What’s the Cost of Doing Nothing
We’re often asked: How much will solar panels cost us?
How about looking at this question inside out: What is the cost of doing nothing? or, How much won’t we gain if we take a pass on solar? This is also known as “Opportunity Cost”.
Let’s look at a typical medium sized Seattle home with a 20 solar panel system costing $20,000. We’ll come up with a conservative answer. Let’s say the solar installation has paid the owner back in 7 years with a tax credit, state incentives, and power cost savings.*
After that, pure gravy. There’ll be free power for at least another 25 years.
So, when all the owner’s expenses have been repaid, we can figure the cost of doing nothing as being the value of the installed solar system plus the value of the power it produces.
Let’s say that Joe Spud finally turns off the tube in 10 years and wonders what he missed by not going solar back in the day.
- Value of the power produced from year 7 to year 10: (remember power costs more every year.) $3000.
- Value of the now 10 year old solar system: the system should add at least another $12,000 to the home’s value.
At year 10, the opportunity cost would be $15,000. Additional value comes from the free electricity that will be produced in future years, worth at least $1000 per year.
Joe snoozed and lost more than $15,000 and lots of free solar power to come!
- Present power cost: $.11 / kWh
- Solar array size: 5.5 kW DC rating
- Annual electric production (1st year): 6400 kWh/yr degradation accounted for
- Annual power rate inflation factor: 4.5%
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