I saw yesterday that another area solar company recently recevied grants from the federal government. I’m happy for them. Really. But I’m curious to know how many people have “done the math” on the return on investment of installing a photovoltaic (PV) system vs. a product like Eco-Panels? I’m guessing that they would be surprised by the resultes.
Mind you regional and state governments as well as of course the federal government are handing out tax credits and investment incentives for solar technologies at a blinding pace, dramatically subsidizing the industry. I’ll be the first to state that solar energy is a worthy cause, but if general estimates hold true power from the sun only accounts for less than 1/2 of one percent of our country’s energy generation – and estimates as to the future growth rates of the solar industry vary wildly. Yet I continue to see articles and papers (like my power bill) regarding the urgency of the need to reduce our carbon footprint – and this actually goes hand in hand with you SAVING MONEY – sooner rather than later. Why don’t we take a quick – and simple – look at a return on investment comparing the installation of solar panels for electrical generation and the installation of Eco-Panels that provide both the structure and the insulation for your new home.
First, what is the energy consumption of an “average” home in the US? While studies in the US do vary from as low as around 9,000 kWh to 12,000 kWh per year, let’s say the average is 10,000 kWh per year just to keep the math simple. That is the same as 10,000 hours of 1kW power generation. How much does it cost me to generate 1kW from PV panels? The solar market right now seems to be using a general rule that runs roughly in the neighborhood of 1kW of PV costs $10,000. Now most of us know that solar panels only work when the sun is shining on them – which is at best 50% of the time. And some of us know that solar PV panels only give optimal power output at the one time of the day where the sun’s inclination is approximately perpendicular to the plane of the panel (known in the PV industry as “peak hours”). Most locations in the US receive fewer than 6 peak sun hours per day – your local solar installer should know this number. Since we’ve established that a PV panel does not output power all the time, and I’ll note that battery back-up systems are falling by the wayside and instead people are simply tieing into the existing power grid for when the sun is not shining, for the sake of this conversation let’s assume that a 1kW PV panel will output approximately 120kWh per month – which is about 16% of a given month. So you’ve spent $10,000 on a panel that effectively works about 16% of the time to offset 120kWh per month. At $0.09/kWh we’ve just saved a whopping $10.80 per month. Without government incentives it would take me 925 months – or 77years – to break even on that investment.
As complex as the above analysis may seem to some, unfortunately, it is even more complex with Eco-Panels because we bring so much more value to the table. Eco-Panels, the most advanced structural insulated panels on the market today, replace the energy inefficient stick-built or concrete block construction methods. Single piece corner panels allow for easier and more accurate erection while adding significant structural strength, windows and doors are already framed in, exterior wall electrical conduit and junction boxes are installed. When delivered to the jobsite the panels are connected quickly together, often in a single day for an entire floor of a house. The panels perform significantly better than traditional construction – even with spray foam insulation – in energy efficiency. They also have great sound attenuation capabilities, are safer due to class 1 fire rated insulation, install easily three times faster than traditional methods, etc., etc. In short while the materials cost more than traditional methods the labor cost should be less because we’ve already taken care of a lot of work in our factory. On one $400,000 home we were told by the builder that we were at a $9,000 premium – about 2%. Some have told us that they break even on costs because of their labor savings. Yet because framing is a profit center for most builders (sticks and labor are often cheap for them) they can be hesitant to want to change their business model.
Now let’s make what could be a complex problem (comparing costs of insulation, framing material, labor efficiencies, etc.) and turn it around and make it SIMPLE. If you are looking at our product you’re going to build a home or commercial building ANYWAY, right? So all you have to do is take a look at the PREMIUM associated with using our product to establish its incremental “cost”. We’ve learned that even in spite of builders not giving a labor discount for our product we typically will come in from 0% to 5% premium cost on the selling price of a home (recall the above 2% premium on a $400k home). And what will this additional cost investment offer you as a financial return in terms of energy efficiency? As stated on our website we have previously looked at the average annual energy bill for a home in North Carolina and saw that it was $200/mo (in latest 2005 state energy survey) and we could approximately cut those expenses in half – saving the homeowner $100/mo. If we consider that in this case for a $9000 Eco-Panels investment we could potentially save a homeowner $100/mo – and a PV array that might cost $10,000 could save a homeowner an average of $10/mo – isn’t that approximately a 10x difference in monthly benefit? In this example PV would therefore have to be subsidized by approximately 90% of its cost to even match the financial benefits of the Eco-Panels product – and this does not even begin to consider the benefits associated with a safer home (class 1 fire rated insulation – potential for “Superior” insurance rating), quieter home and stronger home (2-3x stronger than stick-built).
Clearly, an investment in Eco-Panels would offer a better return on investment than PV.
As always we welcome your thoughts and comments.
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