Solar: Save Money, Increase Value of Your Home

I have been going over some of the bills from the last few years. My utility company, San Diego Gas and Electric has been increasing the cost of electricity around 7% annually.

Seven percent per year seems like quite a bit, especially since inflation has been running around two to three percent. The increases of fuel costs and energy products in general have far outpaced inflation. Here are some solar facts:

Based on conditions here in CA state:

  • The average home owner chooses to install a 4 KW DC photovoltaic system. This generates 4500 to 5000 KWh per year.
  • With rebates and incentives, the final system cost is about $10-11K.
  • Over the course of the system life (25 years), the electricity generated will cost $0.09 per KWh. Currently, SDG&E electricity averages $0.158 KWh (increasing at 7% per year).
  • Without inflation, that equals a savings of $29,000.00.

Also, based on conditions in CA state:

  • The average home owner chooses to install an 80 SF/80 Gallon solar hot water system. This will supply a family of four with 80% of their hot water annually.
  • With rebates and incentives that system cost is around $3,800.
  • Over the course of the system life (25 years), the energy converted by this system will cost $0.03 per KWh. Currently, CA electricity averages $0.158 KWh (increases 7% per year)
  • Without inflation, that equals a savings of $16,500.00.

Of course, these are long term investments. In order to realize this type of savings, a homeowner will have to stay put for 25 years. That is a rarity these days.

Solar systems retain almost all of their pre-incentive/rebate value when added to a structure as a capital improvement. Here is a list of residential home improvements and the values added to a typical house:

  1. Two story addition: 94%
  2. Bathroom remodel: 93%
  3. Major Kitchen Remodel: 91%
  4. Solar System: 90%
  5. Basement finish/remodel: 89%
  6. Siding: 88%
  7. Roof Replacement: 85%
  8. Deck: 84%
  9. Hot tub: 84%
  10. Family room addition: 82%
  11. Sun room: 75%
  12. Garage addition: 70%
  13. Backup power generator: 58%

Of course, if the rebates and incentives are considered, then the installation of a solar system is cash positive from day one. What this means is the homeowner pays $11-12K but gets $32,000 of additional home value. I can’t think of a better deal than that. Go Solar and you will be spinning back to savings…