Become $867,000.00 Richer with Solar Power

In this post we’re going to compare mortgages with, various investment options and solar power for your home, and how you how you could become $256,000 to $867,000 richer by choosing to go solar today.

Lets cut to the chase. If you own a home with a mortgage, you could become $794,000.00 to $867,000.00 richer buy going solar and putting the cost of it on your mortgage.

Or if you have $10,500 and you’re looking to invest we’ll show you how you could become $256,000.00 to $567,490.70 wealthier by choosing solar over term deposits or share market investments.

Assumptions

The assumptions we’ll be working with today.

  • Mortgage amount, $400,000 interest rate 5% per year, 30 year term
  • Term deposit return after tax 4% per year
  • Sharemarket investment returns after tax 7% per year
  • Power price inflation 2% per year
  • Cost of 4.5kw rooftop solar and power diverter $10,500 delivering:
    • Conservative estimated power savings of $85 per month
    • Optimistic estimated power savings of $100 per month
    • Power savings are used to repay the mortgage early, or invested in the share market
  • Annual solar output loss 0.5% per year
  • Finance deal on solar system 24 months no interest, no repayments

The simple stuff

This table shows you how much you’ll save of your power bill each year after installing a solar power system, including 2% rise in electricity costs per year, and a 0.5% reduction in power output.

Year Annual solar power savings conservative Annual solar power savings optimistic
1 $1,035.36 $1,218.00
2 $1,050.84 $1,236.24
3 $1,066.56 $1,254.84
4 $1,082.64 $1,273.68
5 $1,098.84 $1,292.76
6 $1,115.28 $1,312.08
7 $1,132.08 $1,331.76
8 $1,149.00 $1,351.80
9 $1,166.28 $1,372.08
10 $1,183.80 $1,392.60
11 $1,201.56 $1,413.48
12 $1,219.56 $1,434.72
13 $1,237.80 $1,456.32
14 $1,256.40 $1,478.16
15 $1,275.24 $1,500.24
16 $1,294.32 $1,522.80
17 $1,313.76 $1,545.60
18 $1,333.44 $1,568.76
19 $1,353.48 $1,592.40
20 $1,373.76 $1,616.28
21 $1,394.40 $1,640.52
22 $1,415.28 $1,665.12
23 $1,436.52 $1,690.08
24 $1,458.12 $1,715.40
25 $1,479.96 $1,741.08
26 $1,502.16 $1,767.24
27 $1,524.72 $1,793.76
28 $1,547.52 $1,820.64
29 $1,570.80 $1,848.00
30 $1,594.32 $1,875.72
31 $1,618.20 $1,903.80
32 $1,642.56 $1,932.36
33 $1,667.16 $1,961.40
34 $1,692.12 $1,990.80
35 $1,717.56 $2,020.68
36 $1,743.36 $2,050.92
37 $1,769.52 $2,081.76
38 $1,796.04 $2,112.96
39 $1,822.92 $2,144.64
40 $1,850.28 $2,176.80
41 $1,878.00 $2,209.44
42 $1,906.20 $2,242.56
43 $1,934.76 $2,276.28
44 $1,963.80 $2,310.36
45 $1,993.32 $2,345.04
46 $2,023.20 $2,380.20
47 $2,053.56 $2,415.96
48 $2,084.40 $2,452.20
49 $2,115.60 $2,488.92
50 $2,147.40 $2,526.24

Notice how the amount saved increases every year even though the output you panels generate decreases ever so slightly. We use a 50 year lifetime for the solar power system. This represents the half life of the solar panels, were power output will be 50% of the original specification. This aligns with most quality solar panel guarantees of 80% output after 20 years.

Got a mortgage?

So what does this mean as a home owner with a mortgage. If you put the cost of the solar power system on the mortgage, you will pay off your mortgage 5 years earlier.

But it gets even better, after your mortgage is paid off, if you invest your previous mortgage payment for the remaining 5 years (as if you had a 30 year mortgage), and invest the power savings you could become $867,000.00 richer.

