Why Solar Makes Financial Sense

Investing in a solar system can be likened to pre-paying for tomorrow’s electricity at today’s rates. As rates continue to rise, your investment becomes more and more valuable. On average, homeowners can expect to recoup their entire investment in 5-10 years. Depending on the incentives and electric rates offered in your area, it might take even less time than that.

Many solar panels carry a 25-year manufacturer’s warranty. Many last longer than that; some of the first solar power systems installed more than 40 years ago are still going strong! When you invest in solar, you can have confidence that you are making a smart investment.

Here’s why solar power makes sound financial sense:

• Solar reduces or virtually eliminates your electric bill. On average, electricity prices have increased by more than 5% per year for the last 30 years. When you choose solar, you free yourself from dependence upon a volatile energy market. As rates rise, your investment becomes increasingly valuable.
• Solar increases the value of your home. A recent study from the Appraisal Institute demonstrated that the selling price of homes increased by $20.73 for every $1 decrease in annual utility bills. Using this example, if you purchase a moderately-sized solar system for $12,000, the value of your property will increase by more than $20,000.
• Solar is rewarded with government rebates and incentives. Federal and state governments are currently offering tremendous financial incentives to motivate residents to switch to solar. Current rebates can cover 30-35% of the total residential solar system cost.
• Solar systems can be financed.SolarCity will help you determine the best way to finance your investment in solar power. In many cases, the sum of your loan payments and your new electricity bill will be less than your previous electric bill - this means you can start saving money immediately, without any out-of-pocket expenses!

Making the Switch: Understanding Electric Utility Billing

When you switch to solar power, your SolarCity PowerStation will work in parallel with the electric utility grid, enabling you to take advantage of the energy storage benefits that the grid provides. After we help you enter into an agreement with your local utility, you will not have to do anything to switch back and forth; everything happens seamlessly without any effort on your part. Your PowerStation will generate electricity during daylight hours with excess electricity being sold to the utility at high rates; during nighttime hours, you may need to draw from the utility grid at low rates.

Until this point, your utility company has been billing you in one of the following ways:

• Tiered Rates. Most traditional electric companies bill their customers on a tiered rate plan. The plan begins with a baseline allocation of power; the more "units" of electricity you consume above that baseline, the more you pay per unit. Solar power replaces the higher-tiered power first, allowing you to experience immediate significant savings.
• Time-of-Use. When you switch to solar, we help you convert to a time-of-use billing system (if you aren't on it already) in which rates area higher during peak hours than during off-peak hours. Your solar system will produce throughout the day; any power in excess of what you use can often be sold back to the utility grid retail prices. You may then draw from the grid at night, at off-peak prices. During the spring and summer months, you will likely accrue credits that can then be used to offset your energy use during the darker winter months.

Financial payback and ROI estimates for solar power vary widely based on critical factors like: prevailing utility rates, utility rate increases, electricity usage on-peak, system price, tax rates, etc.  For a more detailed introduction to the financial benefits of solar power please read this paper by Andy Black, a respected authority regarding the financial payback of solar power.

Source: Solar City