A Financial Perspective on Solar EnergyApril 11, 2022 7:19 pm
A Financial Perspective on Solar Energy with Jeff Ray, Arch Director of Finance
Considering solar energy as a home or business owner involves a lot of different considerations; environmental, energy independence, aesthetics, building value, and the financial aspects. I’ll just focus on the last of these today as finance is my area of expertise.
As a homeowner, solar is essentially locking in a fixed energy cost for whatever percentage of your utility bill is offset by your solar installation. For a typical home in Wisconsin, this is usually anywhere from 60-95% of their annual energy bills. From the financial angle, your energy bills are subject to change, and traditionally that change has always been upwards. Meanwhile, your solar payments (either financed or cash upfront) will never change after they have been installed. (At least with any reputable installer).
You can see how we demonstrate our cash flow on a year over year terms below using a conservative system design with a payback of 14 years (above average). Assuming that utility costs stay as they are this 9.3 kW system will return its investment in 14 years and after that, it’s all profit.
Now if utility costs rise by any significant amount, then this system’s payback time will shrink dramatically because that rate increase will not impact the energy usage offset by the solar system. So, from a financial perspective, this system will conservatively pay for itself in 15 years if utility rates stay consistent and they also serve as a financial hedge against volatility in utility rates.
This post was written by archelect