How Long Will It Take For Your Investment In Green Energy To Pay Off
With any investment that you make, you expect to see some kind of return either in the long run or in the short run. When people discuss "investing" in green energy, they imply that you will make money off of your investment. Have you ever wondered if this is possible? If you have, then this article is for you. This article runs you through the basic steps you need to follow in order to determine if your purchase of solar panes or a wind turbine are really and investment or if they are simply you doing something good for the environment.
There is absolutely nothing wrong with spending money for the good of the environment, that is a truly noble cause. However, it would be nice to know if the estimates that most of the experts give you about how quickly you will make your money back on an investment in green energy are accurate. So here are the steps you will need to take.
First you need to calculate how much you will need to invest in the project to get it up and running. This can be done by getting an estimate from your local contractor that you plan to hire to install whatever piece of green energy equipment you are thinking about. Once you have the initial cost, you can move on to step two.
In step two you need to figure out if you will be getting any compensation for your initial investment in green energy. Often times, the government will provide you with a rebate or incentive for your investment. If this is the case, you will need to subtract this amount from your initial cost to see how much money you will need to recover through future savings.
Many people make the mistake of using their electric bill as a wholesale place to estimate how much money they will be saving. Instead of estimating that you will be saving 50 or 75 percent of your electric bill, you instead need to look at what you are charged per unit of energy. In most cases, you are charged a hefty fee just to be connected to the grid and your use charge is relatively low. Look at what you are charged per kilowatt hour and then use the estimates of your energy production to figure how much energy you will save. This is an estimate of your monthly savings.
Once you have your estimated monthly savings and your initial investment, you can move forward with your calculations. While we are ignoring the time value of money in this calculation, for all intents and purposes we can say that it is zero, given the low interest rates. So divide your initial investment by your monthly savings and this will give you the number of months it will take for you to recoup your investment.
It really is that easy. Hopefully this is in line with what you expected, and you have found this article informative. Good luck in your green energy endeavors.
