» posted on Sunday, November 14th, 2010 at 3:47 pm by Woody Wilson viewed 398 times
GetSolar Staff. Sunday, November 14th 2010 09:00
Some businesses and homeowners are motivated to go solar because they want to reduce their environmental impact – but for others, it’s all about the potential savings. By reducing the consumption of grid-sourced energy, solar power can slash a household or business’ energy bills significantly. But can a solar installation do more than break even and have a positive return on investment?
The answer is yes – with some caveats.
In most cases, solar arrays will have a payback period – the length of time they take to pay for themselves through energy savings – of no more than 15 years. (Solar water heating systems, which are much cheaper than home solar installations, have a shorter payback: Because they only cost a few thousand dollars, they will pay for themselves in far fewer than 10 years.)
In states with robust solar incentive programs, solar installations can take much less time to pay off. In places like California – which often have rebate programs at the municipal level – or New Jersey – which requires utilities to pay clean-energy producers for the power they generate – solar projects’ payback can be surprisingly short.
Yet even solar installations in states without strong rebate programs can pay for themselves in short order.
On November 12, the St. Louis Post-Dispatch profiled chemical distribution company Walsh & Associates, which recently put 416 solar panels in place at its warehouse. The array’s $500,000 price tag was offset by a 30 percent federal tax credit and a one-time, $50,000 payment from utility Ameren – but Walsh assumed the rest of the installation cost.
Even so, the company expects its solar project to be paid off in just six to nine years. The reason for the quick payoff is that Walsh will cut its energy spending sharply: By going solar, the firm will slash its $36,000 annual energy bill to just $1,500.
Assuming the array has a 25-year useful life, the chemical distributor anticipates that it will enjoy a return on investment of half a million dollars. Homeowners who go solar shouldn’t expect to save $500,000, but they, too, can see a positive ROI by installing a solar array.
Solar has environmental benefits, of course – but it’s hard to ignore the economic ones.