If you haven’t heard, Solar is the new favourite in the energy race, receiving almost double the investment that fossil fuels was awarded in 2015. It seems that solar is finally outperforming coal, the champion of the industrial era, and the 1% are wasting no time in cashing in.
But, what about everyday, financially savvy, Mums and Dads investors looking to take advantage of the energy boom, What options do they have?
Well, you can always try to time the market, invest in the right stocks and hope for the best. Unfortunately, without years of experience and in-depth know how, this strategy can equate to little more than betting on your favourite horse.
Most everyday Australian’s couldn’t possibly participate in funding any sort of Large Scale Solar project. Projects, that end up making millions for those who can.
So, it seems that the best way to make money out of Solar energy is to put a system on your roof and wait. Then in 25 years, you will have saved tens of thousands of dollars on utility bills. It’s hardly what one might call a return on investment, but certainly a smart way to cut your expenses.
Well, what if there was another way?
Solar Power, an Investment, not just an Energy Source
See, most people who look into getting solar are homeowners, or they own a business. For the most part are looking to reduce their quarterly bills and save money over the long term. Or, for the business owners, reduce their overheads and minimise their outgoings. That being said, many people who could benefit from solar are scared away by stories of huge upfront expenses and uncertainty over how long it takes to break even. But the days of large financial outlays are over. Solar systems have halved in price over the last five years and the technology has continued to improve year on year.
Just to clarify, it usually takes between 3-5 years to pay off a standard solar system. Results vary from household to household, but unless you choose to get the top of the range solar components, alongside a heavy duty battery system, it’s very unlikely you’ll ever have to wait that long to have your system paid off and earn money. Even then, high end systems often do outperform their less expensive counterparts, meaning you could still pay off a more advanced system in a similar timeframe.
See, what most people forget is that a solar system isn’t just a method of producing energy, it’s an advanced piece of technology, that could save future occupants thousands. What we’re trying to say is, solar is an asset, an asset sitting on the roof of your home.
In studies conducted in 2015 by realestate.com, it was found that by having a solar system on your roof, you can increase your home’s value by roughly $10,000 or 3%.
This isn’t just the opinion of a couple of property managers, investors and industry ‘experts’. This extensive study was aimed at buyers, and how they thought solar affects the price of a home. This means the people interested in purchasing a home, concluded that a solar system -- in their eyes -- improved the value of a home by up to $10,000. In fact, a solar system is the number one energy efficiency feature home buyers look for when buying.
On top of this, the average cost of a solar system sits well below the return you will get when reevaluating your home. In fact, for a good 5-6KW system, the largest system you can get while remaining on the grid, you can expect an average outlay of only $6,500.
It doesn’t take a mathematician to see that solar has a great return on investment, for homeowners, landlords, renovators and property investors. Increasing the value of your home by ten thousand dollars gives you an instant return on investment of nearly 100%. Calculating for future savings (profits) you can generally expect a 25%to 30%+ ROI (return on investment) from day one. It’s obvious that solar, as a financial investment alone is worth the expense.
Realestate.com conducted a survey asking its users about the various technologies that assist with reducing utility cost, and what they thought most increased the value of their home.
Out of five technologies (including solar hot water, water tanks, energy efficient appliances, water saving fixtures, and rooftop solar) solar won, with 85% of participants selecting a solar system would increase the value of a home
Renovating has almost become an Australian tradition, with families willing to spend thousands to give walls a lick of paint or re-tile the bathroom, why not capitalise on the roof space?
REA Group Chief Product Officer Henry Ruiz - or in other words an expert who knows what he is talking about - put it simply, by saying, “Having solar panels installed on your roof represents a valuable investment in your property, as this research shows.”
Plus, you won’t just improve your home's dollar figure, you will stand out if you ever decide to sell.
Solar a Popular Favourite Among Buyers and Tenants
The best part is that, not only will solar pay for itself but more and more buyers are becoming environmentally conscious, opting for homes that reduce their emissions. Did you know that installing a 5kW system on your home could reduce carbon emissions by 20 tons or more over 15 years?
Realestate.com even allows you to filter out homes which aren’t as eco-friendly. When it comes to property, the market is for the most part dictated by popular opinion. So it’s good to know that 8 out of every ten Australian’s view solar as a positive technology. Solar is in fact the country’s favourite renewable energy source.
To quote our expert again:
“If you’re looking to sell or lease your property, it’s a really simple measure you can take to gain a competitive edge in the market. You should also speak to your agent about mentioning your home’s solar power in your online listing.”
So it seems that solar might help you attract the interest of any prospective buyers, while also adding value to your home, but what if you want to simply lease your property to tenants?
Evidently three quarters of renters would pay more for a home with solar, and for obvious reasons. 40% of people surveyed stated they would pay up to $10 extra a week to live in a home with solar electricity.
Are Solar System’s Safer than Property, with Larger Returns Than Stock?
Understanding what solar can do for your home beyond simply saving you thousands on your power bills, (significant in itself), is quite exciting and has built confidence among Australian home owners that the upfront outlay is nothing to worry about. Smart money management extends beyond reducing your bills and adding value to your home. Imagine how many years you could reduce your mortgage by if you transferred your electricity savings into making extra payments off your mortgage each month?
With an average Australian mortgage of $275K, you could potentially save 5 years of payments off your home loan. So, it’s easy to see how one simple but smart investment can have a domino effect with all sorts of positive outcomes. Start planning that family vacation because it’s clear solar can benefit your family immediately and for years to come.