| SolarSavvy |
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Solar can be a savvy investment, but not for everyone
By Mark Becker
Contra Costa Times correspondent
Posted: 02/12/2010 02:00:00 PM PST |
If the conditions and your energy use is right, solar might be worth the investment. But that's not the case for everyone. The environmental benefits of solar power are widely accepted, but solar may not stack up as a good financial investment for everyone. Given the right circumstances, installing a solar system can provide double-digit financial returns in the long term. But many factors affect returns on an investment in solar.
The most important are how much electricity your solar system produces, how much it costs to purchase and install, how much electricity you currently use, and the current and future costs of power purchased from your utility provider. Proper sizing of a solar system is one of the most critical factors to get right to maximize financial returns. How much electricity a solar system produces depends on how much sunlight the panels receive as well as their size, number and efficiency rating.
The amount of sunlight received depends on array location, orientation, tilt and shading. Efficiency refers to the percentage of sunlight reaching the panels that is converted to available power. A solar system's power output is most efficient when oriented in a southerly direction, with minimal shading. Other orientations and some shading are acceptable.
How much your system costs to install is an important factor. Also important are how much electricity you use and current and future costs of purchasing power from your electric utility. Costs of solar systems vary with the type of system and the complexity of the installation.
These costs can be offset by utility rebates, tax credits and system depreciation for home-based or commercial business use.
Zero-cost installations can be made through a lease or a power purchase program. The Federal tax credit of 30 percent for solar installation has been extended to 2016. Rebates are still available, but, as intended by the California Solar Initiative, they are getting smaller as more systems are installed. Your electricity use is a fundamental piece of the investment equation. If you have a low electrical need, you may not save enough on utility bills for a solar investment to warrant the expense. If you have a high need, you likely will reap some lucrative returns.
Future costs of purchasing power must be considered. Based on past trends, utility bills are expected to increase an average of 6 percent a year for residential customers and 5 percent for commercial. During the 25- to 30-year lifetime of a solar system, your utility bill easily could be more than five times what you pay now. Investment in a solar power system serves as a hedge against rising utility bills. Another benefit of installing a solar power system is the increased value of your property. It is accepted appraiser practice to increase the valuation of a residence $20 for every $1 saved on annual electric bills. This increase in appraised value will not increase your property taxes. According to California law, 100 percent of an increase in appraised value from renewable energy systems is exempt from increases in assessed value. Going solar may be a good investment if your electric bill is more than $100 a month and you are able to site your system to take sufficient advantage of the sun. As long as rebates and tax incentives remain available to offset installation costs, and as utility rates continue to rise, solar can be a very savvy investment. Mark Becker is a general contractor and president of Semper Fidelis Construction and Solar Power Solutions, a Danville-based solar power consulting and brokerage firm. For more information, visit www.CaSolarPowerSolutions.com. |
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