For an alternative investment that defies increasing costs and inflation, look no further than the roof of your home, says Probenergy, a division of the Probe Corporation.
With pressure on the economy, rising interest rates, inflation, and high energy and fuel costs, South Africans are desperately seeking high-performing alternative investments. The advice from energy experts is, forget about buying art, Krugerrands, or looking for that vintage car that may be worth a fortune one day. Think about solar energy and going off grid instead.
It may sound far-fetched to consider solar power as an alternative, high-yield investment, says Frank Rovelli, Probe Group CEO, but the facts and sums speak for themselves.
“Looking back just two years shows that Eskom had annual tariff increases of 17.6% and 17.1%. They have now applied for a 30% increase. Presume another increase of around 17% and the trend is obvious. Electricity is never going to get cheaper, and tariffs will grow faster than inflation. What people also tend to forget is that if they get electricity from a municipality, a second layer of costs is added. These costs compound sending prices ever higher. The reality is that power prices are expected to double every five years. The consumer is in a lose-lose situation and the pain is set to endure.”
“In contrast, consider going off grid and the return on investment. Even if you acquire a system by taking out a bank loan, you have the comfort of knowing that you will pay a set monthly rate for the period of the loan. In the meantime, you will be saving money because as energy costs rise, your costs remain constant and the savings increase, reducing the cost of your initial investment.”
“The ‘Rent to Own’ options and personal loans available to buy solar systems are, in fact, helping to tackle the major problem facing people – the initial capital cost of a system. Purchasing schemes are now becoming the keys to not only circumventing power blackouts, but also to financial freedom as they allow you to avoid having to power your home at a cost which others decide and impose on you.”
“The ultimate benefit comes between 5 and 6 years, the average time it now takes for the benefits to offset the cost of installations by the savings made. While the average user continues to live in fear of another massive hit on their personal income, your investment is paid off, and the energy cost drops to zero.”
A Probenergy application for a typical 3 bedroom house in South Africa would include a 5kW solar system with 11.7 kWh storage. The total capital layout would be approximately R127 000 or R2 821 per month, if financed through Probenergy. On average, this system would produce 22kW per day plus the use of the 11.7kWh battery, generating power of around 34 kW per day and 1 030 kW per month at approximately R3,00 per kWh. This means that from the offset you’re paying R 2 821 for R3 090 worth of power.
Total current power cost: R 2 824
Total capital layout: R 127 000
Projected monthly cost: R 2 821
If it is considered that the cost of Eskom power increases by an average of 17%, the cost of the electricity for the home would rise as follows*:
|Year||Eskom projected annual 17% increase (estimated for illustration purposes)||Installation Financed through Probenergy (5kW system with 11.7kWh storage)||Estimated Monthly Saving||Estimated Annual Saving||Estimated Yield (Saving over capital costs)|
|0||R 2 824||R 2 821||–||–||–|
|1||R 3 305||R 2 821||R 484||R 5 808||4.5%|
|2||R 3 866||R 2 821||R 1 045||R 12 540||9.8%|
|3||R 4 523||R 2 821||R 1 702||R 20 424||16.1%|
|4||R 5 292||R 2 821||R 2 471||R 29 652||23.3%|
|5||R 6 191||R 2 821||R 3 370||R 40 440||31.8%|
|6||R 7 243||R 2 821||R 4 422||R 53 064||41.7%|
|TOTAL ESTIMATED SAVINGS AFTER 6 YEARS||R161 928|
*This table is for illustration purposes and costs will vary depending on Eskom rates, components, power usage, power generated etc.
“Considering the projected returns outlined above, the return on investment is significant and will be one of the safest and best investments in an owner’s portfolio. The added feature is that you get power security and stability plus the added value of having an asset worth more than the initial value as the cost of power is significantly lighter after 5 years and the saving is after tax.”
“Added to this must be the value added to the home which, if sold, would provide the new owners with an immediate and growing return on their investment – sellers would therefore be able to negotiate higher property fees based on future savings.”
“So, South Africans looking for great returns on investment don’t need to start consulting investment gurus; they just have to look as far as the roofs of their houses,” concludes Rovelli.