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Why should you invest in a solar electric system for your home or business?
It is good for the Environment
Every kilowatt-hour of electricity produced from solar energy helps combat Global Warming by reducing power plant pollution, and reduces local air pollution. About 30% of the air pollution in the world today comes from electric utility smokestacks that produce electricity for our daily use (in your home that electricity is used to run your refrigerator, air conditioning, heating, lights, computers, your kitchen appliances, etc.). The more electricity that is produced from solar power, the less coal, oil or natural gas is consumed by these large generating plants, and the less pollution they emit into the air. In addition to worldwide environmental impacts (e.g. global warming), cleaning our air locally can produce immediate benefits for our air and for our wallets: it can lessen the incidence of asthma and other respiratory illness downwind of power plants (reducing worker downtime and lost productivity), and lessen the costly damage that acid rain inflicts of forest, crops, fisheries, and its corrosive effects on buildings, cars, bridges, etc. (it's acid, afterall!).
Of course, in addition to generating part of your electricity from clean renewable sources, you should also consider reducing your consumption: use efficient Energy Star appliances, compact fluorescent lamps (in place of incandescent bulbs), and shut off all electric lights and appliances when not in use. You can also save on heating and cooling costs by having your attic insulation upgraded, and by replacing old drafty windows with new high-efficiency double (or triple) glazed "low-e" windows.
It will produce electricity for you every day
That's right! Solar electric systems produce electricity for you on cloudy days as well as sunny ones. All the solar modules need is a little light to start producing, and they will produce electricity even when it is raining (of course much more electricity is produced in bright sunlight). Most of the total day's output does occur in the middle six hours of the day, because that is when the sun is at it's most intense and when it shines most directly on the surface of the solar modules. But once you own a solar electric system you will be amazed at how early in the morning it starts to produce electricity and at how late in the day it continues to produce.
It will spin your electric meter backwards during the day
Hard to believe it is legal, but since 1997 NY and NJ homeowners have had the right to generate electricity from solar and wind power and sell it back to their local utility at the same price they pay. The law allowing this process is called the Net Metering law, and it allows homeowners to pay only for the net amount of electricity they use each year after accounting for the electricity they produce from their solar or wind generator. Net Metering is now the law in 35 states and has been instrumental in helping grow the market for solar and wind power. It eliminates the need to use batteries to store extra electricity you produce during the sunny part of the day (in effect "storing" the excess electricity in the utility electric grid).
Connecticut, Long Island and New York rebates and tax credits pay for 50% to 70% of the installed cost
Connecticut, Long Island and New York, through their Clean Energy Programs, are trying to encourage tens of thousands of homes and businesses to invest in solar electric systems. By providing rebates (and tax credits in NY) to pay for most of a system's cost, a solar electric system becomes an attractive investment. Their hope is that if solar electric systems become commonplace, energy users will buy them in future years with lower rebates or no rebates. (To get more details, click here or on Solar Economics at the top of any page.)
It will protect you against future electric rate hikes
In New Jersey and New York most of our electricity is generated using oil and natural gas. Unfortunately the prices of these fuels are subject to national and world market forces and are now at some of the highest levels seen in many years. Even coal prices (which account for about 10-20% or our electric generation) have seen double digit increases over the past year. New oil supply is getting more expensive to develop worldwide and some large countries, like China and India, are rapidly increasing their consumption of oil because they are in a period of rapid industrialization. Competition for domestically produced natural gas is also increasing because almost all the new electric generating plants built in the past ten years use natural gas as their primary fuel. Higher oil and natural gas prices are forcing utilities everywhere to collect more revenue, often through frequent adjustments to the fuel adjustment factor on your bill.
It increases the value of your home
The typical solar electric system delivers from 30% to 80% of the homeowner’s annual electric needs. So, a solar equipped home costs less to operate than a home without a solar system. According to the October 1999 issue of "The Appraisal Journal" (published by the Appraisal Institute, a national trade association of real estate appraisers), for every dollar reduction in annual utility bills, the value of your home increases by about $20.
Early reports by the real estate industry in California (where solar electric systems started being installed a few years earlier than in the East) are that buyers will pay more for a solar electric-equipped house. The increase in the home sale price is estimated at 15-20 times the value of the electric produced each year, as predicted by the Appraisal Journal. This amount is often as much or more than the net investment made by the homeowner to install the system. (It is reasonable to assume that a business property would see a similar increase if value, but there is no data yet to support this.)
It will provide a relatively high-yield, low risk return on investment
Your solar electric system will continue to produce electricity as regularly as the rising of the sun each day. And utility rates can be practically guaranteed to continue to rise. So your investment in solar is fairly low risk. Because there are no moving parts in a solar system, and silicon based solar modules have been operating for decades (some for as long as 50 years), manufacturers expect each solar module on a home to operate for at least thirty years. You could compare the value of the electricity produced by a solar electric system to an annunity payment you receive each year. The electricity you produce means you have to spend less of your after tax income to pay out for the electricity you need.
In New York the annual Rate of Return (ROR) tends is in the range of 4-6% (higher for Con-Edison customers). In New Jersey it is in the range of 6-10%. Since these RORs are in the form of savings, rather than income, they are non-taxable, so they compare to taxable investments yielding returns that are perhaps 30-40% higher (depending on your tax bracket). In addition, NJ residents will receive taxable SREC returns of an additional 6-8% per year, and NY an additional 1-2% from their RECs. In short, a NJ owner of a residential solar electric system can realize an annual ROR comparable to a taxable investment that pays as much as 20%. In NY your solar investment's ROR is comparable to getting 10% from a taxable one. What's your current portfolio doing for you?
RORs for commercial systems are tend to be much higher than for residential systems. This is because of the potentially much higher federal investment tax credit (30% but no cap) and the five-year accelerated depreciation.
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