Why Should I Buy Solar Panels?

The solar power industry is steadily growing and solar panels for homes and businesses are starting to get affordable. Why should you invest in your own solar power system? Very different things motivate people. We have found that the most common motivators are:

 

Environmentally Motivated

  • Reduce my dependence on energy sources such as fossil fuels and coal by using a clean and renewable energy source. Investing in green energy contributes to fighting global warming.

 

Sense of Security

  • I want to become independent of the electrical grid, completely self-sufficient with electricity.
  • Solar panels provide a good backup of electricity incase of electricity cuts. You should hook your photovoltaic system together with batteries if this is your motivation for buying solar panels. A system like this is often called a hybrid, meaning it has components of both off and on-grid systems.
  • I want to protect myself from future price increases in utility-supplied electricity. Data from U.S. Energy Information Association shows that the price of electricity has increased about 3 cents/kWh in the last 10 years, and is projected to keep growing.
Read How to Become Energy Self-Sufficient to get an introduction on how you can generate your own electricity to cover all your needs.

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Financial Reasons

  • Generating my own electricity will lower my electricity bill, saving money long-term. This of course depends on each particular situation. Whether or not investing in solar panels would result in long-term finacial benefits is dependant on many factors (amount of insolation, rebates and incentives to name a few).
  • Make the electricity company work for you by selling electricity back to the utility grid. Many utilites supports net metering, meaning that the power you generate with your PV-system that is not used first-hand by yourself, goes back on the electric power grid.
  • The cost of installing a utility line to my location exceeds the cost of a solar system.

 

The Solar Panel Hobbyist

  • Solar panels are a hobby of mine. I want to learn more about making my own solar panels and the technology behind them.
A good resource for you is to read the following article: DIY Solar Panels versus Pre-Manufactured.

 

Supporting National Interests and Businesses

I support the U.S. by reducing dependence on foreign oil and investing in photovoltaic components that are manufactured in the U.S. This is of course a valid reason for many countries outside the U.S.

 

In the Research and Learning Phase

  • I haven’t decided yet – I’m here to learn more about solar panels for home use. Most people who read this article fall into this category. You are at the right place. Go to the Solar category to learn more.

 

Which of these goals are actually realistic? The answer to this question can only be determined by looking at your particular situation.  In general, rebate programs and net metering, which we will talk about in later articles, are absolutely essential if you want affordable solar power.

Even with these benefits, the cost of electricity generated by solar panels would in many cases be higher than the power the utility companies can supply. This is why we believe that purchasing a solar system should at least partially be environmentally motivated.

You might also want to check out advantages and disadvantages of solar energy in general in Solar Energy Pros and Cons.
How much does a complete solar panel system really cost? Learn more about this in our in-depth article Solar Panels Cost.

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Comments - 3

WRT

Are solar panels a good investment?
My wife and I live on Queensland’s Sunshine Coast. We installed our solar panels in June 2011. The equipment included 13 panels (German made) producing 3.06kw and a Sunny Boy 3000 inverter. I kept a spreadsheet of the main headings from each power bill since then so I can easily keep track of the ongoing costs. As it turns out it has been a very interesting exercise. By the way, our household number is normally two adults with the four adult kids and other family members staying from time to time. So, on average, we are probably a 3 adult household.
A. Set up costs are as follows:
• Supply and install panels: $16170
• Plus fitting: $400
• Less government rebate: $4092
• Total cost $12478

B. Ongoing costs:
In simple terms, we have two arrangements. Firstly, we use electricity from the grid and pay our electricity company at their rate (which will continue to increase in the future). Secondly, we produce electricity from our solar panels and sell this to our electricity company at a fixed rate of 52 cents per kilowatt (which will not increase in the future). To me, these are two completely separate arrangements. We still get a bill for my electricity usage but I am credited with the electricity we produce. These are shown on the quarterly bill. If the balance is a credit, we can either leave the funds with our electricity company in case we have an unusually high usage bill sometime or we can ask them to send us a cheque. At this stage, our credit balance of $683 is still with our electricity company – but not for long.
Summary of past 12 Months’ Bills (4 quarterly bills):
• Electricity supply (what we used): $1181.62
• Rebates (what our solar panels produced): $1684.28
• Resulting position (less GST, helicopter donation): $363.97 credit over the past year

C. Comparison of investment options

Now here’s some boring mathematics to see if I did the right thing, financially speaking. The calculations are based on a 10 year period:

• We raised the funds ($12478) for the panels by redrawing on our home loan account. So, assuming home loans maintain an average of 7% over the next 10 years my loan will be around $24500 more – ouch!
• If I had come up with a spare $12478 (Lotto?) and invested it safely at 5%, I would have around $20300 after 10 years – a return of $7822. My super fund might be better.
• After 10 years my solar rebates at around $1700 per year will return me $17000. This is a good return. However, unlike the situation above, I cannot withdraw my initial outlay along with my investment return. The panels will still be on the roof but will they add any value to our home? The fact that we have solar panels might attract more interest if we were to sell but I doubt if the price of the home will be increased by their presence. (It’s a bit like hoping the set of driving lights will increase the value of your 4WD).

Further considerations:
• The panels have a 10 year guarantee and the inverter has a 5 year guarantee. The panels should last well past 10 years – hopefully. Apparently inverters often need to be replaced after 5 or 6 years at a cost of around $2500. I’m not sure about maintenance of the panels but I have heard that they will need to be cleaned and checked by a qualified tradesperson – maybe every two years. This costs about $200.

Verdict:
• I’m of the opinion that my investment of $12478 would have been better left in our home loan or dropped into our super funds. As we have no intention of selling our home, we might never know for sure. I suppose there is the added fact that we are doing something for the environment.

March 12, 2013 12:42 pm Reply

SS

Great thinking but you have forgotten the system has made you a profit of 1181.62+363.97=1545.59 so in ten years has saved you $15455.90 assuming a zero CPI. Taking you original cost this would result in a return in 8 years but if you take into consideration the net reduction you would more than likely see that more like 5-6 years giving a 16% to 12.5% return on investment.
Money well spent if you pay 7% interest on the loan plus you don’t have to earn the money to pay a bill you cannot tax deduct!
Great investment I’d say looking at your figures.

March 26, 2013 3:25 am Reply

Greta

The project came out of a partnership of the Novato-based SPG Solar Inc.
If you could turn that passion into a source of income, you would
be only one click away from your financial independence.
• When you rely upon solar energy system in your home or office,
you don’t have to be without power when there is
a power outage. Or if you happen to have been unfortunate enough to have your
residence damaged during last year’s tornadoes, you shall receive a further five thousand dollars off.
They are used in heating or cooling residential houses or commercial spaces,
together with the hot water systems for spas and swimming pools.
If you are going to start your home internet business, the first thing you need is a website.

July 3, 2014 4:26 pm Reply

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