Solar Power Homes

Do Solar Power Homes Really Save you Money?

I have always been excited and enamored of renewable energy, but until now the technology has been too inefficient to really replace traditional carbon based power, and often the costs have been prohibitive too.

Lately though, in the last semi decade, the technology for Solar Power Homes has improved dramatically, and due to increased economies of scale, the prices have gone down significantly too. But has this occurred to an enough level to make any significant change to solar power homes landscape. I don’t know. It might make sense in some situations, and not in others. I know I am taking the classic “it depends” fallback. Let me explain though with a hypothetical example.

I live in Northern California in a 1300 sq. ft. home. We approximately need air-conditioning about 3 months a year, and heating about 4 months a year. My electricity bill is approx. $100/month. My estimate is that to generate even half of the electricity consumed, I would need about $10,000 of investment in materials and contractor costs. At the rate of saving $50/month on electricity bills, it would take me 10,000/ 50 = 200 months or more than 16 years to recover my investment. This means at the end of 16 years I would have spend exactly the same amount as I would have without going solar. By this time, I would probably need to replace the whole solar thing with new advanced materials, incur more contractor costs, and start all over again.

On the other hand, if I put this $10,000 in a FDIC insured savings account at typical interest rates of 3.5%, at the end of 16 years, this would become more than $ 17,000. Clearly in this scenario, using that $10,000 for a solar power home is not an obvious choice.

Also, this equation could change depending on whether you are using government grants and subsidies to reduce your initial costs. The costs can go down even further if you are good with your hands, willing to learn and do some part of ‘solarifying’ your home yourself, while saving the more challenging parts for the contractor.

One hopes that technology and business models evolve to a point, where opting for green technologies is a no-brainer. This would go a long way in mass adoption of Solar Power Homes and move it beyond the realms of green earth romantics.