Solar isn’t expensive, we can prove it!

Solar Vs Generator
Federal Government Installs 80kw Solar mini- grid in Kogi state.

There are two very deep misconceptions about the cost of solar that need to be addressed.1. Solar is expensive compared to running a generator
It’s natural for people to feel that solar is expensive due to the traditionally high upfront cost. However, even with Solynta Energy offering a Zero Money Down Plan (no deposit required) this sentiment lingers. The principal reason is a lack of understanding of the actual costs of running and maintaining a generator versus using a Solar Home System.
A simple illustration of Solar versus Generator is shown here. It’s clear that Solar is the smart choice in both the short term and long term.
Power Source: 500 watt Solar Home System
Daily Power Supply: 24-Hours power
Monthly Cost: N15,000 repayment fee
Monthly Maintenance Fee: None
After 36 months: Free Energy Source for 25 + years
Other Benefits: No Stress, No Noise, No Fumes
Power Source: 0.9KVA Generator
Daily Power Supply: 6 hours power
Monthly Cost: N21,750 on fuel
Monthly Maintenance Fee: N5,000
After 36 months: Perpetual Fuel and Maintenance Bills
Other Benefits: None
2. Going Solar on a payment plan is expensive compared to buying outright
Imagine, you have 2 options:
A. Buy a 1KW Solar Home System outright for N830,000
B. Pay N30,000 for 36 months N1,080,000
It seems obvious that option A is the way to go? After all you save N250,000. Wrong! One hasn’t factored in the critical principal of the Time Value of Money (TVM). In simple terms, the money you have now is much more valuable than that same amount of money in the future, due to the reduced purchasing power of future money as a result of inflation.
In order to calculate how much future cashflows are worth today, firstly you must apply a discount factor to it, based on the prevailing interest rate. Using a discount rate of 25%, the value of the future cashflows is NGN754,534, which is NGN75,466 less than the cost of buying the system outright today.
Let’s do a second calculation to determine whether it’s better to pay cash outright or pay ‘small small’ on our zero money down plan. You have 2 options:
A. Buy a 1KW Solar Home System outright for N830,000
B. Invest your N830,000 into treasury bills at the rate of 15% per annum, and reinvesting the capital plus interest over 3 years
After 3 years, your treasury bill investment will be worth NGN1,262,326, which compares against the total monthly payments made over 36 months of N1,080,000.
You will be better off by NGN182,326 if you signed up for the zero money down plan instead of buying it outright with cash.
Why are we passionate about getting this information out? Why should you care? In the long run, it doesn’t just come down to saving money, ROI, or payback. In the long run, you should be doing this for peace of mind and a better, more productive lifestyle for you and your family. Solar is more than a nice idea. It’s switching to a brighter life. Check it out for yourself!
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