We are often asked how solar energy compares to traditional investments such as with stock, bonds, or mutual funds. What people are often surprised to hear is that solar energy for your home is a superior investment as it amounts to an untaxed stock market return on investment with no volatility. But how is that possible?
A conventional solar system that saves $1,000 per year on your electricity bill has a payback time of approximately 12 years, which is the equivalent of a 7.7% return on investment. For a solar energy system with a warranty of 25 years and a life expectancy of 30-35 years, you are effectively paying for 30+ years of electricity upfront. Imagine if 25 years ago you could purchase 25 years worth of gasoline at $1/gallon and store it free of charge. That is effectively what you are doing when you go solar! However, instead of purchasing a fossil fuel you are purchasing clean, renewable energy for you and your family that will last for decades.
The best part? That 7.7% is completely untaxed. The IRS won’t (and can’t) go after that money because it’s merely savings on your electric bill. The same return on investment in the stock market would be about 25% higher before being taxed by the IRS, so it’s more like the equivalent of a 9.7% return on investment, which is comparable to an aggressive and risky mutual fund. The difference is that there are no wild ups and downs with an solar energy investment, and thus no volatility. As long as the sun rises in the morning you know exactly what you are saving.
Finally, the savings increases even further if you pair your solar energy system with an electric car. Did you know that charging your electric vehicle costs just $1/gallon each time you charge at home? That means if you charge your car with solar energy, which costs less than half that of grid electricity, you are paying the equivalent of less than $.50/gallon for fuel! That brings your 9.7% return on investment up to well over 10%.
Of course, this is nothing to speak of the added value to your home, the security and peace of mind that comes from owning your own power, and the public health and environmental benefits of adding solar energy to the electricity generation mix. By going solar, you are providing you and your family with an investment that goes well beyond traditional investments.
