Solar Power Cost
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.
For additional benefits check out the generous Government Incentives.
- Government Incentives Detailed information on rebates, incentives and tax credits for all solar technologies and energy efficiency is available at the Database of State Incentives for Renewable Energy (DSIRE) web site. Click on your state to get local information. And don’t forget to click on the small map labeled “Federal Incentives” to understand the tax credit offered by the federal government.
