By Robert Silvey
In much of the US, it’s now cheaper to install a solar-electric system than to buy your electricity from the grid. If your house is in the right placeâ€”it gets enough sunshine and it’s in a state that provides a solar rebateâ€”a photovoltaic system is simply a good personal investment. You’re not just reducing your carbon footprint, you’re actually saving moneyâ€”and the resale value of your house is likely to rise by almost exactly the amount you invest, while you get free electricity, year after year.
That was not always the case. In 2001, when I last investigated the feasibility of going solar in Berkeley, it would have cost about $40,000 to install enough PV panels to reduce my PG&E electric bill to zero. So when Dick Cheney said, “Conservation may be a sign of personal virtue, but it is not a sufficient basis for a sound, comprehensive energy policy,” he was not altogether wrong. It was an expensive choice, however virtuous.
But Cheney is wrong now, at least when it comes to solar power. In California (as in many other statesâ€”here’s a list), you can reduce your carbon footprint and bask in that sense of virtue, and as of 2007 you’ll come out ahead financially too. Well, perhaps not ahead of Cheney, with his oil-gotten gains, but well ahead of where you would have been.
So I’m putting in solar power. Sun Light & Power, a local Berkeley company with 30 years’ experience in alternative energy, is designing and building a PV system with 3.2 peak kilowatts. The total cost is $26,000; the California Public Utility Commission will pay a rebate of $6,000, and I can claim a federal tax credit of $2,000, so the net cost will be $18,000. It’s exciting!
But it is a lot of money, so the next obvious question is how long it will take to recoup that cost. Sun Light estimates that with the energy I save it will take me about 13.5 years, with a return on investment of 9% over the 30-year life of the systemâ€”assuming (improbably) that the cost of electricity will rise no faster than the overall inflation rate.
But that’s the wrong question, because the $18K cost is in fact translatable directly into home equity. It’s an investment, not a sunk cost. As Andrew Black reported to the American Solar Energy Society:
These monetary benefits are financially quantifiable. A solar electric system increases home value by $20,000 for each $1,000 in annual reduced operating costs, according to The Appraisal Institute. A solar electric system compares very favorably with other home improvements in percentage of cost recovered. Often, a solar system can recover much more than 100% of its cost, and this percentage actually increases over time as electric rates rise.
In my case, that is, I invest $18K into the house with a new solar-electric system, and the house is now worth $18K more in resale value. Since my electric bill goes from $900 per year to zero, my immediate return on investment is 5%. When electric rates double, the ROI will be at least 10%â€”and possibly much higher, if the resale value of the PV system increases. (In fact, I am also adding a solar hot-water system, at a net cost of $6K, with a similar projected ROI.)
So here’s the point: Go solar now. There’s no reason to wait for the cost to come down further. Even if you aren’t particularly motivated to save the Earth, you can save some real money. Of course, the Earth would be grateful too.
[Cross-posted at Rubicon]