Financial Return

If you like the idea of locking in your electricity costs at today’s rate, or believe hedging against energy volatility is a sound idea, generating some or all of your power from Solar Energy makes a compelling case. Please bear with us as we go through The Investment Return of Solar Energy.

A Solar installation is rated by the kilowatt – in our example, the system is 6.7kW (24 panels of 280 watts each). But the electricity we buy from our utility is priced in kilowatt-hours (kWh), so we need to calculate how much electricity our 6.7 kW system will generate.

Since there’s enough math going on here already, we’ll side-step the calculations leading to system output, and state that 1 kW of installed solar will generate about 1400 kWh of electricity in Houston. Thus, our 6.7 kW system will produce about 9,400 kWh of electricity over the course of a year.

A 6.7 kW array producing about 9,400 kWh of electricity costs just over $15,000 to install after the 30% federal tax credit.

Let’s also assume our electricity costs are $0.11 per kWh for electricity, therefore the 9,400 kWh your solar panels produce is worth a little over $1,000 a year.

So in this case, the investment return of solar energy (current return or yield) is 6.7% ($1,000/$15,000). In other words, sort of eye-popping when compared to alternative, safe investments. Also, consider the value of the energy produced by your system will rise over time as electricity rates increase, and will do so for as long as the sun rises… or the next 30-40 years, whichever comes first .

Conclusion

We have programs that calculate more ratios regarding the investment return of solar energy, including Levelized Energy Cost, Net Present Value, Cash Payback and IRR, but our point here is to keep it simple. To get an in-depth analysis for an installation for your property, please call 713.802.0223.

Hope this helped, it’s pretty simple…in fact it’s a no-brainer.

 

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