Solar as an Investment
Solar isn't just a great choice for the environment - it's also a great investment. Solar works in much the same way a bond does:
pay some money today, get a lot of money back over time.
When you build a PV array on your home or business, the electricity it generates will be consumed by whatever electrical loads
you have on-site, thus preventing you from needing to purchase electricity from the utility. If you're not using any power on-site
(because your business is closed, or because you simply don't have any lights on), the electricity flows out through your meter, which
runs backwards, generating a credit. This credit can be used at any time to purchase electricity you need when the sun isn't out.
This all happens automatically; your electrical system will function exactly as it did before, and at the end of the month, you'll
receive a much smaller utility bill. The difference between your old bill and your new bill is your monthly return on investment.
How do I evaluate solar as an investment?
Any contractor who proposes a solar array for your site should present you with a payback model that covers the manufacturer's
warrantied life of the PV modules (usually 25 years). This model should show you your cash flow in detail for each year. It should
show how much energy the system is expected to produce, and what you can expect that energy to be worth. Two numbers should leap right
out at you: the Levelized Cost of Electricity (see link below) produced by your system, and the Net Present Value of the entire
investment.
How do I maximize my return?
Investing in solar power can seem complicated, but here at Fiveboro, we have the expertise to help you capture the value of your
rooftop realty. There are Federal, State, and Municipal subsidies for which you likely qualify in some combination. Depending on your needs, the components
chosen by your system designer may cost less today, but require more maintenance down the road, or vice-versa. Depending on how various factors at
your site come together, it may make sense to build a smaller array that will be more efficient in the long run. There are many
choices to make, and Fiveboro has the skill and experience to help you decide how to get the best return on your investment.
What should I watch out for?
Unfortunately, there are solar contractors and come-lately 'project developers' out there who view your solar array as an investment in their own bottom line, or who
have simply not been in the industry long enough to know what can go wrong. Rather
than sell you the system that would actually work best on your site, sales people may present metrics for
system performance that, by design or otherwise, can conceal major problems.
'Cost Per Watt' is a metric that some contractors use instead of Levelized Cost of Electricity, and it is a red flag: it means a
contractor is asking you to judge the value of their proposal, literally by dividing the price of the system, by the size of the
system. A metric like that makes no claim about how the array will perform. Is it facing the right direction? Is it tilted up at the
correct angle? Is it shaded for most of the day? When will you get your money back? Cost Per Watt doesn't answer those important questions, and will not help you compare
alternatives. At Fiveboro, we use Levelized Cost of Electricity to describe the true price and payback of your project, because we believe that
an informed consumer is a happy customer, and that's good for business and good for the planet.
'Derate Factor' is a metric that describes the relationship between the capacity of a PV array on paper, and how it will actually
perform in the field - the latter number being what you'd use to estimate how much electricity, and therefore how much money, the
system will produce over time. A typical number is 0.77. With certain technology (that may or may not be cost-effective depending
on your situation), you may be able to get a little more. If you get a proposal that uses a number higher than 0.77, scrutinize it
carefully. Make sure there is a legitimate reason for you to expect above-average returns, and ask if the difference you're paying
for them up front, is justified.
At Fiveboro, our NABCEP-certified designer is always glad to walk you through the details of your investment. Plain and simple,
we want your investment to pay off, just as much as you want it to.
Useful Resources:
Bret Heilig is a NABCEP certified PV Installer,
a Licensed Electrician in the State of Califonia, and a proud alumnus of
Solar Energy International. He has participated in the construction of over 4MW of PV since 2005, of which he designed over 500kw.
Prior to his work in solar energy, Bret put himself through trade school working as a painter and carpenter. Bret holds a B.A. in
History from UC Berkeley.
Heidi Heilig is a professional writer who spent two years teaching urban agriculture to children at the Brooklyn Botanical Garden
before opening her own successful gardening business. She still has a soft spot for soil over silicon, but is always happy to be moving
New York City towards a greener future. Heidi holds an M.F.A. in Theatre from NYU.
