What sort of capital investment is required?
How quickly will I see a return on my investment?
Are there any risks involved with this investment?
How does this investment compare to others, such as stocks and bonds?
How does solar PV compare to solar hot water and other technologies?
What do I need to get started with solar?
Will the technology improve or become cheaper if I wait?
Will my investment ROI improve or worsen as time passes?
What are my financing options?
- The ROI (Return on Investment)
As a general rule of thumb one 250W solar panel will produce $50.00 in power at a rate of $0.15/kWh (current NSP rate) annually. That means that if the cost of power in Nova Scotia stays the same (not likely) then one 250W solar panel will have paid for itself in 12 years (our price for 250W is $600.00) – however, if the rate of power were to increase by as little as a few cents per kWh (very likely) then the hardware will pay for itself in fewer years. Based on historical data we conservatively estimate that the return on investment (ROI) for one panel (+ micro-inverter racking and cables) is approximately 10 years. This means that after just ten years your solar system will have paid for itself in energy savings and for every subsequent decade you will save the same amount again. For example: Let’s say your annual power costs are approximately $2000.00. A 10 kW system consisting of 40 panels will produce $2000.00 per year in energy savings eliminating your hydro bill. The hardware cost of a 10 kW system from WattsupSolar is $24,000.00 meaning the system will have paid for itself in 12 years (assuming the cost of hydro does not increase – we have good reason to believe that it will and thus calculate a 10 year ROI). If this is the case, your system will have made you $24,000.00 of profit in the first 20 years and the best part is that at that point in time all of the components of your system are still warrantied for another 5 years. On average provincial power rates across Canada have increased by 3% annually. Industry experts estimate that rates from NSP will be $0.20/kWh by 2020 and $0.25/kWh by 2030.
- The capital
The price of a PV solar system isn’t cheap by any standards. The initial cost for most residential customers can be anywhere from $2,000 – $30,000+ depending on the size of the system. The good news is that the ROI doesn’t change based on how large the system is and the financial benefits of a solar system don’t change based on the energy needs of the consumer. For example, 250W worth of solar hardware will produce approximately $50.00 annually in energy savings at the current NS power rate ($0.15/kWh). This means that the return on your investment will be the same whether you’ve installed a 250W ($600.00) system of a 10kW ($24,000.00) system. If you use a great deal of power in your home a solar system might seem like a great way to reduce your energy costs – it certainly is – but that doesn’t mean that a home that doesn’t use much power is not a good candidate for a solar investment. In fact, if you plan to finance a small system to eliminate the power bills of a small energy efficient home your interest costs will be much lower once the system is paid for.
Solar systems are considered to be an extremely low risk investment. The hardware is warrantied for 25 years and said warranty is backed by a third party in case the manufacturer were to dissolve. You are not betting on the markets as you do with stocks and bonds, you are simply betting that the sun will continue to rise on a daily basis. That’s a pretty safe bet in our opinion. If we ever lost that gamble we would have other things to worry about. It would be extremely difficult for a solar system to be stolen once it is securely fastened on to your roof and all of the components are highly durable and have been tested extensively in many climates. In other words, an investment in solar WILL pay you back. It is a near certainty. In fact, there is not a single investment product on the market today that is as risk-free as a PV solar system.
- How does it compare to other investments?
As mentioned above, an investment in solar is hardly comparable to typical investment products because of the risk disparity. Investing in stocks, bonds, mutual funds and so forth isn’t always a bad idea – but you can never be sure that you will actually see a return on your investment. It’s a high level gamble and most of the time it’s an expensive suit or even a computer that is playing your hand. With a solar system there is virtually no risk. You are purchasing an asset that has its own value as well as the ability to literally generate a tangible, usable form of green energy which you can use in place of the power that you buy from your provincial power grid.
- How does PV compare to other types of solar?
Solar powered hot water systems are becoming increasingly popular, and they can undoubtedly save you money, although, are they really the best use of the prime sun-exposed real estate on your roof? Absolutely not. Once your water has been heated by the sun, it sits dormant while you contemplate taking a third shower just to put it to use. Why spend money to purchase equipment that turns an infinite energy resource into something finite? You only need so much hot water, and you can’t give your surplus hot water to anybody else to get use out of it. This means that in the early afternoon on a sunny day your expensive roof equipment has ceased to be of any use to you as soon as it has heated up your water, and the infinite rays of solar energy bounce off your roof and back into nothingness. What a waste! Solar hot water systems are a great example of the versatility of solar energy and how it can benefit consumers, however, if you’re making an investment in renewable energy (good on you by the way) then you should definitely be getting the most bang for your buck.
- What do I need to get started?
To make sure your system gets optimal sun exposure it should definitely be facing South. The closer to South the better although SW and SE are acceptable and can still be highly efficient. If your roof isn’t ideal, that isn’t always a problem. Ground mounted systems are becoming increasingly popular and even have some advantages over roof-mounted systems, such as accessibility for snow removal. It is important to have minimal shading throughout the day for obvious reasons. A good system design can just about make a solar project work for any location, although, unfortunately there are some locations that cannot properly benefit from a solar installation.
- Should I wait?
Solar technology has dropped considerably in price over the last few years, although, the efficiency ratings of said technology haven’t improved by much (if at all). Anyone who bought a Blu-Ray player back in 2006 would have probably been upset in 2011 after they had dropped in price significantly and the same may be true for early adopters of PV solar technology in Canada. We have now reached an industry plateau where the price of the technology cannot get cheaper because the market is shared by so many competitors that the prices have dropped to a point where market share matters more than overall profits. It is unlikely that the cost of good quality warrantied solar hardware will continue to reduce past 2015.
- Will my ROI better or worsen with time?
With a net-metering solar installation your ROI would decrease if the cost of power from the provincial power company (NSP) were to drop from where it currently is ($0.15/kWh). Your ROI will improve if the cost of power increases. You can be the judge as to whether your ROI will improve or worsen. Historically provincial power rates have only ever trended upwards. A seemingly minor increase in power rates could drastically improve your ROI with a grid tied solar system in Nova Scotia.