In New Jersey, Solar Panels Beat the Stock Market with +324% Return on Investment

posted by brian on June 28th, 2010

NJ-Solar-ROI-draft-v09.004

Say you live in New Jersey and have $25,500 to invest today. Where is the best place to put it for the next 15 years? Stocks??? Bonds???

Try solar panels on your roof.

Let’s face it: for many people, buying solar panels for the home is a serious investment. Here at 1BOG we knew that solar was a good investment in New Jersey, but we wanted provide our members with a better analysis of the long-term ROI (Return On Investment).

Right now, an investment of $25,500 in a 7.3kW solar panel system for your NJ home would return $108,000 in 15 years! That works out to 324% return on your investment. See for yourself.

How did we figure this out? It’s simple: we started with an average-size solar panel system, took the $$$ you would save on your electric bill + the projected value of New Jersey’s SREC payments over the next 15 years and…voila! $108,000 in your pocket with no strings attached (confused? Learn more about SRECS and the 5 Reasons why NJ is the best place in the country to go solar).

In New Jersey you’ll earn your initial investment back in about 4 years AND get paid more than $5,000 per year for the Renewable Energy Credits your system produces. Over 15 years that works out to an 10.1% annual return on your investment! That’s 3.3% better than the S&P 500 historical average, with virtually no risk. And considering the current instabilities in the stock market, we believe we are beinghow can we say this nicely…generous in our projections. It is impossible to predict right now what the stock market will do over the next 15 years, but we do know this: unless something catastrophic happens to New Jersey, investing in solar panels there will provide INCREDIBLE returns!

No Rebate? No Problem.

There has been much to-do lately about the cancellation of the state solar rebate in New Jersey. Typically, rebates like this one offset a large portion of the cost of home solar systems. However, due to a unique combination of high electricity rates, the Federal solar tax credit, and Solar Renewable Energy Credits (which we’ve said before basically turn your roof into an ATM), we think investing in solar in New Jersey is a financial no-brainer. As our CEO famously (at least in our office) stated, “If I could I’d move to New Jersey right now just to buy houses and put solar panels on them.”

If you are interested in learning more about putting solar panels on your home in New Jersey, sign up for 1BOG’s Southern NJ Solar campaign.

.

Disclaimer: 1BOG is not a financial advisor. We recommend you learn about risks and benefits before making any financial investment.

More information on our calculations:

Facebook Comments


12 Responses to “In New Jersey, Solar Panels Beat the Stock Market with +324% Return on Investment”

  1. New Jersey. The Sunshine State.

  2. AJ says:

    I have made a calculator that creates an ROI sheet state by state for any system and based off the 665.04 SREC for New Jersey I do not know how you are reaching 108000 in 15 Years. I am reaching closer to 41000. If you could clarify your calculation I would greatly appreciate it.

    • brian says:

      AJ,

      Thanks for your question about our post. I will try to clarify for you here:

      Part 1 – Value of SREC payments:
      As noted in the post, we used the current and projected price of SRECs in NJ through 2025. In NJ, our 7.3kW example solar panel system would generate just over 9 SRECs per year. To keep things simple, we have estimated that the average value of a NJ SREC will be $554 over the next 15 years. Thus, 9 SRECs per year x $554 per SREC x 15 years = $75,000 in SREC payments to the homeowner.

      Part 2 – Value of avoided utility payments
      Next, we looked at how much money solar panels would save in home utility bills. In our example, a 7.3 kW solar system in NJ would allow a homeowner to avoid paying roughly $32,500 for electricity over 15 years.

      Part 3 – Total
      Add these together and you get $108,000 (actually, you get $107,500 because we simplified things a bit, but you get the idea).

      Please note that this total does not include the cost of the solar panels (-$25,500). The total we calculated is simply what the average homeowner can expect to save or earn from their solar panels in 15 years. However, (and potentially more importantly), we did not include the additional savings the homeowner will gain for the remaining life of the solar panels (panels typically carry a 25 year warranty) nor the increase in the value in their home as a result of installing solar panels.

      Right now, solar panels in NJ provide an excellent ROI (return on investment).

  3. matthew says:

    Not a huge follower of srec but have a question. Forgive me if it is something simple.

    Being that the investment opportunities seem positive, and I would imagine it would spur lots of people to install solar. What happens to the value of the srec.

    For me on paper it would seem that their value would go down.
    Firstly if more and more people use solar there are offsetting their usage and the electric company is selling less electricity. SO if it needs x percentage of the electricity to be renewable that value would actually be declining as less electricity is being sold(atleast porpotionally).

    2nd I would think if many people jumped all over the srec, there would be alot more sources for the electric companies to buy from. There would be lots more srec and less of a demand for them.

    To me that just seems to lead to diminishing values of srec.

    3rd possibly much less important. If you are selling your srecs. Does that mean all the electricity the individual producer is using in their home is from other sources. Ie coal, nuclear etc. Some personal consumption is still from dirty sources. TO me you can only claim to use clean energy or sell your srec.

    So if you plan to sell srec well solar is installed for an economical reason.If you are doing it to reduce ones carbon foot print then you are not selling your srecs.

    Thanks for any clarification you can give.

