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The Benefits Of Solar Energy & The ROI Of Solar Systems

How To Save On Energy Costs – Eliminate Or Significantly Reduce Your Electricity Bill With Solar Energy

There are many reasons why homeowners go solar, but improving the environment and cutting on energy costs are the most common.

Solar PanelMany people are aware that solar is a great home efficiency upgrade and are eager to reduce their carbon footprint while also improving property value.

Whether your motivations for going solar are economic, environmental or personal, there are various benefits in going green.

One of the biggest reasons to go solar is that you can eliminate or significantly reduce your electric bill. An average monthly electric bill of R1000 becomes an annual expense of R12,000.

Over 20 years, that same R1000 monthly bill balloons to R240,000 without taking in consideration electricity rate increases. On the other hand the cost of solar systems is dropping drastically across the world.

Just by doing this quick calculation it is a no brainer to realise installing a solar system at your home or business is one of the best investments you can make.

Going solar can eliminate your electricity bill completely or reduce it so dramatically that electricity costs are no longer a significant factor in your budget.

Your savings with solar depend on a few factors, how much energy your system produces and how much you consume, but the biggest factor is the rates you would otherwise pay for electricity.

Because your savings are equal to the costs you avoid by going solar, you’ll save even more if electricity rates are high in your area. Since electricity prices will continue to rise, your savings will continue to grow every year over the 25+ year lifespan of your solar system.

Heat Pump

Reducing one of your largest monthly expenses makes perfect sense, but the benefits of solar aren’t just economic.

Because electricity prices can be unpredictable, they make managing your budget difficult. By installing a solar panel system, you also fix your electricity costs and make them more predictable.

This is especially beneficial for anyone with a fixed income, as well as for businesses that stand to gain from a more stable cash flow. When you make your electricity costs more predictable by going solar, you also improve your expense forecasting and management capabilities.

Solar System ROI – What returns can I earn on my solar investment?

In many ways, your solar system is an investment – one that is capable of generating annual returns ranging anywhere from 10 percent to more than 30 percent.

The average solar system investment breaks even in just seven to eight years and earns a strong solar ROI, receiving free heating energy or electricity for the remainder of the solar system’s 25+ year lifespan.

You can calculate your annual returns by dividing the financial benefits you receive each year by your initial investment in your solar system.

Many factors can impact your solar ROI, including:

Electricity Rates:
How high are your current electric bills? This determines your savings over the life of your system. The higher your rates, the more you can save with solar.

Financial Incentives:
Are you a business or other organization that can take advantage of depreciation tax benefits, including accelerated depreciation? Higher incentives mean lower upfront costs and a shorter payback period.

Cost:
Did you compare your options to find the right price? Were you able to take advantage of tax incentives that offset the cost of your installation? Lower costs mean a shorter payback period.

Technology:
How efficient is your system, i.e. is it producing heat or electricity at optimal levels? A more efficient system will offset a greater percentage of your monthly electric bill.

Property Value Increases:
How much does the value of your property increase when you install a solar system? Renewable energy systems increase your property value.

Business Benefits:
How much will your profits increase because of your energy cost saving? What is the value of the goodwill your solar system generated? What level of revenues is attributable to your green credentials? All of these factors can increase your company’s return on solar investment.

Earn a great solar return on investment:

While the ROI earned through investing in renewable energy systems is different from investing in stocks and bonds, solar systems offer many superior characteristics that make them strong contenders for inclusion in your overall investment strategy, including:

Consistent, Long-Term Returns:

Your solar system can produce free energy or electricity for 25+ years with minimal maintenance and upgrade expenses.

Over that time, you will generate returns in the form of savings, equal to what you would have otherwise paid your electricity.

It’s safe to say that the cost of electricity will continue to rise, which makes the savings and returns from your solar PV system low risk and consistent over its useful life.

PV System

There are not many other investment options capable of producing consistent, relatively safe returns of ten percent or more over such a long period.

Increasing Returns Every Year:

Historical trends suggest electricity prices will increase by an average of eight to ten percent each year. Therefore when you invest in a solar geyser or PV system, your investment will grow accordingly.
The higher the cost of electricity, the higher your avoided costs are when you use solar energy. That means your solar return on investment is higher, too.

Tax-Free Returns:
The majority of the returns you receive from your solar PV system come in the form of savings, not income.

This is an important difference because, unlike income, savings are not subjected to income taxes. Depending on your tax bracket, your solar power system can deliver 20 to 35 percent more cash in your pocket than a taxable mutual fund investment earning a comparable rate of return.

Solar systems can be financed with a solar loan, and the interest on these loans may also be tax deductible. Business owners have the added benefit of accelerated depreciation that allows them to deduct the depreciation they take on their investment over a shorter period of time.

Increased Property Resale Values:

Multiple studies show investing in solar systems increase the value of your property. Properties equipped with solar panels sell for significantly more than similar properties without solar.

Buyers are interested in properties with low or non-existent utility bills and in reducing their impact on the environment. They are willing to pay a premium to accomplish these goals.

Goodwill:
Your investment in a solar system doesn’t just benefit you. Your whole community will enjoy the environmental benefits that solar provides.

Businesses that go solar may also experience a top-line benefit in the form of increased sales from customers who are attracted to the company’s “green” credentials and demonstrated commitment to sustainable practices such as solar power.

Reduce your energy costs and protect yourself from rising utility costs:

Without a doubt, the long-term trend for electricity prices is upwards. Over the past decade, electricity prices have risen by an average of 8 percent each year.

Eliminating or significantly reducing these costs will save you a lot of money in the long run. By going solar, you also protect yourself against rising prices and make your monthly bills more predictable. With solar you produce your own energy, so it takes away the anxiety associated with rising and fluctuating energy prices.

You’ve exchanged one expense for another, but your new expense is:

Predictable
Lower than your pre-solar electric bill
Consistent over time, without any fluctuations or increases

 

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