Solar is Providing Investors with Sunny Returns
North Hollywood, CA -- (ReleaseWire) -- 11/20/2018 --After years of unprecedented growth in equity markets and real estate values, investors with unallocated funds are struggling to find attractive investment vehicles in which to put their hard-earned cash. The stock market seems to have, at best, hit a plateau and housing prices have stagnated or are falling in some markets. Given this economic climate, astute investors with cash, or financial means to borrow, are turning to an alternative vehicle to store and create wealth: home solar energy systems.
Over the past five years, equity investors have enjoyed healthy returns on their investments. Since the end of 2013, the Dow Jones Industrial Average ("DJIA") has increased from approximately 16,000 to a high of 26,600 in January 2018, a 66% return. In 2017 alone, the DJIA increased from approximately 19,800 to 24,700, a 25% return. However, since January the equity market has experienced greater volatility, and as of November 15, the DJIA has retreated to 25,200, a 5% drop.
In the same five-year period, the US housing market has been booming with home prices increasing over 30% nationwide. In hot markets, the increases have been significantly larger: 57% in California, 66% in Nevada, 57% in Washington and 51% in Colorado. But there is evidence that the housing market is cooling as supply has increased and lenders have raised rates. Freddie Mac reports that average mortgage interest rates have increased from 3.90% in October 2017 to 4.83% one year later.
Many investors that have grown weary of property, and stocks are now looking at solar energy systems as an alternative investment.Edward Harner, Chief Operating Officer at Green Solar Technologies, says, "As investors cash out of stocks and stop investing in real estate, an investment in solar is looking more attractive as it can provide large returns with very little risk."
Solar energy systems are more affordable now than ever. The Department of Energy's National Renewable Energy Laboratory reports that since 2013, the cost of an installed residential solar panel system has dropped by more than 25%. Harner says, "With any investment, returns are based on your initial investment and the amount of gains that one can actualize. Solar panels cost less now."
Returns on solar energy systems are based on avoided costs of monthly electricity bills and increasing utility rates. There is evidence that utility rates continue to rise, which is increasing the ROI of a solar energy system. "Not only are solar prices lower, but utility companies are continuing to increase rates. We are really seeing that an investment in solar is able to provide an IRR of close to 10% in many markets" says Harner.
Solar energy systems are largely financed by homeowners and fierce competition from solar finance companies is bringing a variety of new financing options and keeping interest rates low for homeowners. "We've seen interest rates rise for mortgages, but this doesn't seem to affect rates on solar loans. In fact, we see interest rates as low as 2.99% on no-money-down loans for solar. Homeowners can choose from many different types of loans as well as choose from many term options, some as long as 25 years," says Harner.
With the current political and economic environment and unstable investment opportunities, risk averse homeowners will continue to seek low-risk investments with stable ROI. As solar system technology continues to improve while prices continue to decrease, an investment in solar will become more attractive for homeowners. Edward Harner concludes, "Until we see another bull market, homeowners should heavily consider the investment of a solar energy system that can provide healthy returns."