Quote:
Originally Posted by redpoint5
I'm repeating myself, but nobody in the Oregon valley is money ahead by purchasing solar. If I have $10k in my pocket, I could buy a solar roof and have it pay back in 10 years (supposedly). On the other hand, if I invest the $10k, in 10 years I'll have turned it into $20k.
It might make financial sense when heavily subsidized, but not if you've got to pay market price for everything.
Of course, we don't need financial reasons to do something, to say it's the financially prudent thing to do is misleading.
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It is absolutely true that there are better ways to get a return on free cash, but let me spin this a different direction a bit:
A residential photovoltaic system can be financed via a home equity line of credit. With favorable system costs, a 10 year payback period is not unreasonable to suggest, but obviously is fungible a few k each direction. Using the 'Rule of 72', where the amount invested can be estimated to be doubled, solar is potentially actually on par with your assertion. Providing a return on investment of 7.2% using that calculation, even if one were to pay a higher HELOC rate equal to that, would still provide long term dividends on the investment beyond the payback period. Right now however, there are HELOCs running in the 5% range. Taking that math a little further, that is still as much as 2% ROI before the payback period ends. Better still, HELOCs when used for capital improvements of a primary residence are tax deductible interest (assuming the $750k limit is not breached).
So if a person lacks the liquid cash outright to finance a solar installation, the option of cheap money, HELOC in particular, is still potentially a cash flow positive proposition over the long term. Moreover, money invested in PV upfront is typically factored directly into property value later on for sale. (Providing the other half of the Rule of 72 doubling.)
But there is still more.
If the property is the primary residence, capital improvements to it and on the ROI that they provide are also income tax free - unlike most other investments such as stocks or additional investment properties. The only real variables then become future market value of the property the solar is installed on, weather, and the cost of energy purchased from others. Other than that, returns are guaranteed.
There are few investments that offer that level of return and security on borrowed money with so little management.