Most customers will typically see a return on investment in 8-12 years because of getting solar installed at their property. Now, each customer decides their individual return based on their desires for energy production and features of the system itself. In each evaluation, there are several factors to consider as customers investigate options.
People often do a simple calculation when it comes to determining their return on investment. As an example, they will do the following math:
Utility costs = $100/month
Annual utility cost = $1,200
System cost = $12,000
Return on investment = 10 years
You own your energy
Here is where that math can leave out some important assumptions. The industry average for increases in utility costs is about 40% every 10 years. Now this becomes a more complex formula because you must factor in this increase over time. So how much of your “overhead energy costs” in the home would you like to guarantee over time? If you are either financing a system or paying cash, then your monthly payment or initial investment can be guaranteed. If the utility decides to increase your rates, then you do not care because you have already locked in your “rate”. You own your energy. You could draw an analogy to renting versus owning a home. If a landlord comes back year after year requesting more money in rent, then you are not left with much of a choice other than paying that increase or moving out of the property. Think about that “rent” payment being your utility costs, and that would help you calculate a more reasonable ROI for the system itself.
Increase your homes value
Another assumption that you could make is that having a solar installation on your home will increase the market value of your property. The industry average for the increase in market value of your home is around 4-6%. In this case, if you decide to install a $12,000 system on a home worth $300,000, then you have already gained the market value increase equal to the cost of the system. Any additional benefits from using solar to generate your power are just extra money in your pocket over time.
Mitigate impact on the environment
We have not evaluated the intangible benefits of back-up power, clean energy generation, and a secure, fixed method for getting power into your home. Those intangible benefits are harder to quantify in real numbers, but they would improve your quality of life, correct? Understanding that you are taking a step towards mitigating your impacts on the environment through clean energy is key in recognizing those additional benefits of installing solar, outside of just a simple ROI calculation.
We will be your guide
At Rectify Solar, we work with each client to discuss the long-term benefits of solar, the impacts that system will have on the environment, and the specific return they would expect to see on their investment. It is a unique calculation with multiple factors mentioned above like the increase in utility costs, the market value change in the home, and the peace of mind and security that comes with a solar panel installation. It is important to have a conversation with an energy consultant to see how solar can work specifically with you and your family as each system is unique and every long-term strategy caters to your future desires and needs with your installation.