Inflation rates have surged since late 2021, impacting many sectors of the economy and nearly all aspects of everyday life. Necessities, such as housing, healthcare, and food items, have experienced significant pricing increases, and energy costs are particularly susceptible to the effects of inflation. In the early months of 2023, the average inflation rate is still hovering around 5% and New England electric rates are at an all-time high. These price hikes can significantly strain household budgets, making it increasingly challenging to meet day-to-day expenses. Investing in solar energy is a strong way to mitigate the effects of inflation and secure a sustainable economic future.
Solar energy systems provide a reliable and renewable source of power that reduces dependence on traditional energy sources. By generating electricity from sunlight, homeowners can stabilize energy costs and shield themselves from inflation.
In recent years, the price of fuel and electricity has increased more quickly than the cost of installing solar projects, especially in Northern New England. We are currently seeing the greatest returns on residential solar investments in our 20-year history, despite the upfront costs being greater than they were before the pandemic.
Investing in solar energy is not only a way to combat the adverse effects of inflation but also a smart financial decision. Rather than letting money sit idle in a savings account where it may lose value over time, or investing in volatile stocks or bonds, allocating funds toward a solar energy system offers remarkably reliable and consistent returns. During times of inflation, money in savings accounts or stocks and bonds typically grows slower than the rate of inflation, which means it loses value that you may never get back. Solar investments, on the other hand, are “inflation proof,” and typically outperform other forms of investing.
Pictured in the graph above is a comparison between a common investment and two solar projects, one financed and one paid for in full. Both solar projects yield a higher return over the course of the 40-year investment, taking into consideration the amount of savings you receive by not paying for utility electricity bills.
Let's break it down even further. With an average annual return on investment (ROI) ranging from 7% to 15%, solar is a much stronger investment than a common savings account, which generally yields annual returns of 0.5% to 5%. Long-term average stock market returns are around 7% but there is huge volatility depending on the time frame or sector, and market performance is uncertain today. Furthermore, would you prefer to see your dollars in a fund of unknown stocks, or put to use improving the resale value of your home and boosting your local economy?
Unlike traditional financial investments, a solar investment has many different returns. For instance, a solar electric array will increase the value of your home and lower the cost of ownership. An environmental return on your investment is also included as you are eliminating thousands of pounds of carbon pollution each year that you and your community can enjoy.
Owning a solar electric array comes with a powerful peace of mind; no matter what happens, you own a certain amount of your electric supply. As the cost of electricity increases, you pay no more for the same amount of electricity generated by solar. When the utility rate for power goes up, your solar power is worth proportionally more.
As energy prices continue to climb, the returns from a solar energy system become even more attractive. Homeowners who have made the wise choice to invest in solar, as well as renters who own a community solar farm share, can enjoy reduced or even eliminated monthly electricity bills, as well as the opportunity to sell excess energy back to the grid, further enhancing their return on investment.
While it might feel like you should hold onto money during times of inflation, the best thing you can do with a chunk of capital is invest it in solar and take control over your financial future. This time next year you could be enjoying that sweet, solar energy and watching your savings climb. Reach our to our expert Solar Advisors to get your journey started.