Year Mortgage Mortgage plus solar conservative Mortgage plus solar optimistic
1 -$394,106.98 -$393,058.88 -$392,873.91
2 -$387,911.85 -$395,987.29 -$395,606.04
3 -$381,399.10 -$388,808.99 -$388,217.68
4 -$374,552.46 -$380,987.71 -$380,173.61
5 -$367,354.82 -$372,487.77 -$371,437.47
6 -$359,788.16 -$363,271.53 -$361,970.96
7 -$351,833.59 -$353,299.57 -$351,733.80
8 -$343,471.20 -$342,530.29 -$340,683.63
9 -$334,680.09 -$330,919.87 -$328,775.94
10 -$325,438.29 -$318,422.35 -$315,963.81
11 -$315,722.68 -$304,989.28 -$302,197.91
12 -$305,508.98 -$290,569.74 -$287,426.39
13 -$294,771.65 -$275,110.21 -$271,594.72
14 -$283,483.83 -$258,554.40 -$254,645.49
15 -$271,617.33 -$240,843.02 -$236,518.42
16 -$259,142.45 -$221,913.76 -$217,149.93
17 -$246,028.02 -$201,701.09 -$196,473.30
18 -$232,241.25 -$180,136.13 -$174,418.37
19 -$217,747.66 -$157,146.35 -$150,911.28
20 -$202,511.02 -$132,655.49 -$125,874.37
21 -$186,493.24 -$106,583.39 -$99,225.89
22 -$169,654.27 -$78,845.79 -$70,880.01
23 -$151,952.01 -$49,353.95 -$40,746.36
24 -$133,342.19 -$18,014.63 -$8,729.99
25 -$113,778.29 $15,270.24 $25,269.10
26 -$93,211.41 $44,514.18 $55,474.42
27 -$71,590.11 $76,087.07 $88,078.72
28 -$48,860.34 $110,154.80 $123,252.67
29 -$24,965.27 $146,894.87 $161,179.02
30 $0.00 $186,497.22 $202,053.42
31 $0.00 $201,206.17 $218,143.24
32 $0.00 $216,961.56 $235,379.04
33 $0.00 $233,836.75 $253,841.28
34 $0.00 $251,910.40 $273,616.03
35 $0.00 $271,266.50 $294,795.44
36 $0.00 $291,994.96 $317,477.95
37 $0.00 $314,192.09 $341,769.03
38 $0.00 $337,960.82 $367,781.52
39 $0.00 $363,411.42 $395,636.06
40 $0.00 $390,661.74 $425,461.82
41 $0.00 $419,838.00 $457,397.05
42 $0.00 $451,075.16 $491,589.67
43 $0.00 $484,517.72 $528,197.80
44 $0.00 $520,320.18 $567,390.78
45 $0.00 $558,647.98 $609,349.82
46 $0.00 $599,678.03 $654,268.76
47 $0.00 $643,599.73 $702,355.07
48 $0.00 $690,615.75 $753,830.57
49 $0.00 $740,942.81 $808,932.77
50 $0.00 $794,812.93 $867,915.78

Looking to invest

Do you have $10,500, and are looking to invest. Lets compare term deposits with share market investments and solar power.

Year Investing Term Deposit Investing Shares Solar conservative Solar optimistic
1 $10,920.00 $11,235.00 $12,293.28 $12,480.03
2 $11,356.80 $12,021.45 $3,728.02 $4,117.34
3 $11,811.07 $12,862.95 $5,079.24 $5,650.58
4 $12,283.51 $13,763.36 $6,541.37 $7,309.83
5 $12,774.86 $14,726.79 $8,122.41 $9,104.15
6 $13,285.85 $15,757.67 $9,830.93 $11,043.37
7 $13,817.28 $16,860.71 $11,676.10 $13,137.88
8 $14,369.98 $18,040.95 $13,667.74 $15,398.80
9 $14,944.77 $19,303.82 $15,816.35 $17,838.15
10 $15,542.56 $20,655.09 $18,133.29 $20,468.68
11 $16,164.27 $22,100.95 $20,630.59 $23,304.02
12 $16,810.84 $23,648.01 $23,321.13 $26,358.86
13 $17,483.27 $25,303.37 $26,218.68 $29,648.97
14 $18,182.60 $27,074.61 $29,337.99 $33,191.04
15 $18,909.91 $28,969.83 $32,694.95 $37,003.09
16 $19,666.30 $30,997.72 $36,306.44 $41,104.28
17 $20,452.96 $33,167.56 $40,190.53 $45,515.20
18 $21,271.07 $35,489.29 $44,366.67 $50,257.93
19 $22,121.92 $37,973.54 $48,855.57 $55,356.05
20 $23,006.79 $40,631.69 $53,679.48 $60,834.70
21 $23,927.06 $43,475.90 $58,862.10 $66,720.88
22 $24,884.15 $46,519.22 $64,428.93 $73,043.49
23 $25,879.51 $49,775.56 $70,407.09 $79,833.47
24 $26,914.69 $53,259.85 $76,825.76 $87,123.89
25 $27,991.28 $56,988.04 $83,716.15 $94,950.17
26 $29,110.93 $60,977.21 $91,111.53 $103,350.18
27 $30,275.37 $65,245.61 $99,047.62 $112,364.46
28 $31,486.38 $69,812.80 $107,562.63 $122,036.39
29 $32,745.84 $74,699.70 $116,697.48 $132,412.49
30 $34,055.67 $79,928.68 $126,495.80 $143,542.44
31 $35,417.90 $85,523.69 $137,004.41 $155,479.37
32 $36,834.62 $91,510.34 $148,273.39 $168,280.27
33 $38,308.00 $97,916.07 $160,356.35 $182,005.99
34 $39,840.32 $104,770.19 $173,310.64 $196,721.65
35 $41,433.93 $112,104.11 $187,197.63 $212,497.04
36 $43,091.29 $119,951.39 $202,082.97 $229,406.83
37 $44,814.94 $128,347.99 $218,037.06 $247,530.81
38 $46,607.54 $137,332.35 $235,135.08 $266,954.48
39 $48,471.84 $146,945.61 $253,457.47 $287,769.29
40 $50,410.72 $157,231.81 $273,090.32 $310,073.02
41 $52,427.15 $168,238.03 $294,125.86 $333,970.38
42 $54,524.23 $180,014.70 $316,662.64 $359,573.43
43 $56,705.20 $192,615.72 $340,806.26 $387,002.05
44 $58,973.41 $206,098.83 $366,669.56 $416,384.54
45 $61,332.34 $220,525.74 $394,373.42 $447,858.17
46 $63,785.64 $235,962.55 $424,047.06 $481,569.82
47 $66,337.06 $252,479.92 $455,828.85 $517,676.76
48 $68,990.55 $270,153.52 $489,866.87 $556,347.17
49 $71,750.17 $289,064.26 $526,319.54 $597,760.99
50 $74,620.18 $309,298.76 $565,356.28 $642,110.88

