Looking for the best solar panels? Many people shy away from the costs as a primary reason for not switching to solar energy. There is no doubt that in recent years, the popularity of solar-powered systems has become a widespread energy alternative to traditional fossil fuels. Not only is solar power more sustainable and cleaner for the environment but, in regions like Africa and South America where a multitude of national issues have had a disastrous impact on the country’s national grid systems, solar power offers a resilient and concrete energy solution.
However beneficial solar energy might be, many people feel it is impossible to make the switch if the cost is unobtainable. Although it is true that in the past decade, thanks to multiple government schemes and sustainable energy investments, the price of solar systems has dropped significantly, for many the upfront cost seems like an unavoidable hurdle. At Alumo Energy, we believe that simply looking at the initial costs of the best solar panels and installation may be a little short-sighted if you are not looking at the long-term financial benefits and savings solar power can offer you.
Get The Best Solar Panels
Our goal at Alumo Energy is to educate our clientele about all aspects of solar energy, including the financial aspects. In this article, we want to present a long-term picture, where we will look at realistic estimates for the upfront cost of the best solar panels and installation in the South African market today. After this, we will compare it to various long-term saving factors. This article aims to show how the long-term saving opportunities can outweigh the initial investment while also covering exactly how switching to solar power can be the fiscally responsible decision in the long run.
Initial Investment: Understanding The Upfront Costs
Before building on our stated thesis of potential long-term savings, we must first garner a realistic view of the upfront costs. Because we, at Alumo Energy, are a proudly South African company, we will investigate this initial cost on the South African solar panels market. However, it is essential to point out here that we believe our prices are competitively priced even internationally, as we offer some of the highest quality systems available today.
To understand the costs of th best solar panels and installation, we should first understand what elements make up a solar system. There are three main elements to consider when pricing out a system. These include:
- Batteries (usually lithium-ion batteries are used)
- An Inverter
- Solar Panels (there are both thermal and photovoltaic options)
The upfront costs consist of these three elements with the addition of the installation cost, which generally includes the labour required to set up the system. The most impactful factor in determining the price of any solar system is how large a system you want (in terms of energy generation and storage). The larger the design you want, the more of the above three elements you need.
Now that we know what goes into a solar system, the next step is looking at real-world prices for these systems. Trying to price out a system yourself can be complicated. Alumo Energy understands this, so our website has an intuitive invoice tool that makes pricing our systems easy. As mentioned above, we also offer some of the most competitive prices in the South African market, so you can rest assured that the figures presented below are realistic estimations.
How To Calculate Long-Term Savings
Now that we have a better understanding of the upfront costs, from relatively small systems to the popular middle-of-the-range installation option, as well as one of the more extensive options for a residential solar system, the next step is to begin looking at the financial benefits of installing these systems.
In the introduction to this article, we stated that long-term savings were significant enough that switching from the national grid to a solar power system was financially beneficial. To prove this point, especially in the face of the substantial amounts quoted above, the article will examine the financial theory behind investments to explain how solar systems provide a favourable economic position after the initial upfront cost.
In this section, though, we will begin with the basics, which include defining the term return on investment (ROI) and the relationship between installing a solar system and your energy bill:
What Is ROI
So, what does a return on investment or an ROI actually mean? Simply put, the return on investment is the relationship between how much you spend on acquiring a particular asset and the money you make back from owning that asset within a specific time frame. The ROI is generally expressed as a percentage, and the goal of any astute financier is to make an investment in which you completely recoup the initial cost, after which you profit from the asset you now own going forward. An asset can be defined as anything that provides the holder with positive economic value (or a profit).
The ROI is generally calculated as follows:
ROI = Net IncomeCost Of Investment X 100
Now that we understand the economic definition of an ROI, we can apply it to our circumstances. Firstly, it is critical to understand that a solar system is an asset. This is because it returns a constant financial benefit, providing you with a continuous supply of energy you would otherwise have had to pay for. Thus, when you purchase one, you are making a financial investment.
