Quote:
Originally Posted by roflwaffle
An 8 year payback is a 12+% return on investment, which is pretty good in my experience. That's ~1.5x the real return of the S&P 500 over the past century.
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It wouldn't be 1.5x the return.
I considered this when I bought my solar system and mine doesn't beat the stock market.
If I consider a conservative average annual return for the total US stock market to be about 7%, that means the value would double every 10 years.
If I figure a lower cost solar system is $10,000(mine was slightly more) after the tax credit, ignore the delay in getting the tax credit money back, and consider the idea that the money put into the solar system is sunk until it comes back out, this is what my math looked like based on my own expected payback.
Solar installed(figuring 8 year payback, but mine is actually over 10) -$10,000
$-8750 Year 1
$-7500
$-6250
$-5000
$-3750
$-2500
$-1250
$0 Year 8
$1250
$2500 Year 10
$8750 Year 15
$10000 Year 16 (Took 16 years to double)
$15000 Year 20
$27500 Year 30
Of course, this isn't accounting for changes in electricity cost or net metering factors specific to your region or electric provider.
Stock market starting with $10,000 with 7% annual return
$10,700 Year 1
$14,025 5
$19,671 10
$27590 15
$38696 20
$76122 30
Compounding returns is powerful. You could take the returns you get from the solar system and invest those in the stock market, but even if you do that, you still need to consider that the price paid for the system is not going to be in the stock market and you've lost the opportunity cost for that initial potential principal. The idea that the original poster is about to otherwise lose the cash and is willing to DIY the install, I'd say that it's still a good move to do.
For what it's worth, the financial component of solar was a factor but I still wanted the solar and I figured it was better than spending the money on a couch, a car, or some other depreciating asset. It is fun for me to look my eGauge power graphs and see the power the system is generating and what the house is using.