Our clients are curious about the viability of solar as a financial investment on their property. At Newport Solar we produce free proposals for our prospective clients, so that they can see how efficient, and thus financially attractive, investing in a solar array could be. However, the value that a solar array gives its owner is not just tied to the kilowatt-hours (kWh) that it produces. To get a full picture, one must look into other financial benefits such as incentives, tax credits, reduction of risk, and property resale value
The most obvious financial benefit of solar, beyond environmental, is the money that it saves by offsetting electricity use. Rhode Island has some of the most expensive electricity rates in the nation. Our clients usually see a 7 to 8 year payback with annual rates of return around 14-16% or higher.
Rhode Island has generous incentives to help pay for a solar installation. In a Net Metering installation, clients can get money up front to help reduce the cost of the installation. Additionally, there are programs that pay RI residents for their electricity production. Ask us for a free proposal and we will help you navigate the somewhat complicated financial benefit of state incentives.
The Federal Government offers a 22% tax credit on renewable energy systems. This tax driven financial benefit helps our clients recoup a large chunk of their investment right away. Though we don’t know what laws might change, 2021 is currently the last year homeowners can pursue a federal tax credit. For commercial systems, it goes down to 10% permanently in 2022. Businesses can often depreciate solar as an asset using a Modified Accelerated Cost Recovery System (MACRS) depreciation strategy. Of course, we are not CPAs at Newport Solar, but we can model these benefits and send any info over to your CPA for review.
Electricity prices, on average, have gone up by a compounding 3-4% annually over the last 10 years. This increase, however, is not a smooth curve; the Federal Energy Information Admin tracks that and you can see it’s consistently high. This unknowable increase over the coming 10 years presents your pocketbook with risk. Will electricity rates go up by more than 4% annually? We don’t know. By producing your own electricity, you are locking in your electricity cost at a 66-80% savings, capturing the financial benefit of controlling your cost of energy!
A frequent question our team gets when we deliver a sales proposal is, “What will solar do to the resale value of my house?” All real estate is local, and you cannot account for taste; however, we can look at the statistics and say that, on average, solar is great for resale value!
Zillow released a broad study that shows homes with solar sell for an average of 4.1% more than other equitable homes. Check out the study and see how solar might impact the value of your home in a positive way!
Solar is Awesome
Residential and Commercial Solar has been around for a while, and the data are in. Solar is likely one of the best investments you can make on your property if you are looking to save money and make an excellent, low risk rate of return on your hard earned cash.