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With changing tariffs creating a hugely volatile stock market, many Americans are looking for alternative ways to invest their money. Investing in solar energy offers a strong Return on Investment (ROI) and secures a sustainable economic future. Unlike with the stock market, you will never lose money on a solar investment; the typical ROI for a solar project is 8 - 16% annually, depending on the rate you pay for electricity and your solar project specifics.
Solar energy systems provide a reliable and renewable source of power that reduces dependence on traditional energy sources. Rather than letting money sit idle in a savings account where it may lose value over time due to inflation or investing in volatile stocks or mutual funds, allocating funds toward a solar energy system offers consistent returns.
Historically, inflation is around 2% annually but has been considerably higher in recent years. Money in savings accounts typically grows slower than the rate of inflation, which means it loses value you may never get back. Stocks offer greater ROI potential but with dramatically more risk, as exemplified by the beginning of this month when trillions of dollars of value vanished in mere hours in the U.S. stock market.
Solar investments, on the other hand, are completely disconnected from stock market value. Additionally, solar ROI actually improves if inflation increases because electricity prices charged by utilities tend to increase at comparable rates to inflation. These factors mean solar investments are even wiser during volatile economic periods as their returns and reliability do not falter.
The graph above compares 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 you save by not paying high electric bills.
Let's break it down even further. With an average annual return on investment (ROI) ranging from 8% to 16%, 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 have traditionally been around 7% but market performance is extremely uncertain today, having dipped precariously close to a bear market earlier this month. Even if you ignore the recent market downturn and assume strong returns over the long term, you are still obligated to pay Capital Gains Tax on stock market earnings, which lowers your total returns by at least 15%.
At the end of the day, do you really want to see your dollars in a fund of unknown stocks, risking fallout from severe tariff impacts? Or would you rather put that investment towards 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. Additionally, the money you spend on a solar project flows back into your local economy, rather than going towards importing fossil fuel energy from out of state. The environmental return on investment is hard to quantify, but reducing air and carbon pollution helps your community immediately.
Owning a solar electric array comes with powerful peace of mind; no matter what happens, you own a reliable stream of energy needed to power your life. 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 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 have a Member-Owned Community Solar share, can enjoy reduced or fully offset monthly electric bills from the clean energy they produce.
While it might feel like you should hold onto money during uncertain financial times, your future self will be glad you invested in solar and took control of your energy future. Like any business that seeks to control costs during periods of economic uncertainty, homeowners can do the same by purchasing solar outright or using a solar loan to control their electricity costs today. This time next year you could be enjoying that sweet solar energy and watching your savings climb as you receive your 30% federal tax credit.
Reach out to our expert Solar Advisors to get your journey started. Questions? Email hello@revisionenergy.com