The ROI And Your Energy Bill
But what is the real-world impact of the ROI when choosing the best solar panels? In the ROI equation defined, the variable net income does not suit our case study well. Instead, we should substitute it for the variable opportunity benefit. The opportunity benefit of owning a solar system is that your energy bill will be significantly decreased, thanks to the free power your solar system is generating. This means you have to pay less on your energy bill each month, directly benefiting you.
To show you just how impactful the ROI on an Alumo solar system can be, our website has a tool to show you the ROI you can expect when you purchase a system from us. By simply telling us how much you generally spend on electricity every month, our tool can give you both the amount you will save and how long it will take to recoup the initial upfront costs we listed in the first section.
ROI Rate: Factors To Consider
The potential to make up to R2300.00 a month in energy bill savings is an incredible statistic. Especially if you consider that after paying off the investment you made in the best solar panels and installation within the first six to seven years, the money you save after that is a direct profit for you and your household. We believe this alone should show the financial benefits of switching to solar power.
However, there are still readers who may need a bit more convincing. This may be because six years may seem like a long time to repay a financial investment. At Alumo Energy, we can sympathise with this view; therefore, in this section, we will look to provide further motivation.
Here, it is critical to mention that our estimates above are only prospective models of potential savings based on the information available to us at the time of calculation. That means the above values would only be accurate if everything remained constant for six years. Our ROI model also excludes all external financial considerations. However, we all know that is a naïve way of viewing the world, as socioeconomic and political factors constantly change, and these changes will inevitably impact your ROI rate. As you will see with the few factors discussed below, these factors can positively impact your ROI.
1. Size Of the System
As you saw in our economic models in the previous section, there is a strict relationship in which the more you spend upfront, the more prominent your return will be. Although it may take slightly longer to pay off, the long-term benefit is more significant.
Our models also only included some of the most popular residential options. However, for those in commercial set-ups or those who live in rural areas and require a complete off-the-grid set-up, those savings could be even more considerable. This is all because the more extensive the system, the less you would have to rely on the national grid for electricity; therefore, the more your monthly energy bill would be reduced.
2. Government Incentives
Since the beginning of the twenty-first century, governments have become aware of the environmental problems fossil fuels cause and the sustainability of natural energy sources like solar power. As the health of the natural environment continues to decline and fossil fuels become a less suitable option, alternative energy like solar has become increasingly crucial.
Therefore, many national governments have invested in providing tax cuts and government subsidies to help popularise and promote the use of solar energy. As the need for cleaner energy sources becomes even more vital, these government incentives are expected to grow. Therefore, by investing today, these programs will only increase your rate of ROI.
3. Electricity Price Inflation
Another vital factor to remember is that as fossil fuels grow ever more limited due to their non-sustainable nature, the price of these resources will inevitably rise. In South Africa alone, the rise of electricity within the last decade has been significant. According to the website “Power Optimal”, it is estimated that over the previous ten years, the price of electricity offered by the national provider Eskom has increased by a stunning 356%.
The rate at which the price of traditional energy sources will increase is not expected to slow down either. This means that as time progresses, the cost of national grid energy rises sharply. In contrast, your dependence on this energy source decreases due to your solar system, resulting in an even greater ROI. This means that you would have recouped the money spent!
Best Solar Panels: A Responsible Long-Term Saving Solution
This article aimed to show how investing in the best solar panels and installation could combat the perceived high initial investment. We believe that we have proven this point by realistically evaluating the price of a general residential solar system today and showing how your ROI could recoup that cost well, providing future benefits.
Conclusion
Considering that this article only mentioned a few factors that would positively impact that rate of ROI, it is easy to see how solar systems will become an even more lucrative investment as time progresses. For those who have been convinced or want to learn more about the process behind installing a solar system in South Africa, look no further than Alumo. With our competitive pricing and excellent installation service, you will have a hassle-free switchover. So don’t hesitate to experience your financial benefits today by contacting Alumo Energy!