MONTGOMERY VILLAGE, Md., June 20, 2012 – Many of us want to do the right thing for energy conservation and the environment. However, it is difficult to make the correct decision, especially when considering solar power. We recently had to make this decision and believe that our decision-making process may help others.
We decided that a 20-year solar lease was the best option for us. We leased an 8.56 kWh direct current (DC) system that provides about 5.86 kWh alternate current (AC). What this means is that the solar panels are rated at a certain capacity, but when the DC they provide is converted to what your home uses, AC, it loses about 15%.
The guaranteed saving in my electrical bill under the lease is about $60 per month. In my case the recovery time (time that it would take to save at $60/month, the whole cost of the lease) is approximately 17 years. Purchasing the system would have increased the recovery time to 23 years and this is including the Federal and state incentives currently in place for homeowners (between $10,000 and $12,000).
This guaranteed savings mean that if the system is not as efficient, the company will reimburse me the difference. For the lease we are also not responsible for any maintenance or damage to the system. Our decision was based on three-step analysis as follows:
* These are too many years to recover the investment, and at face value, it is not an attractive proposition. However, since we are not investors, our analysis was different from what it would be if we were. If we were to leave the money that we are spending on the lease in my variable annuity, we would come out close to even.
Only if there were a big boom in stocks and bonds, would we gain by leaving the money in the annuity. The lease guarantees me about 5.5% return per year. This was the first test in our decision and the result was neutral;
* Another scenario that we tested was using the money for other improvement of our home. Typical improvements that many homeowners consider are remodeling bathrooms and the kitchen or putting in an in-ground pool. These options will make the homeowner responsible for any maintenance and repair for anything that goes wrong in these systems.
We know from family and friends that maintenance for a pool can be onerous and insurance rates can also increase. The recovery time extends to the time that you live in the house, since there is no recovery date unless you sell the property. One can argue that these changes to your home will improve your quality of life, but this is difficult to quantify. In our case this comparison was won by the solar lease decision;
* Assuming that in both cases, home improvements and solar lease, the homeowner is able to recover the costs, what decision is the wisest monetarily? While in the case of the solar lease, the potential value for a buyer decreases according the how much time is left in the lease, one can also speculate that as time passes the pool, kitchen and bathroom updates will also lose value. This comparison is also neutral or a little in favor of updating bathrooms and kitchens.
* Finally, there are other considerations that are difficult to quantify. An important one for us in this category is doing the ethical thing with regards to energy conservation and environmental protection. We believe that it is important to conserve energy and reduce our carbon footprint. By choosing the solar option, we know that we are doing just that.
However, there are other simpler things that one can do to reduce the carbon footprint. The following actions can reduce carbon pollution and conserve energy:
1. Add more insulation to the attic;
2. Add consolidate car trips to save gasoline;
3. Be more careful about leaving lights and other electrical devices on;
4. Join a carpool, saving 50% of the energy just by commuting with another person;
There are many other suggestions that I am sure the readers can add. Please feel free to do so in the comments.
Mario Salazar, the 21st Century Pacifist, is a bleeding heart liberal, agnostic, exercise fanatic, Redskin fan, technophile, combat infantry veteran, jewelry maker, amateur computer programmer, Environmental engineer, Colombian-born, free thinker, and, not surprisingly, pacifist. You can find his articles - ranging from politics to cooking a mean brisket - in 21st Century Pacifist at The Washington Times Communities. Follow Mario on Twitter @chibcharus #TWTC and Facebook at Mario Salazar.
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