Go Green...Go Solar
The economics of solar panels for the home was the topic of a previous post. The conclusion was that while solar panels requires a significant cash outlay (they can also be financed), they provide a return on investment of 5 to 10%, depending on where you live and the rebates and tax incentives that are available. Solar panels can be analyzed as an investment because they can be expected to last 25 years or more.
An additional financial benefit of solar panels is the increase in value they provide for your home. The typical improvement in home value is figured at about $20 for every $1 saved in electricity cost. Thus, if you install a 4 kilowatt system that saves just $800 in electricity cost per year (in very sunny areas like Arizona or Southern California the savings are significantly greater), you can add about $16,000 to the value of your home. Of course, this is a negotiated amount, but there is a strong argument for the increased value: any new owner would benefit from the lower electricity costs.
According to this analysis, the value of your home increases by an amount almost exactly equal to the cost of the solar panels after rebates and tax credits. On top of that, you earn a 5-10% return. These two factors make the installation of solar panels worthwhile financially as well as environmentally.
