THE ECONOMICS OF PV SOLAR
Whenever we make a purchase to lower our overhead or operating costs, the first question that will always come up is the one about payback or Return on Investment (ROI). In our case, how long will the savings created by a Sunscape Solar PV Solar System add up to equal the total cost of the entire installation? The classic method for calculating simple payback is to divide the annual savings into the total installed price to calculate the number of years to payback the original expense of the system. So if a system costs $20,000 and saves $2,000 per year, the simple payback is ten years ($20,000 divided by $2,000.) But using simple payback as a benchmark for making the decision to go solar begs the question: “What is an acceptable payback?” Some say five years, some say ten years, but who’s right? Many people believe that the PV Solar Solution is justified if it simply pays for itself within its useful lifetime. The electricity generated from your Sunscape Solar PV Solar System is clean and it recycles dollars back into the local economy instead of buying electricity generated out of state by power plants burning irreplaceable fossil fuels. Your Sunscape Solar PV Solar System also helps our local utility companies by providing energy to help power the demands of air conditioners when it's most needed, during the hot summer months. The economics of the decision to install a Sunscape Solar PV Solar System should really be viewed in the same light as you would view any other investment: by its annual return or yield.
When you invest in a CD, stock or bond, the annual return that this investment provides is stated in terms of a percentage. If $2,000 is placed in an account that yields $100 profit per year, the simple yield or return is 5.00% (2000 / 100 = .05). If the yield is taxable, the actual or net return will be less. But if you pay the tax on that annual return of 5%, the actual yield or return can actually be less than 3%. The safety or security of an investment can also affect the yield. Usually, the deposits in a large bank in a certificate of deposit produce the lowest return because they are very safe and secure. Risky investments, like junk bonds or penny stocks, can produce spectacular results, but your entire investment is at risk and you could lose it all overnight.
When a Sunscape Solar PV Solar System generates savings for a home or business owner, the yield is not taxable! Typically, a Sunscape Solar PV Solar System will provide a ten to fifteen percent return per year. If you wanted to find a ten percent annual, after tax yield, on as safe and secure an investment as solar, you would fail in today's economic situation. A fifteen percent yield from your Sunscape Solar PV Solar System equals at least twenty percent before taxes! That’s why today, there is no better an investment opportunity to increase the value of your home and get a high return on the investment. In fact, it is now possible to borrow at six to eight percent interest to make an investment in solar that yields ten to fifteen. Since your Sunscape Solar PV Solar System is part of your home improvement, the loan interest is deductible, so the real and final cost is even less it appears on paper. And don’t forget about using OPM (Other People’s Money) to help pay for your Sunscape Solar PV Solar System. Right now is the best time to buy with the current Utility Rebate at $2.20 per watt of installed panels. AND the Federal Government also gives you a 30% Tax Credit on the total installed price of your system, bringing your net cost even lower! It’s a No-Brainer. . .
However, there is a big difference between going solar to avoid high utility payments and placing the same money into a stock, bond or CD. While the traditional avenues of investment are available to us as options, we really have no choice about our utility bills. Unless we choose to live in cold, dark homes, we must continue to be at the mercy of our utility companies and pay that monthly energy bill. And with SCE’s guaranteed 9.5% rate increases per year for the next three years, our electricity costs are going up even more! So the choice to install a Sunscape Solar PV Solar System is more about how you are going to spend your money than whether or not the payback is less than five or ten 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 Sunscape Solar PV Solar System, you are no longer renting energy from the local utility; you are generating energy yourself (owning it) and developing equity by putting your savings to use elsewhere. And when you consider that a Sunscape Solar PV Solar System will last for decades, the entire ROI is incredible!
But, what if you’re not planning on staying in your home that long or decide to relocate and sell? No problem! The additional value that you Sunscape Solar PV Solar System has added to your home will definitely be returned to you upon the sale of the home. And then the new owner or tenant will then take full advantage of the low or no utility payments for a long, long time!