Wednesday, January 25, 2006

How much $$$ to install, part deux. Its even easier with a loan!!!

Hello Future solarDwellers:

Coincidentally after writing about how much solar costs in yesterday's post, I saw an article (link) in today's San Francisco Chronicle also talking about how now is a very good time to go solar, to go "green" electricity.

The writer comments on whether solar makes sense to install on his San Francisco home (in a part of S.F. without so much fog, which does exist, believe it or not). He comments on an financing angle I didn't discuss yesterday: paying for a solar installation using a home equity or consumer loan. It's a smart way to avoid paying "up-front" the $13,500 cost of the hypothetical installation I mentioned yesterday.

Bottom line: his electricity bill pre-solar is a low $75/month. The 15-year loan to pay for a solar panel set-up would cost him about $145/month. So, basically, he'd be paying an extra $70/month: call it a "green energy" premium. But, also think of it this way. He is protected against future electricity rate increases. His electric bill 10 years from now could easily be $100+, making that $145 loan payment look not so bad. And from year 16 to year 25, the warranted life of the system, he is free and clear with NO MONTHLY ENERGY COSTS! As his neighbors continue to pay the electric company more and more money each year, the value of the energy his solar panels is producing goes up as well.

The real bottom line on the "solar" decision: The "payback" time is between 12-15 years these days, 7 years if you have $150+ elec bills. But the real question: how much is having 100% green, solar electricity really WORTH to you?? Using the above case, is the benefit of paying $0 to the electric company WORTH paying an extra $70 per month for your own solar power plant on your roof? Would you be happy paying an extra 70 bucks for the satisfaction of producing clean electricity???

Personally, paying an extra $70/month would be worth it for green energy for my home. "But solar energy is more expensive and has too long a payback time," isn't a persuasive enough argument for me to avoid making the solar purchase. The question to me is: "Is the benefit of green energy affordable for ME?"

Taking out a loan that only adds $70/month to my electricity costs seems like a practical, doable way to become a "green" energy producer, and a CO2 reducer.

--the solarDweller

Next post: more on the psychology/economics of the "solar decision," further debunking the "barriers" of a long payback time and higher cost of solar electricity. Hint: what is the difference between the "value" and "price" of clean energy vs traditional carbon-based energy? Is one type inherently worth "more" than the other in terms of price?
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