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Solar Energy: Is It a Worthwhile Investment?

The history and development of solar energy is quite fascinating. It has been a viable option for electricity for some time. But for the consumer marketplace, it started to became affordable around 2005. 

In relationship to the cost effectiveness of solar energy for consumer, a growing awareness of environmental concerns has developed in recent years. Solar systems and the green energy movement have coincided with one another. Those considering “going green” often look to solar energy as a first step in those efforts.

Additionally, solar panels can have economic benefits to the consumer. Of course, people are looking to them to save money in their monthly budget. But others are also considering the investment side of solar energy. One, as an investment in their current home. And two, as an investment in which they can diversify their cash and make money in the long run. 

So is solar energy right for you as a cost savings measure or as an investment? Here are some beginning things to consider.

What exactly is a solar panel?

A solar panel for a home is a board that is mostly made of silicone. It can absorb the sun’s rays and convert them into electricity. A home solar system usually consists of a large number of panels. These are normally placed on the roof or on the ground in a large, open space at the residence. Each solar cell forms a partial conductor. By means of double-sided conduction, an electric field is created.

Also, the panels are considered relatively light. That makes them ideal for installing on a roof. However, this only really works and is beneficial to the homeowner if the roof structure is larger than 60 square meters. Additionally, it needs to be a relatively continuous surface, have easy access and not be consistently shaded. Those are some of the first things to look at when considering installing a system.

The initial investment

The initial investment in solar panels is obviously a big thing to consider. This will include the purchase of the panels, related equipment and installation. You will need to make sure that the infrastructure for the panels, and the connection of the system to the electricity company will be carried out by a licensed solar energy contractor. The upfront costs vary depending on the company but it does reach into the thousands. 

How is the cost calculated? The Center for Sustainable Energy states that cost is calculated in dollars per watt. Residential system estimates range from $3-5 per watt. That means the average system cost will be between $15,000 – $25,000. This is before any applicable tax credits or incentives available from local, state or even national governments are applied.

So right away you can see this is a huge barrier for some people. That seems pretty expensive to install. But there are other factors to consider that may still make it worth it. More on that in a moment.

Where does solar power make sense?

If you are trying to figure out if solar makes sense, geography and economics may play a role. 

For starters, it makes the most sense in geographic areas that receive lots of sun. Of course, all places receive sunlight but others may be more inclined to be above the averages. Places like Hawaii, Florida, California and the Southwest (Arizona, New Mexico) are ideal candidates for solar.

However, economics may also pay a role. A reason people move to solar is to save money on their energy bill. So local jurisdictions with high energy costs also make the move to solar more viable. Some of the most expensive states in the U.S. in regards to energy rates (cents per kilowatt-hour) include Hawaii, Alaska, California and New York, New Jersey and pretty much everywhere else in the Northeast.

In these locations, more than most, quite a few private individuals and private businesses choose to install solar panels. In these areas, there are many companies offering a different range of products and budgets. So do your research first by getting online and checking out the rates, issues and requirements in these regions. Sites like choosesolar.com can be a great help in this process. 

What is to gain and is it right for you?

As stated already, people convert to solar power for a variety of reasons. The three main considerations are for financial savings, economic independence and for an investment return. 

Financial Savings

Some people pay much more for electricity in the winter and some people pay more in the summer. With solar panels it is possible to lower the costs of electricity throughout the year. This is because the electricity is produced independently. For the balance you receive a monetary return from the electricity company.

Economic independence and investment return

Many are looking for a lucrative and safe investment. Such is the investment of installing solar panels for a private home. The price of a solar panel today is cheaper than ever. It is an investment that should pay for itself with 5-10 years.

Also, think about comparing the yield to what can be obtained in the real estate world. Studies show that the yield from installing solar panels on the roof is greater – offering about 12% yield. So there are actually investment returns to consider. 

However, is solar really right for you?

Related Content: The Ultimate Beginners Guide to Investing Money the Right Way

Is solar energy right for me?

These are reasons maybe not to go this route.

  1. There are no incentives or rebates for solar power in your area. These greatly reduce the initial investment, making the upfront costs much more doable.
  2. You plan to move soon. Solar panels are an investment and cost cutting measure for the long run. You will need to stay in your house for awhile to recoup the cost of installation. So if you are planning on moving soon, they don’t really make sense.
  3. The cost of your electricity is already low. As previously mentioned, some states energy expenses are higher than others. If you live in a small home that doesn’t require much monthly energy expenditure, you won’t realize the cost savings you need to benefit.
  4. You’d have to upgrade your roof structure to make it work. Installation can only work on roof systems that can support the product. Your roof may need to be rebuilt to accommodate the weight of the panels and other equipment. That will increase your up front costs, making recouping the savings more difficult.

Take all these things into consideration when looking at solar energy. It can be a great cost savings and provide you with more money in your monthly budget to use for other things. Just make sure to do your research first to see if it is right for you.

Leave a Comment or Answer a Question Below: Have you ever considered solar energy? Do you think it would be worth it to you? 

Image courtesy of Nuno Marques at Unsplash 

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