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Wednesday, April 11, 2012

Utility Inflation and YOUR quesitons about Solar Energy

Following up on a presentation I made this week, I wanted to provide more detailed information than I was able to cover regarding utility inflation and the benefits of solar electricity in the time we're allotted in our keynote presentations.

Honestly, I could speak for HOURS about this stuff. Ultimately, I see solar as a form of autonomy for homeowners, a massive inflation hedge, as well as an environmental cause. What I sell is freedom from utility inflation as well as clean energy.

Getting back to the discussion of the latter, here are some statistics that are worth noting:

According to a recent Frost and Sullivan study, global electricity demands will increase 18% by 2020, while capacity (how much energy the world creates) will only increase by 6% (Frost & Sullivan "U.S. Energy Challenges for 2020"). We will literally be using three more times the energy than we can produce. Why? It's simple: population growth and economic growth in developing countries (namely China and India). The quote that I grabbed from the presentation that still resonates with me: "Utilities can't meet energy demands." That's the reality facing the U.S. in less than a decade.

In another report from Bloom Energy ("Understanding California's Electricity Prices," April 2011) they cite (from an EIA Energy Outlook report from 2009) that utility prices have increased in 45% in California since 2000. Natural gas prices will double by 2020, representing a roughly 2% increase year over year. Over the next 10 years, $7 billion will need to be raised (primarily between Pacific Gas & Electric and Southern California Edison, the state's two largest utilities) to update existing physical infrastructure and meet new smart grid management requirements. Since 2000, those utilites' rates have increased 44% and 65% respectively.

Edison has already released numbers publicly that they will have to raise $1 of this within the next year.

Utility costs now share an inflationary category with higher education and healthcare: meaning that it is a cost that outpaces inflation.

This is the concern that I carry with me every day when I service my clients as well as your referrals.

Below are some common questions regarding solar that I wanted to address directly. Please post your comments directly or email me for more specifics.

1. Do we offer financing?

Solar Energy Worx offers a number of financing options including unsecured lines of credit, prepaid leases as well as 0 down leases. We can present any number of options to any homeowner based upon their unique situation.

2. Are there rebates for home and business owners?

Yes. The rebate rates vary depending upon the utility provider. We will calculate and present the rebate amount during the presentation.

3. Are there still tax incentives for home owners and businesses?

Absolutely! Homeowners can claim a 30% tax credit through 2016. Businesses have the same tax credit benefit as well as an accelerated depreciation schedule whereby they can claim the full depreciation of the cost of the system in 2 years.

4. What is the average return on investment period for solar.

This varies greatly depending upon the home, but the average ROI time frame for residential solar is 6-8 years. Our company has designed systems that will pay for themselves in less than five years.

5. Solar is a large up front cost. How can that be justified?

There are TWO important numbers that should be discussed during a solar presentation: one is the payback period and two is the average cost per kilowatt hour (kWhr) that the homeowner will be paying after the solar is installed. When a homeowner invests in solar on a cash basis, the cost per kWhr over the lifetime of the system is always cheaper than SCE. It is a long term investment that will typically pay for itself in far less than a decade.

6. What sets Solar Energy Worx apart from its competitors?

There are many differentiators between us and similarly-sized companies as well as large national competitors (eg. Solar City).
  • We do not require monthly minimums to size a system for either a lease or a purchase. In order to work with the large, national leasing companies (Verango, Solar City and Sungevity), a customer's bill must be at least $150 or higher for them to prepare a quote. We will prepare a quote for anyone who turns on a light bulb.
  • We prepare quotes with the highest quality, American-made and engineered equipment at lower prices than our competitors for far inferior product
  • We don't have a waiting list! The average wait time for an installation from a Solar City crew is currently between 6-9 months from the date the agreement is signed.
7. Is solar a smart investment even if you don't spend a lot on electricity?

The most important number in any discussion regarding investing in solar is the ROI. A recent customer of ours spends between $30-$50/month and her payback period is a mere 7.7 years. It's also worth remembering that Edison (who affects most homes in So Cal), while they do have to answer to the Utility Commission, are a privately held company. They reserve the right to raise rates that can--and do--affect all of their customers regardless of their current usage.

8. Who are good referral sources for Solar Energy Worx?

  • Mortgage Lenders
  • Professionals who sell environmentally-friendly products (eg. Arbonne)
  • Home improvement professionals, namely plumbers, electricians, HVAC contractors, and roofers
  • Real Estate Brokers
  • Appraisers
  • CPAs
  • Financial Planners
  • Home Energy Efficiency Raters/"Green" Home Contractors
9. How can I learn more?

Set up a one to one meeting with Rachel Parker! :-)

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