Here we see a solar power vs term deposits creating up to $567,490.70 extra wealth. And solar power vs investing in shares creating $256,057.52 to $332,812.12 extra wealth.

Summary

Do your own maths, make your own assumptions, get independent investment advice and call around various solar power installers. It could be the best financial decision you’ll ever make.

8 thoughts on “Become $867,000.00 Richer with Solar Power”

  1. Interesting. And thanks – I’m new to your blog so may have missed some previous stuff, so sorry if I have misunderstood!

    However is there no additional capital cost/maintenance/repair accounted for in the model for the PV panels? Their life expectancy (even with degradation) is unlikely to be 50 years. Given I pay, say 25c/KWH, a bill of around $100 pcm at the moment and I will need storage or drawdown from the grid over the hours of darkness (and some time either side) these models look really optimistic for solar power. Plus the last table starts solar with saving $3-4K a year, which is more than my total power bill so hardly realistic. and the mortgage tables look really odd around years 23-25 – did we pay off that much with solar? Historically, over the very long term, energy prices (inflation adjusted) have dropped. Even locally they do not show much of a trend: https://www.powerswitch.org.nz/trends (albeit over the short term.) Its an interesting premise but I’m unconvinced by the data here….. Cheers for the blog!

    1. Hi, thanks for taking the time to comment. I’ll try and address your concerns one at a time.

      I have not added any additional maintenance costs into these charts. I fully expect the solar panels to last 50+ years. They’re guaranteed for 25 years, they have no moving parts. However I do expect to replace the inverter (10 year guarentee) once during the system life at around year 20-30. At this point the plan would be to add battery storage at the same time. This is not costed in to the results tables.

      At a cost of $100 per month for electricity a system size as used in these examples would be significantly oversized. Our average monthly cost before installing solar was $200 per month. In your situation look at 2-3kw solar systems priced at $6,000 to $8,000.

      The last table shows the combined return from investing in the share market plus investing the power savings from going solar. It also assumes you take advantage of 0 interest no repayment for 24 month offers on solar power systems provided by select installers.

      For the mortgage tables between years 23-25 the home owner has paid of the mortgage so they’re are transitioning from a negative balance to a positive balance. It’d be much easier to show in monthly breakdowns, but the the tables would be super large.

      Assumption is power prices will increase at the inflation targeted rate of 2%. From the power switch link provided this 2% increase per annum is visible for some providers. Eg Mercury energy in Christchurch region. Others are significantly higher and some are lower, so I’m happy with this as an assumed industry average over the long term.

      If in doubt run your own numbers.

      Going solar wont be for everyone, but for a large portion of our population, it can be the great step towards significant wealth.

      1. Thanks for responding David – I am very interested as we have just moved in to a new build and decided solar did not stack up! Of course, I could have done my sums wrong, but with an air to water heat pump for the hot water (and underfloor heating – South Island winter bliss!) the daytime energy sink that most people have may not be there for us. Still, worthy of looking again (the house was built with wiring for solar) and running the numbers.

        1. Smart choice on energy efficient heating.

          If you do look into solar again, I’d look into heating the slab and hot water during the day, and then switching off during the night.

    1. Hi. I went with WorldSolar. System size is 4.5kw of solar panels, and a 5kw SolaX inverter, and an Immersun power diverter. Total price $10,500 installed.

      Harrison’s Energy were also price competitive up to 3.5 kw system size, but I didn’t like their sales approach. They tried very hard to rubbish their competition.

      Both of the above offer 20 to 24 months no repayments, no interest deals via qcard.

      Do shop around. Prices for identical equipment had a 20% variation between installers, and when comparing quality system vs a top end system, price differences were easily 50% or more.

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