The average price of a gallon of regular gasoline just rose to $3.63 in Southwest Florida. That’s a 15 cent rise over last week’s average. Would people tolerate this if electricity costs were as unpredictable? No way!
How much would you pay if your local gas station was offering a guaranteed price for gasoline for the next 25 years, provided you were willing to pay for a certain amount of your expected usage up front? Let’s just say you wanted to buy enough gas now to drive 10,000 miles per year for 25 years. Let’s also assume that you will average 35 miles per gallon over that time. You would need to buy 7,143 gallons of gas now. Would you pay $4.00 per gallon to do so?
Sure, you would be paying more for gasoline than it costs now, and you would need to come up with about $28,500, but wouldn’t you look like an absolute genius if gasoline prices doubled in 10 years.
Think about what gas prices were 10 years ago. Did you know that gas prices in UK and Germany are over $8.00/gallon today?
If the average price of gasoline is just $6.00/gallon over the next 25 years, you will have saved $14,286 by hedging against increasing prices! What if gas prices go above $8? $12? More?!
Electric companies have the luxury of being able to recover all of their costs through regulation. They do a pretty admirable job of keeping prices stable by hedging against fuel price fluctuation. Unfortunately, the long-term effect is invariably rising electricity prices for consumers.
What if I told you that you can buy residential electricity in advance, locking in a price slightly higher than current rates, or possibly even the same or less than current rates? Doesn’t that sound like a fantastic hedge against the risk of rising prices? Is there really any risk of decreasing prices?
It’s the same financial offer as the gasoline example above. Is this really possible?
Solar electric systems offer this fantastic promise TODAY! You will get a reliable and predictable return on your investment with solar electricity. More importantly, solar electricity allows you to effectively pay for future electricity generation in advance, locking in the price of electricity, and hedging against ever-rising energy costs.
And just like the gasoline example, you can purchase just a portion of your expected usage. Any amount you are able to purchase today will hedge against future price increases. The more you can purchase today, the more effective your hedge.