Typical Yearly Savings Due to Solar Panels
One aspect that is often not fully appreciated when evaluating a solar power system is the annual return generated.
Most people will pay serious attention to the level of return on an investment.
Strangely these same people do not regard investment in a solar power system in the same way as a typical investment.
Consider annual savings on a two kilowatt solar system with an installed cost of $6000.
An average daily output of 8 kilowatt hours if used totally by the owner may typically result in a daily saving of say $1.
60, based on a 20 cent per unit cost.
This can be translated to an annual saving of $584.
Many customers will focus totally on a payback period thus calculated at 10.
3 years.
However, the astute investor will immediately be aware that a $584 annual return on an investment of $6000 represents a percentage return of 9.
7%.
Furthermore, this return is .
normally non-taxable as it is a savings on an expense and not income .
available for the life of the panels which is over more than twenty years .
more than twice the level of return typically regarded as a satisfactory return on a safe investment.
When it is further realised that the return can and will grow over time with every increase in the cost of power, the need to consider the savings generated in these terms is beyond question.
Finally, it should be acknowledged that there is not one simple rule to follow in arriving at the decision to invest in a solar power system.
The measure above is a vital consideration in an overall assessment that will lead to a well balanced decision.
So while payback period is a consideration that should be taken into account, the more often neglected figure of return on investment is one that should receive greater prominence.
In this way the typical savings on a solar power system can be put in perspective against any other investment the homeowner may consider.
Most people will pay serious attention to the level of return on an investment.
Strangely these same people do not regard investment in a solar power system in the same way as a typical investment.
Consider annual savings on a two kilowatt solar system with an installed cost of $6000.
An average daily output of 8 kilowatt hours if used totally by the owner may typically result in a daily saving of say $1.
60, based on a 20 cent per unit cost.
This can be translated to an annual saving of $584.
Many customers will focus totally on a payback period thus calculated at 10.
3 years.
However, the astute investor will immediately be aware that a $584 annual return on an investment of $6000 represents a percentage return of 9.
7%.
Furthermore, this return is .
normally non-taxable as it is a savings on an expense and not income .
available for the life of the panels which is over more than twenty years .
more than twice the level of return typically regarded as a satisfactory return on a safe investment.
When it is further realised that the return can and will grow over time with every increase in the cost of power, the need to consider the savings generated in these terms is beyond question.
Finally, it should be acknowledged that there is not one simple rule to follow in arriving at the decision to invest in a solar power system.
The measure above is a vital consideration in an overall assessment that will lead to a well balanced decision.
So while payback period is a consideration that should be taken into account, the more often neglected figure of return on investment is one that should receive greater prominence.
In this way the typical savings on a solar power system can be put in perspective against any other investment the homeowner may consider.