Should You Invest in Solar Power?


In 2020, we saved almost $2000 on our electrical bill because we added solar panels on our home in 2019. But, was it a good financial deal?

As an advocate for addressing climate change I wanted to personally walk my talk, but I am also financially frugal, so I didn’t want to do something that was not financially sound. So, I constructed an elaborate Excel spreadsheet with what I thought were conservative projections of electrical production, credits we would get on our electrical bill, the deterioration of production capacity, likely raises in cost of electricity, etc. The results were that our investment would generate a pre-tax 3.46% internal rate of return in 20 years and a 7.09% IRR in 30 years. Wow, for a fixed income investment comparable to buying a bank certificate of deposit, that looked great.

So, how has it turned out? The first year’s actual production was 95% of that projected. The credit on our electrical bill available through net metering was a bit lower than expected, as I had assumed the total of cost of generation plus the cost of delivering the electricity. Nonetheless, with revised projections the spreadsheet now shows a pre-tax 2.76% IRR in 20 years and 6.28% in 30 years, still not too bad.

Does this mean you should do the same? It depends. We lucked out by having hail damage on our roof just before we had the panels installed, so we had the roof replaced (mostly paid by insurance) before installing the panels. If you would need to replace your roof within a few years, the investment rate of return would be lower. If you have space on your property for a ground mounted system, then that would be a better option to totally avoid this issue.

Is a community solar garden available through Xcel to you? If so, being able to “invest” in solar without any money invested is much better. For many people without investment capital, this may be the only option.

Will you be selling your home soon? Having solar panels on your home definitely adds value to your home, but will the true value be recognized by potential buyers? It should be as more homes in the future have the solar panels, but perhaps not in the near years.

What will the alternative energy tax credit be for your investment? It was 30% in 2019, but has now been extended to be 26% through December 2022, then drop to 22% until December 2023.

We made the decision in 2019 because our roof was not getting any younger and the tax credit was scheduled to drop, so the sooner we made the decision the better. The same may apply to you.



Comments

Post a Comment

Popular posts from this blog

Our Changing Climate: Options to Consider

Image
Our Changing Climate: Options to Consider ·          Have you noticed that the past few “normal” Minnesota winters have not been as cold as 20 or 30 years ago? According to University of Minnesota scientists testifying to the Minnesota House of Representatives earlier this year, between 1895 and 2015, average daily low temperatures in winter have increased. In the northern part of the state, they’re up 4.8 degrees over that period and 3.4 degrees in the south. One study pointed out that between 1959 and 1978 Duluth averaged 45 days a year in which the average daily temperature did not top 10 degrees Fahrenheit. Between 1999 and 2018, there were no such days. ·          Have you noticed that the emerald ash borer territory has moved north with the borers not killed in the winter as the winters have gotten warmer, such that our state’s ash trees have been disappearing? ·          Have you noticed that the world is experiencing more frequent and more devastating storms,
Read more

Biography - Part 2 (the beginnings)

Image
The Beginnings I was raised in a very rural area in the Upper Peninsula of Michigan, 17 miles south of Houghton and Hancock, out in the sticks, not far from  Lake Superior . My dad died when I was two and a half months old, leaving Mom with six kids, with my oldest sister age 16. We were raised on welfare until I was 17, as there were scant opportunities for work for Mom in the area. We owned our own home, a 24’ x 24’ story and a half structure, located on a 40 acre parcel. Our property was comprised primarily of scrub soft maple and aspen that sprouted after the big forest fires of the early 1900’s after the mighty White Pine were logged. We had no phone, no TV, and heated the house with two wood stoves. We got an indoor toilet when I was 6, but no indoor shower or bath. We warmed the sauna every Saturday and took a bath whether we needed it or not. (I am of Finnish descent, as all of my grandparents immigrated from Finland around 1900. My paternal grandfather, John Carl Dr
Read more

Congressional Candidate Rick Olson (MN2) Breaks Party Ranks

Statement on Impeachment Vote in the U.S. House of Representatives Rick Olson, Republican Candidate for Congress, MN District 2 For more info: 320-248-9933, olson48176@gmail.com,  http://rickolsonforcongress.com Sunday, December 15, 2019 – For immediate Release This morning a Star Tribune reporter informed me that Angie Craig had decided to vote “yes” next week on the motion in the U.S. House of Representatives to impeach President Trump, and asked me if I were in her shoes, how would I vote. When I took office as a State Representative in Michigan in 2011, I swore an oath to uphold the U.S. Constitution. That oath is still binding today. I understand the Founding Fathers viewed the impeachment process as very similar to the process in a criminal court. The prosecution presents evidence in a preliminary hearing. If the judge hears sufficient evidence to believe a crime has been committed, taking the evidence as true on its face in the absence of any defense from the
Read more