Yash
We consider many financial instruments available in the market like bonds, FD, mutual funds, stock market, etc as an investment option to secure our retirement.
But…
We skip one big investment option from our mind that is the investment in the solar power system.
You know getting it installed on your rooftop can be the smartest investment choice of your life.
"You will not only reduce the electricity bill for decades to come but also enjoy your retirement life relaxing under a fan running smoothly through SOLAR".
Investment vs. Expense: The concept
I think it is first important to understand the concept of Investment and expense before talking about Solar Investment benefits.
The terms investment and 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 an investment.
For example:
- 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.
In short, the good investment surpasses the expenses incurred on it.
"Buying a solar power system is an expense today. But it is a very good investment, providing you free, smooth, clean electricity for decades".
Solar awareness survey
I conducted a small survey in my area (through personal meetings, telephonic conversation, e-mails), a couple of months back, to know the interest of the people in the residential solar.
And
I got the following results:
Results:
- 50% of them were interested but delaying due to lack of knowledge about the system.
- Another 35% were simply not interested because they feel that Solar is expensive and not profitable (not a good investment).
- The remaining 15% of them were unaware that Solar has a potential to run their electrical appliances.
If you analyze the above results, you’ll find one thing that is common among all the respondents is “UNAWARENESS”
Although its degree varies from low to high.
People think that it is difficult to design a complete solar power system matching their energy needs.
But
Let me tell you that it is quite easy and you can design it in minutes using my Solar Feasibility Spreadsheet (It is an amazing tool that finds the complete techno-economic feasibility of the residential solar power system).
This survey clears that there is an urgent need to highlight the benefits of Solar as an investment.
Solar is a great investment for retirement
- Stable and Attractive Return
- Smooth electricity for decades
- Hedge against the rising electricity prices
- The value of your home increases
- After retirement, most of the time you’re at home
- Large reduction in the fixed demand charges
- The benefits from solar are not taxable
1. Solar offers stable and attractive return
India is a vast and sun-rich country with solar radiations vary in between 4 kW/m² to 7 kW/m².
Your solar power system can provide you with an annual return of 8% to 16% depending on your location.
(Please Note: I’m talking about all this without considering any benefits and tax credits offered by the government).
And
If I look at its lower end, the investment in solar is still attractive than the return offered by the infrastructure bonds in the country.
And
Oh my God!
Its higher-end even surpasses the average return offered by the Indian stock market in the last ten years.
On 31 December 2010 NIFTY closed at 6134.50 And On 31 December 2020 NIFTY closed at 13981.75 (Data Source: NSE India)
Let us do a little MATH
Total Return in 10 years:
(Final Value – Starting Value)/ Starting Value x 100%
(13982.75–6134.50)/(6134.50) x 100%
= 128%
Average Annual Return:
Total Return/10 years
128%/10 = 12.8%
Moreover, the return offered by the solar power system is stable and is risk-free.
(I can even bet that solar is the attractive option in most of the countries around the world).
2. Smooth solar-electricity for decades
The solar power system generates a smooth current that keeps your electrical appliances safe and increases their useful lives.
Now, you don’t need to shell out extra money to repair your electrical appliances after every year or two that used to get damaged due to voltage fluctuation.
In addition, the solar panels are very durable that last more than 25 years, and require very little maintenance.
Therefore, you’re going to get free and smooth electricity for decades with no headaches.
3. Solar is a perfect hedge against the rising electricity prices
If I look at the rising electricity prices in India for the last ten years (2009 to 2019), these are rising at an average annual rate of around 8%.
That’s a quite high rate.
It means, in the 25th year you would pay over Rs.45 for the same 1 unit you are consuming today for Rs. 6.6.
Once you install the solar power system on your rooftop, you start getting solar electricity.
Now you’re generating your electricity, and you needn’t worry anymore about the rising grid prices.
In that way, you have hedged yourself against the rising electricity prices.
The more is the increase in the grid price year after year, the better would be your return from the solar power system.
4. The value of your home increases
There is an increased demand for energy-efficient features in homes among people looking for properties.
It has been found that the value of the home increases by over 4% compared to similar homes without solar.
And
This premium can be more where the grid electricity prices and their escalation are more.
Because people know that buying solar installed homes would save them a good amount of money every year.
5. After retirement, you are at home most of the time
This pandemic (COVID-19) has restricted the mobility of millions of people around the world and even after retirement you would be spending most of your time at home.
It indirectly means that you would be consuming more electricity than before.
If you have a system that can provide you free electricity then nothing like that and the solar power system is one such solution.
Or
In other words, I can say that the utility of the solar power system further increases after your retirement.
6. Reduction in the grid fixed demand charges
Now, you have become an energy-independent person and are using solar electricity according to your needs.
I mean, when you are out for a vacation with your family, you’re not using any electricity and you need not pay any fixed demand charges for that.
While this is not exactly true in the case of grid supply,
whether you use it or not you need to pay the fixed demand charges to your grid supplier.
But
By going solar, you can significantly reduce the fixed demand charges and in that way, you can save a good amount of money in the coming years.
7. Solar benefits are not taxable
You can easily find that the income from most of the financial instruments in which you invest is taxable
whereas
the savings (the units generated by the system) are not at all taxable because your solar power system is generating current not the money.
It is a method that we adopt to find the return by converting the units generated by the system into the equivalent monetary value.
Many factors are considered like degradation in solar panels, grid price, its escalation, cost of the system, maintenance cost, cost of capital, and many more while calculating the right monetary value of the units generated.
And
Above all, it is Clean Energy.
Although this is not a financial benefit, it is the most important benefit when you switch to solar (renewable energy).
Yes,
You are contributing to nature by reducing the carbon footprint from the environment by going solar.
"The financial benefits can only be enjoyed when you have right environment for that and SOLAR does this very effectively".
In the end, I can write in clear words that solar is not only environmentally friendly but is also a very good investment choice for securing your retirement.
Know the return from your solar investment
The Solar Feasibility Spreadsheet lets you know the complete technical design and the financial feasibility of the solar power system.
If you want to install a solar power system on your rooftop then why not know everything in detail beforehand through my solar feasibility spreadsheet.
And
learn everything about it through my Online Solar Course, helping you to save more on your solar power system.
"By spreading awareness about solar, we can motivate people to adopt it in their lives".
