'Going Green' as an investment

I asked my wife to read the last article I wrote in the Go Green section of the Free Press and asked for feedback. She said: “It's great, dear, but I still don't know how much solar costs.”

Using much of the solar jargon I've acquired throughout my career, I tried to explain that every situation is different and there is no one price; it depends on roof orientation, mounting angle, panel size and type, historic household energy consumption, and so on. All she heard was “blah, blah, blah,” and restated “all I want to know is how much it is going to cost me — $50 or $50,000.”

Therefore, I was inspired to give the rough answer for those of you that may be interested in what the investment is to go solar. The “average” homeowner paying $100 per month in electric bills consumes about 11,500 kilowatt hours (kwh) per year based on the current electric rate of 10.5 cents per kwh.

A solar system comprised of 35-40 panels and utilizing 500-700 square feet of roof space should create enough electricity to offset this usage over the course of a typical year. The price of a solar system can vary widely and is dependent upon panel quality, installer expertise, mounting equipment, installation method, and existing electrical arrangement. That being said, the value of a solar system, again using solar industry language, is between $6-$8 per watt installed or in this case right around $53,000; but because of the available renewable energy incentives, this is not the price you will pay.

The current Solar*Rewards rebate from Xcel Energy is designed to pay for nearly half of the system cost BUT THIS REBATE IS A MOVING TARGET and is designed to diminish over time. Because most installers will “float” this rebate, we can subtract it right off the top leaving $30,200, of which 30% or $9,060 will be paid back through a federal tax credit; which means you will invest $21,140 in a solar system worth over $50,000 that will offset $1,200 worth of utility payments the first year.

If a mortgage-type loan is used to finance the investment, monthly loan payments will be about the same as current utility payments but instead of increasing over time they will be FIXED for the loan period and the interest portion could be tax deductible as well. When we account for inflation using historic inflation rates of 7-8, that same solar system will offset around $1,600 worth of expenses in year 5 and $2,300 worth of electricity in year 10.

In other words, the return on investment gains value each year and now as electric rates go up (incidentally according to the current proposed rate case by Xcel Energy, costs are scheduled to go up as much as 13.59% next year for residential customers), you cheer instead of complain as your solar system becomes more valuable.

Additionally, the National Appraisal Institute in joint effort with Housing and Urban Development and the Environmental Protection Agency coordinated a study and found that for every dollar offset by renewable energy or energy efficient measures, home value could be raised by 20.

In the case of our “average” home, the asking price could increase by as much as $24,000 in the first year. So what does it cost to “go green?” Nothing — in fact you can end up making money. It is better to think of renewable energy as an investment in your future rather than an expenditure. What is the return on investment from your current utility payments?

from "Going Green" in GJ Free Press 23 Nov 2009

Scott Wegs

Solar consultant

HIGH NOON SOLAR

569 S. Westgate #4

Grand Junction, CO 81505

highnoonsolar_scott@yahoo.com

970-234-1498