Are Renewable Energy Sources Renewable Assets?Does anyone even think about Solar,Wind or any alternatives as Renewable Assets? In this economy everyone is looking for the bottom line. Trying to make our money work harder for us. Or are we? We've been taught to look at the payback on investments but what about the Return on Investment or(ROI).
Let's get right down to the question. Are Renewable Energy Sources really Renewable Assets?Maybe we should back up and ask if Renewable Energy is an investment? Well of course it is. A pretty sizable one. Does it have a payback period? Yes to that as well.Is it an attractive payback? That depends on the type of system and the size.
A Solar Thermal system can pay you back in 5-7 years. Using the "Rule of 72" we divide 7 into 72 and come up with a 10.28% return on investment. Since the system will last 20+ years that makes it a wise investment. The other factor is the 30% federal tax credit. Right off of the top. This in most cases will shorten the payback to 5 years.That makes the ROI 14.4%. If you are heating your pool the tax credit does not apply but you know if you heat with gas or a heatpump you are spending money every month.Payback on a pool heating system is 3-5 years. At 5 years that's a 14.4% ROI.
Even Solar Electric will have at least a 3.5% return which is better than you can get in a bank CD. Consider that your electric rate will go up. That means you ROI% goes up as well. So we have established that Solar as an Alternative Energy Source is indeed a Renewable Asset.
Let's move on to Wind Power. Figuring this out is a little more complicated because there are variables. (1) Amount of wind available.(minimum 12MPH average is needed) (2) Height of tower. (3) Cost of electricity to utility.(if you are paying less that .09 per KWH you might want to skip this section) (4) Federal tax credit or state rebate. (5) Cost of system. Typically a system will have a payback of around 14 years which is a 5.14 ROI. This is if you have good wind speeds and you get the tower high enough (60-80ft).
The final Alternative Energy we'll talk about that is also renewable. Micro Hydroelectric power. If you have access to a stream.All you need is a 2ft drop and 2 gallons per minute to generate electricity. Obviously more is better but this will work. Here are other considerations to take into account:You need to consider distance the power will have to travel, flow rate of the stream and drop. A balance of system must be taken into account pertaining to your Inverter, Batteries,(if you are going Off-grid) and Controller. These will also determine the cost of the system. With a 15 year payback a 4.8 ROI is attainable.So the answer is yes. Renewable Energy sources like Solar, Windpower and Hydroelectric are indeed Renewable Assets. You just have to ask whether or not you want to add them to your portfolio.
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