Saturday, April 7, 2012

Solar Energy is An Investment that Keeps Performing

Tom Ferraro, Solar & More: If you’re like me, the recent performance of stock, bonds, real estate and some other so-called "safe" investments have been playing havoc with my tolerance for risk. Our 401k has performed like a yoyo since our financial markets crashed back in 2008 and actually, more like deadweight!
Tom Ferraro in front of panels located in his Solar &
More store located on Route 23 in Pequannock.

Since then, I’ve moved most of my investments into low return but "safe" money markets and certificates of deposits, lowering my returns down to what I call "why bother" rates. The returns promised by investment houses just don’t materialize any more unless you’re willing to take on high risk.

But there is an option not very well understood…a way to diversify your investment portfolio while garnering double digit returns. Known to only a select few, a solar photovoltaic (PV) system can return between 13-20 percent on your investment. Here’s how it works.

The cost of a typical solar PV system in New Jersey is averaging about $30,000. First, right off the top, you’re eligible for a 30 percent Federal Tax Credit, or in this case $9,000. So now you’re down to an adjusted cost of $21,000. A typical $30,000 system would probably reduce your electric bill about $1,300 in the first year. And through a New Jersey incentive program called SRECs (Solar Renewable Energy Certificates), you’d generate another $2,000 per year in income. This results in a total annual cash flow of $3,300, or a simple Return on Investment of over 15 percent. A payback on this investment would come out to 6.4 years on an investment that will last for at least 25, and probably 30 – 40 years.

With this cash outlay, you’ll recover about 40 percent, or $12,000 in the first year alone. And there are programs to help you get to the end of the first year without any out of pocket outlays. In effect, buy a $30,000 solar system and only pay $18,000…after the end of the first year!

So, the question you have to ask your investment advisor is, can you get me 15 percent on an investment whose principle can’t go down without affected my current cash flow? The answer is yes…if you invest in solar!

Tom Ferraro owns Solar & More, a retail showroom in Pompton Plains, where you can go to see and learn about solar, geothermal and other renewable energy systems. For more information, see their website at, or call 800-782-0241.


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