• Renewable energy is a financial investment

  • Often there are numerous motivations driving a home owner’s desire to incorporate renewable energy systems, such as solar power, solar thermal and ground source heat pumps, into their deep energy retrofit (DER) plan. Most owners are certainly motivated by the potential energy savings. Some consider the environmental benefits important while others are motivated by the political benefits of decreasing dependency on foreign oil. At Green Energy Systems we believe that renewable energy systems are a financial investment that must meet clear rate of return guidelines. While homeowners my differ in their expected rate of return on the investment – the decision must be primarily a financial one.

    Proper investment analysis is complex for most renewable systems. First, estimating the cash flow savings is tricky, given the volatile nature of commodity energy prices. Second, determining the proper risk level for the investment and the relevant comparable alternatives to compare the investment to is complex. Third, defining the correct amount of investment can be tricky – is the proper amount to be considered the incremental amount invested over a conventional system or the total dollar amount of the renewable system? Finally, if the investment in a renewable is an after-tax return (which it is,) how do you adjust this to properly compare it to other, pre-tax alternatives? Green Energy Systems has dealt with these questions and more to help guide our clients to sound financial decisions.

    Lastly, how should a homeowner weigh the non-financial benefits of a renewable system investment? Green Energy Systems has developed a method to help homeowners assess and personally value these intangible benefits.