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You’ve probably heard of high profile investments in solar by large retailers like Ikea, Kohl’s, Costco, and the world’s largest retailer, Walmart. These investments leverage the long terms assets (real estate) of the companies into income producing machines both inside and out. Coupled with various tax credits, accelerated depreciation, rebates, and other incentives, investments in solar make great financial sense for companies who have maximized interior square footage, but haven’t taken advantage of massive swaths of roof space. Walmart alone has installed over 65 megawatts of solar capacity to date. Susan O’Neal Gear of Upstream Insight has an interesting perspective on big-box solar investments. She hypothesizesRead More →

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I’m in Las Vegas learning and sharing with colleagues, and let’s just say I’m feeling lucky… not just in the Sports Book, but because of the valuable information and face time we will get this week. This is the time of year we all get a good status check and go over trends in the industry. Serious meetings – with a little fun sprinkled in. 😉 Naturally I was reflecting on the plane about the “gamble” of going solar. Is it a safe bet? What is the risk/reward trade off? If I head down to the Casino and drop $100 on red, there is aRead More →

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I received a question from a potential customer today about power production guarantees for Photovoltaic (PV) Systems. I realized that I hadn’t covered that issue on my blog, so I thought I would copy the question and response here (revised for clarity). Question: Is there a guarantee on the percentage  power output of the proposed photovoltaic system? Answer: The Canadian Solar CS6P-250P modules themselves have a power production warranty that states basically that they will put out a minimum of 97% of rated power at test conditions during the first year and degrade no more than 0.7% per year thereafter through a total of 25 years. ThisRead More →

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Men may be from Mars, and Women may be from Venus, but both share an interest in Solar Energy. What’s interesting is the products each gender tends to buy. At risk of sounding stereotypical and seriously impacting my home life, I decided to write this post anyway. I have fairly hard data behind my opinion, so I figure I can get away with it. I have found that men are the primary buyers of Solar Electric (Photovoltaic) Systems in Southwest Florida. On the other hand, women and men equally or collectively tend to drive the decision to buy solar pool heating systems. The last 10Read More →

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Florida Power & Light loses about 8% of the energy it produces in transmitting it to your home. Right out of the gate, that’s a great argument for producing energy at or near the point of use. Locating solar energy systems at homes and business is often called distributed solar energy. That is, the production of solar power is scattered around the utility grid in a distributed manner. This is the opposite of utility-scale solar energy that is produced in huge solar fields typically long distances from the places where the energy is needed. Obviously there is a significant cost to moving energy around “theRead More →

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I just read an article published today on the Harvard Business Review blog that misses the point about businesses, specifically banks and other financial institutions, engaging in sustainable building practices. The article focuses on how companies should be less focused on environmental sustainability and more focused on financial sustainability given the nation’s disfavorable attitude toward banks today. What the article fails to regognize is that sustainable building, when done right, is financially responsible and sustainable! Green building techniques have returns on investment associated with them, and some can be extremely favorable, especially when combined with utility and government incentives. Banks often operate on razor-thin marginsRead More →

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Florida House Bill 0277 (2013) has passed both the House and Senate unanimously. This bill makes official the de facto standard used by county property appraisers that excludes renewable energy (i.e. solar energy, wind energy) systems from assessed property values. This exclusion was inadvertently removed from law during a previous congress in 2008. Various attempts have been made to reenact the exemption, with no success until now. According to the Florida Solar Energy Industries Association, “The bill implements a constitutional ballot initiative approved in the 2008 general election by Florida voters, which prohibits adding the value of certain home improvements specific to the installation andRead More →

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Calling all real estate agents in Southwest Florida! There is an updated form released by the Appraisal Institute® called the Residential Green and Energy Efficient Addendum (Form 820.04). This form provides a way to value solar energy systems on homes that allow the value to be included in residential and commercial real estate appraisals. It has long been known that solar energy system increase real estate values and reduce the time on the market for home sales. Only recently have widely accepted tools been released. Since there are so many solar panel systems in Southwest Florida, it’s important that real estate professionals understand the implicationsRead More →

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I thought April 15 would be a great day to talk about the tax benefits of solar electricity. However, I’m not really going to talk about the massive 30% tax credit you can take on a solar electric (solar photovoltaic or PV) system. I want to talk about the tax implications of the stream of income that follows an investment in solar energy. The return you get on a solar energy investment isn’t usually dollars back in your pocket or bank account in the traditional sense of investing. Your return is the reduced electricity bills you will see for the next 40 years (yes, solarRead More →

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Many economists think that a financial Armageddon is on the horizon in the United States and Europe. While don’t necessarily agree that a meltdown would result in an end-days scenario, doomsday prepper-style, there is certainly an argument to be made for inevitable inflation if out of control deficit spending by governments continues. How can solar energy help? Individual and business decisions whether to invest in solar energy are often predicated on the belief that utility electricity rates will increase steadily in the future. Arbitrary average energy inflation rates, based loosely on historical records of varying lengths, are often used in financial models. Averages range fromRead More →

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I was at a home last week on a sales call for a solar photovoltaic (electric) system. Whenever I am at someone’s home, I look around at the appliances, lighting, and construction of the home. I ask myself, “is this home efficient?” If not, I’m obligated to point out that making a home more efficient can often be more cost effective than installing solar panels. Homeowners look at me quizzically, because after all, I am there to sell solar panels, right?! This particular homeowner had a 2 HP single speed swimming pool pump. The pool and pump were under one year old. I had toRead More →

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The most complex financial analyses that solar dealers need to perform are for grid-interactive solar electric systems. The number of variables makes an accurate and reliable analysis difficult to provide to potential customers (investors). However, there are plenty of models out there to give us an idea of the realistic investment returns a system owner can expect. Some are simplistic, while others are tremendously sophisticated. The key is to ensure that the inputs are realistic and accurate. The first kind of analysis, the one that most people ask for, is the payback. Many people, myself included, are critical of this metric, primarily because it isRead More →

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One of the most frequently asked questions about a solar energy system is, “what’s the payback?” What the customer is asking is how long does it take to get their money back from the investment. My favorite response (which I have never actually used) is, “what’s the payback of that [insert fine automobile brand here] in your garage?” Payback is a term taught in basic accounting, finance, and investing courses. When I was studying as a University of Florida Finance major, payback came out pretty early in the curriculum. The concept is pretty simple. If I invest $1000 and I get a return of $250Read More →

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As a financial analyst by education, I’m surprised at how few posts I’ve made on the investment returns of solar energy products. Residential solar energy systems provide a return on investment that rival investments of similar risk. One factor that is often left out of financial analyses is the impact of personal income taxes, not from the perspective of tax credits, but from the perspective of electricity costs. Let me explain… When you pay for your utility bill each month, you are probably paying with money from your checking account. This is money upon which you have presumably paid taxes, or will pay taxes. Let’sRead More →