At Sunbright Solar, we love it when someone get straight to the point, and we do sometimes get the question “But seriously, is solar worth it?” given to us point blank. And the straight-up answer is “Yes! For many, solar is extremely smart financially, and pays off.”
That’s why we’re always getting stopped in public by solar owners exclaiming “I LOVE my solar!” Seriously if you hang around the Sunbright booth at events, dozens of people will usually drop by, saying the same (We love this, by the way!)
Large purchases should of course be approached with seriousness. There are some boxes you should check as well, like is your roof in good condition? (Hey, why not ask Sunbright?)
So just to give you a real idea of the true payoff and value, we’re sharing a direct response we gave recently to a customer in response to those questions.
If you want to connect and talk with local, honest experts as well, please give us a call, and we’ll be happy to help! 520-222-9993
“Hi John,
Understood […] and to your note about “Still looks like 8-10 years to ROI (return on investment)”
Eight to ten years, that depends on what you get, what you pay, how you pay, and how you figure the ROI.
What you get:
I showed Panasonic panels with a SolarEdge Inverter, both with extended warranties and consumption metering, and this is with dealer financing included. This has a cost associated.
Drop consumption metering, and go with the 12 year-warranty vs 25 on the inverter, and we save several hundred dollars while keeping the same KWH performance. And/or change the Panasonic panels out for a “standard panel” or for even less.
These panels do not have the same kwh performance, warranty, etc., and they degrade at nearly double what Panasonic does… but the cost can make up for it, and degradation catches up with you on the back half, not the first 15 years.
What you pay, how you pay:
Once the equipment is dialed in, that sorts out what you pay. The other side of that is how.
Our cost and projections are listed assuming you use our dealer financing. This has a cost associated with it. About +/- 7%. Use your own financing or pay cash, and the cost goes down along with the ROI in years and rate of return % (RoR) goes up.
If you finance your system as many people do “because it’s still better than the alternative,” then how you decide to proceed will affect the ROI as well.
Our shorter terms have lower rates and a better total cost of ownership because you pay less interest while our long-term loans offer great day 1 savings. Some people buy solar on a cash flow basis: They know they have to pay for power one way or another so they take their $200+ $2,500 expense and switch to a 20-year solar payment of $140. That’s an $850+ a year raise.
Bottom line is, these options have an impact on the ROI on how quickly it pays for itself.
How you do the math for the ROI:
Before I get into it- What is the ROI on the alternative? You would say “It’s the Monthly utility bill” And you’d be correct… And these costs are inflationary, meaning they go up reliably.
More importantly: statistically speaking, Arizona and the Southwest they are increasing at a higher rate than standard inflation. And of course, statistically we are using more power per person due to high heat summers.
This brings me to my first point. The value of solar production “kwh” depends on how it’s used. Two things matter here: #1, Avoided costs and #2, Utility buy back rates (export rates). If the export rate is locked in for 10 years and then the utility raises rates (something non-solar customers are at the mercy of) then the avoided costs value (saving or returns) go up. If this is modeled in the ROI, then it gets better.
Alternative ROI’s Available
I’m an investor, landlord, business partner, and average middle-aged American with various financial accounts and a relationship with both a credit union and banks. I try to be more financially savvy as I age.
So, I ask the normal questions on what can I invest in, what level of risk, and of course what are the returns?
Generally, we have several options, and then the tax consideration. Savings and money market accounts are “low risk, low reward.” CD’s and bonds, followed by mutual funds, ETFs, & stocks… “Better returns, higher risk.” And yes, there is bitcoin, crowdfunding, etc., other uncertain markets.
And then we have solar power. It’s high single-digit/ low double-digit returns with a relatively low level of risk. Pair that with the fact that the alternative is in an inflationary utility bill and for an investment it’s actually pretty good.
But there’s definitely more than that. For one, you own a house. And as a homeowner, you do periodic improvements. Each with a cost and effect on home value. This is important because statistically we all sell our home. Some more than others.Everything from new paint and flooring, to a new roof, kitchen, bathroom, pool or addition has a cost and home value effect. Furthermore, there is a marketability aspect. Is the home improvement that you have done in demand? Homes with certain features statistically spend less time on the market and that of course affects the final price.
Now Sunbright Solar does not assign a dollar value on this, but Zillow in 2019 found a 4.1% average increase in total home value. And Berkeley did a study that analyzed 22,000 home sales with about 1 in 5 having solar across multiple states over about 5 years and found that homes with solar sold for and average over $15,000 more than comparable homes, and again government funded NREL National Renewable Energy Laboratory found that homes with solar sold on average 20% faster with a premium of roughly 17%.
Here’s another piece to consider: How the seller does the selling. If no information on the solar is on the listing, then the value potential buyers will pay is certainly diminished.
On the other hand, if the solar is shown in the listing and a “solar” utility bill is on the table, along with a 1-page infosheet showing the warranties are transferable… Well, your home value just went up.
Final point to all of this. If we even consider a fraction of an increase in the home value and marketability in the ROI math then the payback period is dramatically reduced.
Last point: Why can be more important than ROI! I don’t know who or what type of person you are and what you think about solar, politics, and life in general. Honestly, it’s not why I’m here. But personally, when I sit down without any distractions and think about what I unbiasedly feel on things like sustainability, efficiency, and even climate change, or personal legacy, or finances … When I do I think about things I value, and then naturally gravitate back to things like solar, efficiency, and sustainability.
Personally, I didn’t need a or set out with a preconceived ROI. I just needed a way to make it work. Part of my ROI is my motivation, part is the cool consumption/production monitoring app, and part of it is that it’s one of the best financial ROI’s I know of. Although ultimately, I think the ROI is mostly the perspective. What do you choose to value?
Okay, that was more than I anticipated typing. I would usually type something like this up and use my better judgement and have one of the office staff fix all my grammar and long-windedness… But NOT TODAY Richard! I’m happy to help and here if you want to continue to explore it. Just let me know!
Thanks,
Dan
The Best Time To Plant A Tree Was 20 Years Ago. The Second Best Time Is Now.”
April 2020
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