Last month we talked about how New Yorkers were in for a rather rude awakening as Con Edison was set to raise rates by more than a billion dollars over the next three years. Despite the fact that interest groups and the public at large have widely panned ConEd for their woeful customer service and poor business record, Public Service Commission chairman John Rhodes approved the move. For the average New Yorker, who already has to suffer from some of the highest energy costs in the country and one of the highest overall costs of living anywhere in the world, the move was not widely welcomed.
However, solar customers are widely more or less indifferent to the move and others are even somewhat happy. This is because their monthly savings is set to increase with the energy rates, thanks to the directly proportional relationship between the two. In this blog, we’ll explain how this relationship works, why it’s so important to solar customers, and why you should take an even closer look at solar now that energy costs are going up yet again.
Why Rising Prices Are Good for Solar
In order to understand why rising prices are so beneficial to solar customers, we have to take a closer look at why solar customers are impacted by these prices at all. One of the best parts about solar is that it is a self-funding upgrade to your home—if you invest the amount of money you save back into the cost of the upgrade, the upgrade will eventually pay for itself. Solar has shown it is capable of doing this just about everywhere, and it does so particularly fast in markets where energy costs are extremely high.
Let’s look at a simplified example so you can see what we mean. Say you spend an average of $200 per month on energy costs, and then decide to invest $10,000 into a solar energy system. Once your energy system is installed, your monthly energy bill drops to just $20 per month; a savings of $180 each month. At that rate, in 56 months (or four years and eight months), your savings from this energy system will surpass the initial investment cost of $10,000, and your solar energy system will have paid for itself. This is what is known as your “payoff period.”
Now let’s look at what happens when energy costs rise. Keeping that same $10,000 system, let’s say your energy bills rise to $250 per month before solar and $25 per month after. That savings is now $225 per month, meaning you’ll reach $10,000 in savings in just over 44 months, or in 3 years and 8 months. In other words, a moderate rise in energy rates in this example cut off an entire year from your payoff period! And these examples don’t take rising energy rates into account either—as costs go up, the payoff period shrinks even further and you save even more!
How Does That Translate to Paying for Solar?
The idea of savings surpassing initial investment may sound great to many homeowners, but you might still be wondering how this solar savings translates to wiping out the cost of your solar energy system. After all, if you finance your system to have it installed, you’ll still have to pay off the loan before you own your system free and clear.
Here’s what we see some people do and what we advise to many homeowners looking to pay off their system as soon as possible: continue to invest the same amount of money into your energy expenses every month as you would have before. Pay your energy bill like normal (as small as it might be) and then put the remaining money you would have spent on energy into the cost of your solar system. You won’t notice a change in your lifestyle or budget from before, and this savings is usually well in excess of what your monthly payment will be. By paying the extra savings into the cost of your loan each month, you will actually pay off your solar system loan in the same amount of time it takes to reach the end of your payoff period. From that point on, any energy your solar energy system generates is pure savings and money right back in your pocket every single month.
How Long is the Average Payoff Period in New York?
New York may not be the sunniest state in the country, but that doesn’t mean we aren’t a lucrative place to switch to solar. In fact, New Yorkers actually enjoy a number of outstanding benefits, incentives, and other perks for switching to solar that many other states simply can’t match. As a result, New Yorkers actually recoup the cost of their energy systems nearly twice as fast as someone from Florida, a supposed “solar hotbed” due to solar-friendly weather. In New York, the average homeowner pays off an 8-kilowatt system in approximately 6-8 years, as compared to Florida that usually does it in around 13.
Interested in switching to solar? Take advantage of friendly incentives and a low payoff period in New York! Talk to the experts at SunPower by Sea Bright Solar by calling (732) 253-4052 today.