Solar technology has evolved rapidly over the years showing an exponential growth spurt with more and more countries embracing the new trend. A solar system is considered t be an investment whether it be for a home or for commercial purposes. The concept of viewing it as a smart financial choice has been flaunted time and time again but what does this actually mean. How does a system that many perceive to have such a great upfront cost to install still be viewed by many experts as a sound financial decision.
What is an investment?
Simply put its an entity that has the capacity to generate or increase in value over a period of time the catch is that there is usually an upfront resource that will be required either in form of time money or effort in order to put this in motion. The purpose of investing is to generate a return form the invested asset. People buy a solar system for one of two major reasons they lack access to power by virtue of them being off grid or simply as a means to cut back or just eliminate power expenses.
Why is solar then regarded as an investment well for one you would need to actually buy a solar home system for you to reap the benefits of solar?
This upfront cost generally includes the solar panel the battery and the charge controller being core items together with the relevant accessories plus the installation service. Once this is done then you start reaping the benefits of your investments immediately. LESS or Zero Power bills going forward your power bill issue gone just like that. Whether you are a business or a home that is looking to save some cash on power bills money not spent is money saved. This in essence is the concept of how returns are made. This is how every single cent you would have spent you get to now keep. But like any business you invest in you only start earning after you have broken even. This basically means you have to return the capital you put in first for you to actually say hey this is how much i made/saved by installing solar at my place. This brings us to a little term called "ROI".
What is ROI?
ROI stands for return on investment, this is a metric used to gauge how effective your investment is. How much in form of gains did you actually receive from the upfront cost you parted with? ln a nutshell I get my capital back then I start making the real money. Investment's gains compare favorably to its cost. As a performance measure, ROI is used to evaluate the efficiency of an investment. You made a commitment and used money to buy a solar power system. Much like you would make a business plan this analysis takes into account timelines, outputs and inputs with regards to operational lifespan of your solar system. When it comes down to it it’s really all about the numbers and the numbers don’t lie.
Why you want to be like Mr. X
Mr. X has a monthly power bill of 4000 Kshs so X buys a solar system worth 10000 Kshs. Because of this decision he had to cough up 6000 Kshs more for that purchase above his normal monthly power bill (Capital investment).Because X chose to part with 10000 Kshs at a go to buy the panel he no longer pays monthly power bills going forward. So in two and a half months’ time the money saved on power bills has returned back his capital and he will keep saving 4000 Kshs monthly for the next 20 years or so. You factor in maintenance cost and battery lifespans give it 15 years on the lower side. In 15 years he makes 720000 Kshs, give or take that’s an annual passive income of 48000kshs. And to think it all started with a single 10000 Kshs investment in solar.
Key Take away
Mr.X could have been like most people and shy away from buying a solar system under the guise of “that’s a bit pricy for my taste”. Unfortunately that’s a rather superficial perspective that is not only myopic but also quite costly in the long run. If you would take a moment and flip that coin then you would realize just how much you stand to gain with that one off cost. All it takes is a minute do the math run the numbers I promise you will have that epiphany.
ROI that next Sale
Because ROI is such an effective analytical tool it doubles up as an effective pitching tool when a contractor tries to sell to a client. With an elaborate ROI breakdown one can easily show you why in the long run investing in solar for your home or business is the smartest move to make. I can show you the whys and the when’s and effectively reel you in because it simply makes sense. Cost benefit analysis shows how savvy you are in your field and just how beneficial that solar product is to the client. So next time you are making a sale lay it out for them. A solar is not just like an average appliance say a TV or radio that you buy and your money is gone like that. This is the mother appliance that will power your appliances and make you money while doing it.
Look on the plus side by getting a solar panel you use clean energy that is both safe and renewable. Hers is the kicker an average solar panel remains viable for the next 25 years or so. To put icing on the cake this won’t be just you making a sound business decision, inadvertently you are also investing in a self-sustaining future for our planet. So whether you are in it for the money or you just are genuinely interested in ensuring planet earth is inhabitable in the next decade it still works .Clean energy sources represent a brighter future for our planet. Change starts with you and YES you can take that to the bank.
