or trees, or by self-shading for modules arranged in rows when modules in one row cause shadows on those in an adjacent row. The default value of 1% represents an array with little or no shading. Shading analysis tools can determine a loss percentage for shading by nearby objects. For one-axis trackers, PVWatts® calculates self-shading losses using the Ground Coverage Ratio you specify under Advanced Parameters, so you should not use the shading loss to account for self-shading with the one-axis tracking option. For fixed arrays or arrays with two-axis tracking, you can use the graph below to choose a self-shading loss percentage when you know the ground coverage ratio (GCR). The graph shows the shading derate factor as a function of ground cover ratio (GCR) for different tracking options. To convert the derate factor to a percentage, subtract it from one and multiply it by 100%. For example a derate factor of 0.95 is equivalent to (1 - 0.95) × 100% = 5%. The GCR is defined as the ratio of the array area to the ground or roof area occupied by the array. A graph that shows specific shading derate factors as a function of tracking type, tilt angle, and ground cover ratio. If you are visually impaired and cannot read this graph, select the Need Help link at the bottom of the page for assistance. Shading derate factor versus ground cover ratio (GCR) for different tracking options and tilt angles. Snow: Reduction in the system's annual output due to snow covering the array. The default value is zero, assuming either that there is never snow on the array, or that the array is kept clear of snow. Mismatch: Electrical losses due to slight differences caused by manufacturing imperfections between modules in the array that cause the modules to have slightly different current-voltage characteristics. The default value of is 2%. Wiring: Resistive losses in the DC and AC wires connecting modules, inverters, and other parts of the system. The default value is 2%. Connections: Resistive losses in electrical connectors in the system. The default value is 0.5%. Light-Induced Degradation: Effect of the reduction in the array's power during the first few months of its operation caused by light-induced degradation of photovoltaic cells. The default value is 1.5%. Nameplate Rating: The nameplate rating loss accounts for the accuracy of the manufacturer's nameplate rating. Field measurements of the electrical characteristics of photovoltaic modules in the array may show that they differ from their nameplate rating. A nameplate rating loss of 5% would indicates that testing yielded power measurements at Standard Test Conditions (STC) that were 5% less than the manufacturer's nameplate rating. The default value is 1%. Age: Effect of weathering of the photovoltaic modules on the array's performance over time. The default value is zero. Availability: Reduction in the system's output cause by scheduled and unscheduled system shutdown for maintenance, grid outages, and other operational factors. The default value is 3%. For information on how temperature coefficient can effect solar panel production and efficiency, visit this page by "Pickmysolar.com".
  11. I am NOT a tax professional... This is not tax advice. Talk with a qualified tax professional or accountant about your situation.
  12. Even at 2.35% (the best bank interest rate according to NerdWallet as of this article) in one year $1,000 turns into $1,023.50. After 10 years at 2.35% compounded your $1,000 would become according to Investor.gov’s compound interest calculator.