FAQ'S/PV As An Investment
Q.
How can a photovoltaic system be considered an investment?
A. Installing a PV system is a capital improvement to your home
or business (and is therefore exempt from sales tax). But unlike
most real property improvements, it generates electricity and thus
an ongoing cash flow, by directly reducing your electricity bills
for the next 25 or more years. The initial capital investments and
subsequent cash flow benefits make a PV System comparable to other
long term, purely financial investments.
Q.
Why should we consider putting some of our savings into a PV system?
A. Besides the obvious environment benefits, investing in a PV system
provides a unique opportunity to diversify away from financial markets
and their volatility. The rate of return from a PV system is independent
of interest rate fluctuations, accounting scandals, recessions and
international crises. In this way, it can provide a new method to
allocate investment assets and improve diversification.
Q.
What returns can be expected from a PV system?
A. The initial pretax return for a medium-sized system on a good
site is 8%-12% annually. That compares favorably to money market
accounts, CD’s, stocks and even long term treasuries. Initial
returns can range from 6%-12% depending on system size, site specifics
and an investor’s tax bracket. The initial rate of return
can be calculated by doing a solar site survey and system design
before making a decision to purchase a system. Average system pay
back is 9-11 years.
