Monday, August 01, 2011

Going Solar...the Financial Argument

Solar panel installation at an information cen...

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We used to have two glorious trees in our backyard. They shaded our southern exposure quite nicely and cooled the house.

Unfortunately, they were old and sick and we had to take them down.

It was sad, but it opened up a new world of possibilities...our new roof was now a candidate for solar panels.

Since watching An Inconvenient Truth and combined with my long-standing concerns around US dependence on foreign oil and my recent travels seeing both the positives and negatives of globalization, I've definitely become more of a "green" person.

Started composting, added insulation into my walls, compact fluorescents...and a few more things.

I'll admit, the economic argument wasn't always there, but I felt like, in a small way, I was doing something...and I was putting my money where my mouth was.

The Solar Investigation
So, I connected through a trusted resource, with the folks at Solar City who came over and reviewed my roof.

They gave me a proposal for leasing solar panels (I would post it, but it’s got my home address all over it) where they estimate a 25% reduction in my annual usage. They gave me a few different leasing proposals, but the question remained:

Was it going to be worth it?

I sent the proposal and the assumptions to a few friends who are better at Internal Rate of Return calculations than I am and the answers that came back were pretty much unanimous.

It's bordeline, and may not be worth it.

So, at the upfront investment of $6700, I wouldn't be coming out ahead.

Now, if you read Dan Ariely's book, Predictably Irrational (review here), you'll know that people don't always make purely rational decisions and this was to become one of those moments.

I'll admit, I'm doing a bit of financial hocus-pocus wizardry on myself, but here's how I came up with the justification to do it.

I figured I was willing to spend about $2,000 on the following elements to the deal.

  1. I'd FEEL like I was doing something for the environment. I'm convinced that our current model is unsustainable and I'm willing to pay something above and beyond to do something about it.
  2. I'm always willing to pay for the feeling and the self-perception of early adopter. It's difficult to explain, but those of us who are, know what I am talking about. In fact, talking to one friend who is one also, he said, "yes, the early adopter rush is definitely worth something."
  3. As a technophile, frankly, I am curious if/how it will work. I constantly experiment with new technologies and realize that, not always, does it work in your favor, but the education itself is worth something. I'm willing to pay for that.
  4. And the one of which I am most proud...since I work at home, I now feel comfortable promoting Never Stop Marketing as a "green business." After all, world HQ is powered by solar, right? (Bonsu if I can swing this as a tax deduction...still investigating).

So, those 4 elements are worth about $2000 to me.

Then, I take that out of the total cost and, assuming the numbers are close to accurate, the system does make economic sense.

Obviously, I'll keep blogging about this.

Should you want to get/investigate your own system, let me know, so I can refer you. We'll both benefit financially..thereby improving my (and your) ROI. Smile

BTW, feel free to talk me out of it…I’m still in the no-penalty cancellation period!

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