My earlier post this week was about adding more solar panels and a couple of batteries to my system. I initially installed solar in 2023, and it was so effective, that I decided to expand my system.
Why Solar?
Even with the 30% tax credit, solar is expensive. My original system cost $29,000 out of pocket. That’s a lot. I got about $10,000 back in taxes, but $19,000 is still a lot to plunk down.
For my $19,000, I get about $3,000 per year in savings. Over 25 years (the warranty period of the panels) I’ll save $75,000 on electricity. That’s a 294% return or 12% per year. That’s a great return on investment, but still a costly outlay.
So, without further ado, the top 10 reasons for me to install solar:
- Free electricity (after 6.5 years when my annual savings have exceeded the installation cost)
- Green new deal – there’s lots of whining about what other people are doing or not doing. I decided to go solar and do a little something for the planet.
- Cost – it’s a good deal today and electricity cost is likely to increase in the future. Going solar insulates me from increases.
- Independence – With my panels, and the 2 new batteries that I just added, I can power my home even when the utilities are down.
There’s only 4, but that’s a solid 4 reasons.
Risk Mitigation
Risk Mitigation is something I think about a lot. It’s not quite as dull as it sounds, but you may still want to avoid me at a cocktail party.
Mainly I think about it in terms of my finances. I am retired and rely on my investments to fund my lifestyle. As I planned for retirement, I moved out of more risky growth investments into more conservative investments. I needed to make sure my assets generated income and would last. Read more here.
Beyond my investments, I also look at my costs. Years ago, my wife and I decided to take a large chunk of our savings and pay off our mortgage.
This wasn’t easy. We saved for a long time, which means we skipped vacations, meals out and other fun things to build a nest egg.
But, by paying off the loan, we had a lot more options.
I could decide where the money went each month. I could invest it, or if I needed something, I could spend. I also saved a fortune on interest payments.
If something came up, I was better prepared to handle it financially with no mortgage.
That’s risk mitigation.
Electricity
A few years back, I realized how dependent we were on the electric grid. Our power goes out infrequently, but when it does, the heat stops working. The fridge stops, which we can deal with in winter, but is a disaster in the summer. Our power went out during a storm and the basement flooded. Sump pump didn’t work and I couldn’t remove water with my wet vac.
And, I’m at the mercy of the electric company. What would I do if they raised rates? Shop around? Nope. They’re a monopoly. They are regulated by the state but whose side do you think the state is on?
Thus my interest in solar.
I first joined a solar farm, which allowed me to use energy from a field full of panels to offset my cost, but soon added my own roof-top solar.
Risk Mitigation. I’m protected from price increases.
I Told You So
Today I read Why Your A/C Bill May Explode This Summer on clark.com.
The basic premise is that as appliances have gotten more efficient, electricity usage across the US has gone down and prices have stayed flat or decreased slightly. However, now with the power-hungry AI boom, prices will likely be on the rise.
Clark and his team are pretty level headed – I don’t see a lot of tin-foil hat stuff from them, so when they’re concerned, I listen.
How lucky that I’ve just installed 5 additional panels and 2 batteries to complement my original 22 panels.
That’s #3 from my top 10 list of 4 items.
Wrap-Up
It’s a little fun to say I told you so, but it’s not too late. While there is talk of eliminating the 30% tax break, that will be a ways down the road if it does happen.
There is still plenty of time to add solar to your home or to join a solar farm.
But that’s not really the point. The point is that we need to think about risk mitigation.
What could happen that would be an imposition for me? What could I do about it? How big of an imposition? Is it worth doing something?
These are good questions to start with.
I own an umbrella policy. This is an insurance policy that covers us beyond the limits on our car and home policy. I have a dog and a pool. A lawsuit is unlikely, but it could wipe me out. And being retired, I have no way to recover. An umbrella policy is a cheap risk mitigation.
So, today’s thought: Think about the things that could bite us in the a$$. And ask these questions. It may be worth our while to do something. Maybe not. We get to decide.