Solar Power: The Superior Investment

Knowing whether solar is right for you can be a timely and complex decision, and understandably so. For some people, it involves prioritizing which home renovations will yield the greatest ROI, while for others it is a choice between switching to solar, or holding on to their money, safely in a savings account. The truth is, solar is no longer becoming a secure, superior investment option – it already is.

Solar vs other Home Improvements

First, let’s compare going solar to some of the most popular home improvements today. According to Wells Fargo and CNN Money, you will only recoup 74% of the initial outlay cost investing in a roof replacement, and 84% for a bathroom remodel. A minor kitchen remodel costing you $17,928, will only add $15,275 to your home at sale, or an 85% ROI (fig. 1).

Fig. 1

A study published in the New York Times in April 2011 showed that solar power trumps all these investments, with an unbeatable 100% ROI, that is, if you install a solar power system on your home, you will recover 100% of the cost when you sell your home (fig. 1). What makes solar the even more superior investment option, is that this percentage does not include all the savings that you receive by offsetting your power. Yes – you can invest in solar, receive all the amazing benefits, and then recoup the entire outlay cost when you sell your home! What other investment can do that?

Solar vs Savings

Now let’s compare going solar to keeping your money in a secure, low interest savings account. According to TD Bank, a basic savings account will yield you around 1% interest. After 10 years, you can expect an initial savings amount of $15,000 to increase to $16,569, and to $18,303 after 20 years, with a net position of $3,303 (fig. 2).

Fig.2

By using an initial outlay cost equal to the initial savings amount of $15,000, we can compare the two investment options over time. Although the solar power system requires an initial outlay cost, it is able to pay itself off quickly through a combination of offset electricity, and sold SRECs, estimated at $1654/yr. By year 9, the system has paid itself off completely, any by year 20, you in an incredible net position of $18,080, thanks to continued savings and SREC income (fig. 2). Furthermore, this net figure does not include the value the solar power system will add to your home – which, as we mentioned earlier, is 100% of the outlay cost, or $15,000 (fig. 1). This revised net position is $33,080 – an amazing 10 times more than the savings investment option.

Several investment experts, including CNN Money, report that a steady interest rate, or ROI, of 7-8% can only be achieved by creating a diversified portfolio. Solar power challenges this theory, by providing a ROI of at least 10%, through guaranteed energy savings, while also increasing the value of your home, and helping the environment.

Whether you’re looking for your next home improvement, or considering a new investment option, solar power may just be the investment that you’ve been looking for.