Solar Power Installation as a Hedge Against Stock Market Volatility

By Steve LoRusso, Vice President, Sales, HelioPower

In today’s mortgage market equity credit lines are often not easily rendered to take advantage of solar energy systems savings and ROI. How else can you finance a solar power system while the Federal Investment Tax Credit is still whole? Not to mention capitalizing on Utility rebates at the highest level possible while still available and hedge against high Summer electric bills?

A system had an initial capital cost of $50,000 after the utility rebate of $16K is also eligible for a $2,000 federal tax credit. The system proposed will also deliver a first year savings of nearly $4,000 in utility costs. The manufacturer warrants solar modules for 25 years, so this is the economic life selected for the analysis. However, keep in mind that long-term studies suggest that solar modules will experience an operating life of 40-50 years. There are other factors included in a typical analysis such as increased property value and utility rate increases.

Rates of Return Solar Versus Secure Investments
The first step is to calculate the rate of return for the solar system. This turned out to be just under 12% in a scenario where we’re targeting your highest usage. On-Line research was used to determine returns for the other investments, which are charted below.

This analysis shows that the yield on a solar system is more than twice that of the other secure investments available.

Rates of Return Solar Versus Stock Market/Unsecured Investments
With the stock market seeing uncertain somewhat worrisome times, what does a predictable investment in a solar electricity system look like compared to the stock market overall?

Over the last 32 years California utility rates have gone up on average 6-7%. Source: PUC. We have seen rates climb 14.8% for residential clients in the Southern California Edison territory already this year. SDG&E territory rates grew, through two increases, to a total of 13%.

Final Analysis
In the final analysis, you can carve out a portion of your market investment to a secure bank note at 4-5% or invest in your own residential power plant for a secure 12%.