Investing in Solar Power vs the Stock Market

So I pulled the plug on solar and the contract has been signed. The numbers for solar are getting even more insane as Keith has found even more available Nyserda grant money. How I love Keith.

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So you can see that I’m getting a $26,891 solar installation for essentially $9,390 out of pocket. This article about how investing in solar compares with investing in the stock market and why I think that solar makes more sense for pretty much everyone.

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Over a 25 year period at today’s energy rates you stand to make $40,428. If you subtract $40,428 – $9390 = $31,038 of profit over 25 years. This is assuming that energy rates stay the same. Nyseg is pushing for a 24% increase that will likely go through in the next year or so I’m going to do this calculation with the 24% rate increase. $40,428 * 1.24 = $50,130.72 – $9390 = $40,740.72. This is interest only, the original $9390 is considered to be ‘lost’ for the purposes of this comparison.

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This is about equal to taking the same amount of money, investing it and getting about a 6.93% rate of return for 25 years (as shown above). The average stock market return is ~10%, but that is assuming that the market continues on its massively upward trend. The question you have to ask yourself is do you want to invest in a future that is being sold as one that will allow unending growth without any end (a fairy tale) or one that will guarantee you at least a 7% rate of return and possibly much more as the cost of energy raises over the next 25 years?

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This calculation changes and gets much more complex if you have to borrow the money. Since you have to pay interest on the borrowed money, you don’t end up making as much on the total install. Let’s say I had to borrow the $9,390 over 15 years at 5% interest (which I am) then I have to pay an extra $3956 in interest. The calculation again with interest included becomes $40,428 * 1.24 = $50,130.72 – $9390 -$3956 = $36,784.72. Plug that into an investment calculator shows 6.56% interest even if you have to borrow the money to do it.

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I’m hedging my bets on an uncertain future. NYS has already said they are going to try to move almost entirely to renewables which is amazing and great but will also increase the cost of energy here in this state in the years to come. The ability to pay only $16/mth for your meter charge and have your installation tied into a giant battery is one of the best deals to be found. The Tesla Powerwall 2 costs about $7000 and stores only about $1.60 worth of electricity.

Not only is going solar a way to make 7% on your investment over 25 years, but it’s also the right thing to do for the planet and your children. When you run the numbers it’s just clear that you have to be crazy NOT to go solar even if you have to borrow the money to do it.

Be the change you want to see in the world.  – Ghandi