The cost of solar power vs the opportunity cost part 1

Many San Diego residents and business owners think of solar energy as a cost – i.e. how much will I have to pay to install a new system on my property?

This approach makes perfect sense on the surface.  After all, the installation isn’t free – unless you use solar leases (which we strongly discourage).

But the logic is flawed for 2 reasons:

1.  Solar is an investment – one that pays guaranteed dividends for decades.  This point is important enough that we’ve dedicated an entire blog post to solar ROIs and paybacks.

2.  There is an “opportunity” cost of NOT going solar.  This is the subject of today’s and tomorrow’s posts.

The Opportunity Cost of Not Going Solar

“Opportunity cost” is an important but poorly understood aspect of solar energy.

Investopedia defines it as:

The cost of an alternative that must be forgone in order to pursue a certain action.  Put another way, the benefits you could have received by taking an alternative action.

To use a practical example.

Let’s say you have 2 investment opportunities that offer returns of 2% and 6% respectively.  The opportunity cost of going with Option A is 4% (i.e. you missed out on the ability to generate an additional 4% return by going with the less lucrative option).

In solar terms, you have 2 different options:

  • Switching over to solar energy
  • Continued reliance on the utility grid

If you switch over to solar energy today, your cost will be something like $10,000 (paid for with your monthly electricity bill savings over the next 4 to 6 years on average).  This represents the cost of going solar.

However, if you stick with the utility grid and get all of your power from SDG&E, you’ll end up paying a lot more.

Let’s take a look.

For starters, you’ll pay an unlimited number of monthly electricity bills.  We don’t know what the exact damage will be.  But if you currently pay $100 a month at today’s prices, you’ll end up paying $12,000 over the next 10 years for your electricity (compared to only $10,000 for solar energy).

And remember that utility rates constantly go up.  So that $24,000 could end up being $30,000 or $40,000 within the next decade.

Equally important, we’re only talking about 10 years.  A standard solar installation lasts a minimum of 25 years.  And a well-installed system can last 40+ years.  If you stick with grid electricity, then 40 years = $48,000 (at today’s utility prices).

In purely economic terms, the opportunity cost of NOT going solar is $48,000 for a homeowner who currently pays $100 for grid electricity.

Diving Deeper into the True Cost of Solar Power in San Diego

As you can see, NOT going solar can get pretty expensive.  But we’ve only just begun.

Tomorrow, we’ll look into some more opportunity costs of continued reliance on the utility grid.  Some of these costs will be economic – others will be environmental.

However, none of these costs are relevant if you decide to go solar today.  You can avoid the pain of paying increasingly large amounts of money to the local utility company (and government) if you embrace clean, free, and infinite solar energy.

If you are looking for a reputable solar company in San Diego, contact Sunline Energy. We strive to offer premium customer service and design a solar energy system for your home or business. We are also one of the top rated solar companies in Southern California with 300+ 5 star yelp reviews.