Beyond Cost of Solar Panels

Sun First has hundreds of case studies and the knowledge to tell you about the options for your home or business. With the technology advancing more and more each year, we can design a system for you that will help you reduce your carbon footprint and save you money. We will be able to advise you on photovoltaic systems, solar hot water radiant floor heating, and pool heating. You will be joining thousands of satisfied Sun First customers.

Of course the basics are clear:

• Reduce or eliminate electrical bill
• Financing can offset initial investment
• Hedge against electric rate increase
• Improve the resale value of your home.
• Self Independence and Empowerment

Often, a primary deciding factor is whether the project is economically feasible.

Financial

While the traditional avenues of investment are available to us as options, we really have no choice about our utility bills. So the choice to go solar is more about how you are going to spend your money  rather than whether or not the payback is less than five years.

It is similar to the rationale behind making a home purchase rather than renting one. Home ownership is all about developing equity and retaining value while renting is just a permanent never-ending expense. When you own a solar energy system, you are no longer renting energy from the utility; you are generating energy yourself and developing equity by putting your savings to use elsewhere.

Whenever any purchase is made to lower operating costs (ie utility bills), the question that will arise is the one about payback: how long will the savings created by a solar system add up to equal its cost?

The classic method for calculating simple payback is to divide the annual savings into the initial price to calculate the number of years to payback the original expense of the system. So if a system costs $10,000 and is saving $2,000 per year, the simple payback is five years ($10,000 divided by $2,000.) But this method does not take into account increases in PG&E rates or inflation.

The economics of the decision to go solar should really be viewed in the same light as you would view any other investment: its annual return or yield. When a solar system generates savings for a homeowner its yield is not taxable. Typically a solar electric system will provide a ten to fifteen percent return per annum.

A ten percent yield from solar equals at least fifteen percent before taxes; today there is no better investment opportunity. In fact, it is now possible to borrow at five to six percent to make an investment in solar that yields more than ten. As part of a home improvement loan the interest is deductible so the real cost is even less.

When a CD, stock or bond is purchased, the annual return that this instrument provides is stated in terms of a percentage. If $1,000 is placed in an account that yields $50 a year, the yield or return is 5.00% (.05 x 1000 = 50). If the yield is taxable, the actual or net return will be less, sometimes considerably. An annual return of 5% that is taxed can actually be less than 3%. The safety or security of an investment can also affect the yield.