Originally Posted by Red Forman
You are paying over $26,000 on a $28,000 loan. If you paid cash or paid it off in 5 years that would be one thing, but 30 years? I also find it amusing you assume I'm basing my comments on political beliefs. A little sensitive are we?
I think you're missing the bigger picture. Sure, you're paying a lot in interest. But unless you have the $20-30K in cash to pay for the installation, you're going to have to finance it.
In this case (based on numbers provided) George paid 1800/year in electric bills prior to installing panels. After installing panels, he is paying 1800/month in loans, but zero for electric.
Over 30 years, he ends up paying 54,000. Who knows what the investment does for his property value, but it's probably safe to assume it will increase the value of his home over time.
Now, assume his neighbor (who doesnt have solar and also pays 1800/mo in utilities) chooses not to install solar and continue paying the electric company. Let's also assume that electric rates increase at an average of 1% annually. (In recent years, the have increased at a greater rate nationally).
Over the course of the same period, the neighbor also pays 54,000. However if you include rate increases of 1% annually, the neighbor pays an additional $8600 over the same 30 year period, and at the end of the 30 years has nothing to show for it.
If you make the increases equal to inflation (average rate over past 100 years is 3.25%), the neighbor pays over $35180 more than George.
In recent years, based on what I found in a wall street journal article, average national electrical rate increase has exceeded annual inflation rates.
Maybe a less stupid financial decision than you thought? If you follow the same line of logic, it's smarter to rent your residence than own. Which might be the case in some circumstances, but if you're planning on living in your home for many years to come, an investment in alternative energy might not be a bad choice. As an added bonus, you are no longer dependent on the electrical grid for power during a disaster or rolling blackout. I know first hand how nice it is to have whole home power when nobody else in the neighborhood does (we have a natural gas generator).
I'd definitely consider a solar installation, but I live too far north right now to justify the cost. However if cost comes down, it becomes more and more appealing.