Are solar panels attractive investment or a big expense?

​The terms investment and the expense are the two sides of the same coin. It is how you perceive them. If you perceive for the short duration then it is an expense and the long horizon makes it as an investment.

• A monthly tuition fee for your children is an expense in present but it is an investment for the future because the education is going to define the future of your children
• Spending money on your good food habits is an expense but in return, you will be getting a healthy body and sound mind that makes it an investment
• Spending time with your friends looks like an expense as on today but it will make the bonding stronger in the later stage, making it a good investment choice.
• Similarly, spending on the solar array is an expense as on today but it is a very good investment for the future, benefiting you on the regular basis for the long period of time.

"Your perception makes the difference

I ran a quiz, a couple of month’s back, to know the interest of the people in the residential solar. Around 50% showed the positive response, 20% people were not interested and the rest 30% were not actually aware about this alternative. After analyzing the results, if we try to create awareness about the solar to the 30% unaware people then it is possible to ignite the interest in them and in this way we can increase the percentage of the overall interested people in the country.
The awareness must include all the aspects of the residential solar like the technical and the financial feasibility of the system. You can try the solar feasibility spreadsheet to know the complete feasibility of your location. It is an easy to use tool which determines the complete techno-economic feasibility of the residential solar power system.
After conducting the quiz, I found that the people are more interested to know the future financial benefits of the solar power system in addition to keeping the environment clean and safe. I am highlighting the major benefits of the residential solar in the following points:

The financial return on the investment varies from 8% -16% 

India is a large country with solar radiations varies from \(4 – 7 KWhr/m^2/day\) across its area, making it vary the financial return from 8% to 16%. If I look at the lower end of the return, it is still attractive and comparable with the return offered by the bonds while on the other hand, the higher end is beating the average return offered by the Indian stock market in the last 25 years.
The life of the panel is more than 25 years, making it a good investment option giving you the consistent return for the next 25 years. Moreover, the solar panels require very less maintenance throughout their lives. The energy source sun is available to us at free of cost unlike the grid electricity where you pay on the monthly basis to run your electrical appliances.

Your return from the solar system will continue to improve every year

The electricity prices are rising on an average of 5% for the last 15 years in India. This trend is expected to continue in the future as well, making your electricity bill expensive every year. It means that you are going to pay more for the same units you will consume in the future. Alternatively, you can say that you are going to save 5% more every year if you install a solar power system on your roof top.

Your income from the solar array is totally tax-free

By installing solar array on your roof-top you are earning every month by an amount of the cost of the electricity units you are generating through your solar array. This earnings or the savings from your solar array are totally tax-free while on the other hand, the income from the stocks, bonds, and the RD is taxable, making the former option an attractive investment choice.
The price of your property is likely to increase as compared to the property without the solar array. Because the overhead cost of the electricity to operate is negligible in the case of the property with the installed solar power system. Moreover, the government offers the tax credit to the solar power owners and the feature of the net metering makes the solar power system more attractive investment choice.

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Conclusion

The return from the solar power system is calculated while taking into account many parameters like:

• The amount of the solar radiations in that area
• The present grid rate of the electricity
• The average expected increase in the grid rate
• Maintenance cost of the solar system every year
• The average rate of inflation
• The degradation rate of the solar panels
• The number of the units generated for the whole life of the system
• The break even cost of the system

It is true that every investment starts with an expense, it is our outlook how we look at it. After analyzing the benefits offered by the solar power system, it can be said it is the good future investment for the people to get the solar electricity from your solar panels.
By spreading the word of mouth, we can actually motivate others to adopt solar in their lives, making world a greener place.

Related Articles:

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• ​How to beat the rising electricity prices?