Benefits
Almost everyday, we hear about the challenges that our environment faces: pollution, global warming, the depletion of natural resources. Harnessing solar energy directly combats these issues. By going solar, we reduce our consumption of non renewable resources, offset the additional release of carbon dioxide into the atmosphere, and remove other pollutants that are normally spewed out by coal and gas fired power plants.
These reasons alone are enough justification to switch to solar energy, but here are a few more environmental benefits:
Reduces US dependency on foreign oil
Reduces the emission of criteria pollutants
Increases air quality
Reduces asthma attacks
Reduces acid rain
Reduces the need to store radioactive waste
The environmental benefits are important, but most home owners can not simply afford to install solar panels unless there is a financial benefit as well. Here are some financial benefits:
Free electricity for decades
Insulation from energy price hikes
Creates high quality US jobs
Increases the value of your home
In the past, the upfront cost of solar panels made them cost prohibitive for the majority of homeowners. But in recent years, prices have come down due to global competition and federal and local incentives available to the homeowner. The financial benefit will vary based on your particular situation, but lets examine a few realistic examples:
Cost of PV system
Homeowner A installs a 3 kw solar system on his roof and is able to take advantage of the Austin Energy rebate and the 30% federal tax credit. Yearly energy savings are about $500/yr at current energy prices. That corresponds to an annual return of at least 8%. This rate of return will increase as the price for electricity increases.
What is 8% a year?
Compare it to the stock market. From 2000-2008, the total return of the stock market has been -3.6%. Suppose that in 2000 you put $5000 into two investments. One earned 8% and the other lost 3.6% each year. By 2008, you would have made $3200 at the 8% rate versus losing $1440 at the -3.6% rate. That is a net difference of over $4600. That 8% investment looks pretty good!
Cost of solar hot water system
Homeowner B installs a solar hot water system that offsets 90% of his hot water usage. This system replaces an old electric heater. With the Austin Energy rebate and the 30% federal tax credit, the initial rate of return on this investment is 11%. This rate of return will increase each year as energy prices rise.
As you can see there are several benefits to installing a solar system on your home. Not only is it a stable financial investment for you, it is an investment in the environment that will pay dividends for years to come.