  4. JC says:

    How can you project SREC values with any accuracy over 15 years? How DID you calculate the SREC values? Looking at the 1BOG calculator the SRECs were about 4X the actual electric savings, so spending tens of thousands for rooftop panels is much more about playing the SREC market than electric savings. What happens to SREC prices if this 75MW sunfarm gets thrown into the equation? I assume their cost per KW is much much lower than rooftop panels. I doubt they will be the only commercial operation jumping on the solar SREC bandwagon.

    http://www.renewableenergyworld.com/rea/news/article/2010/06/time-to-double-down-for-solar-in-nj

  5. misanthropope says:

    no kidding, you’re not a financial adviser.

    using inflation-adjusted numbers for the S&P, and nominal dollars for your solar panels? naw, that doesn’t skew your results.

    *if* the panels can really be depended upon to work efficiently for 25 years, and *if* the array can really provide nearly 8% of the purchase price in annual savings (= after-tax earnings), then you have a rational investing thesis. banking on the gub’mint to pay you FOUR TIMES your outlay in “thank you!” money, that’s just reckless speculation. who the hell do you think you are, haliburton?

    speaking of reckless, representing said unsustainable trend of subsidy in the fashion of “unless something catastrophic happens to New Jersey, investing in solar panels there will provide INCREDIBLE returns!” would be at best unethical, flirting with the criminal, if you *were* a professional financial adviser.

  6. Clayton says:

    The longevity of solar panels is not a big *if*: http://howsolarworks.1bog.org/how-long-do-solar-panels-last/

    The money coming from the government does so in the form of writing off taxable income, so that happens as soon as you file taxes. SREC money comes through the marketing mechanism, and money comes from the utilities, not the government.

  7. BP says:

    Reckless or negligent are both accurate descriptors.

    Avg of $554 for 15 yrs is flat out wrong.

    The NJ BPU and solar industry associations have regular conversations about how unsustainable the high prices currently are, and what can be done to reduce them so an industry damaging bubble isnt created.

    FURTHERMORE: the NJ BPU has not even finalized the ACP schedule going out 15 years, so even if you did use an ambitious spot price estimate, you would not be able to project unless you also had an estimate of the ACP.

    That is double blind speculation…

  8. In 2009 I constructed a new hay barn on my farm in Sicklerville New Jersey and decided to install a 10kW photoelectric system on the roof. I used panels that are self adhering to the standing seam metal roofing installed on the South facing side of the roof. Since the solar panels were installed on the roofing before it was put in place, the roof became part of the solar system and I claimed a federal tax credit on the difference in cost between the regular barn roofing and the Standing seam. The total cost amounted to $75,377.26, which was higher than expected because all the wiring had to be explosion proof. (Example, a 200 amp electrical panel that could be picked up for $175 normally cost $850 in a dust tight version). For the first time in my life my timing was right on. The 30% Federal tax credit of $22,613 reduced the cost to $52,764.24 and the $1.75 per watt NJ rebate of $17,500 knocked it down to $35,264.26. Starting in July of 2010 I have sold 19 SRECs which has reduced the cost to $23,025 and will be selling an additional one this month for another $651. The system has reduced my power consumption by 22,291 kWh as of today which has saved me an additional $3500. I haven’t projected the pay-off date yet, but as you can see, it’s going in the right direction. I’m happy with the system. The panels produce considerable power even at lower light intensities. It was cloudy today but the were still kicking out 4000 watts when I read the production stats off the inverters at 4 PM this afternoon.

  9. Ricardo says:

    So confusing…Can someone please explain the following:

    SREC gives 1 credit for every 1KW your system generates right.

    Following the example above of a 7KW system.

    Wouldn’t that mean that I would generate 7KW a day, therefore 7 credits a day? What am I doing wrong? Obviously is not 7 x day, what makes it 7 a year?

    Thank you and sorry for my ignorance

    • katy says:

      Hi Ricardo,

      I understand your confusion!

      Here’s how it works. For those registered in New Jersey’s SREC program, each time their home solar installation produces 1,000KW of energy 1 SREC (Solar Renewable Energy Credit) is deposited into an electronic account. These can then be sold by the homeowner via the SREC tracking system. You can find the going rate for individual SRECs in New Jersey here: http://srectrade.com/

      With a 7kW system, the “7kW” refers to the system’s size, or in laymen terms, it’s capacity. The bigger the system, the more energy it can produce. Depending on a variety of factors (panel efficiency, weather, etc.) a system this size might have the ability to produce around 8,000kW annually. Most home installations run in the range of 3-6kW in size, with variable output.

      Hope that clears things up a bit?

      Best,
      Katy Killoran, Associate Marketing Manager
      One Block Off the Grid: community power meets solar power

  10. Rahul Choudhary says:

    This is one of the highly informatics and attractive blogs that has not only educated also informed me in a very effective manner. There are very few blog like this one I have read. For info please visit – http://www.teotiatech.com/.

Leave a Reply

High electricity bill? We can help.

At One Block Off the Grid, our job is to help homeowners save money and go solar by providing the best options straight from the nation's leading solar providers.

Free Home Solar Quote
FIND OUT HOW MUCH YOU'LL SAVE BY GOING SOLAR


Like this? Click the "like" button to share it on Facebook.

In New Jersey, Solar Panels Beat the Stock Market with +324% Return on Investment

[X] Close

Share on Tumblr