Should you buy a solar-energy system or microgrid today, or wait a few years for prices to come down?
Answer: Do some homework, learn about what you are buying, and do it as soon as you can. The sooner you invest in solar energy for your business the higher your financial benefit will be. And also, the more benefit to the planet.
The first time we posted this article was in 2014. Then again in 2018 and 2024.
The answer has always been the same – if you are going to invest in solar energy, do it sooner than later. It is a better financial decision for you. And a better path forward for our future by reducing carbon emissions now.
Here is a link to that last analysis.
https://solarislandenergy.com/2024/01/build-solar-energy-solar-microgrids-now-or-later/
This week one of our commercial neighbors asked for a revised quote and it triggered the financial geek in me.
The first time they asked for a solar quote was in 2021. Way back in 2021 we quoted then a price of $600,000 for a project on their roof. They decided not to pull the trigger in 2021 but asked again this month in 2026 for another quote. This time the cost is $450,000 for the same power and energy.
What a great deal, right? They waited 5 years and saved $150,000, or 25% of the project cost. Equipment costs did come down a lot. High fives all around!?
But wait (yes, here is the other shoe dropping) was it really a good deal?
Like we posted the first three times in this series, the cost for equipment has gone down. But by waiting 5 years the client missed the savings on energy that the solar installation would provide. So, as it turns out, it really was a much worse deal to wait. Here is the analysis. This is in the Bahamas, but it would be similar in the USA.
Each time before there were lots of assumptions of how prices and costs would change. There are no assumptions this time around.
Had this client installed the system in 2021 they would have enjoyed a 28% return on their investment (line 6) with a Net Present Value of $460,000 (line 7). The straight-line payback would have been in 2025 (the green cells on line 5).
Waiting until 2026 is the next table. Instead of buying the solar installation, that $600,000 is invested in the S&P 500 as an index fund. Line 11 shows the average annualized returns based on actual data from 2021 to 2026.
Instead of the 28% IRR that the 2021 buyer gets, this 2026 delayed solar investment yields a 2% loss (line 14) and a big negative Net Present Value (line 15).
Ouch! That’s not such a good outcome.
For the NPV to have been the same, the return on the S&P 500 would have had to be a guaranteed 36% annually. And let’s remember that an investment in the stock market isn’t guaranteed.
But that doesn’t mean it is a bad investment today. If now is when you are first considering a solar-energy system, the comparison clock is reset. Starting today in the Bahamas you would see a 3-4 year payback and a Net Present Value over $1M.
If you are curious about some version of this analysis that suits your circumstances, please send us a note. Even if we aren’t a provider for your project we are interested to help spread the word and counter misinformation on the internet.
