How To Make Money From Solar Energy

Solar energy is often talked about as a good way to save money but did you know you can actually make money from your solar energy too?

There are a couple of ways to make money from solar panels and they are all pretty straight forward.

1. Save Money On Your Electricity (The Obvious One)

I know we want to talk about making money through solar but first I wanted to highlight the fact that the best return on investment you’ll get from solar is through saving on your own electricity bills.

The reason this is the case is that electricity companies charge you more for energy provided to you then they’ll pay for energy you provide to them.

Here in Australia energy costs around $0.26/kWh. But if you feed extra electricity back to the grid you’ll only be paid somewhere between $0.04-$0.10/kWh.

The electricity you save by using your own power is 5 times more valuable than the electricity you give back to the grid

2. Feed-In Tariffs

Many countries have introduced what are known as feed-in tariffs.

Feed-in tariffs are fees paid to you for the electricity you supply into the grid. This is the simplest way to make money with solar energy and truthfully one of the only ways to do it for most people.

The problem with feed-in tariffs is that they aren’t mandatory everything. Most states in the US (according to EIA) don’t have mandatory feed in tariffs.

It is then up to the electricity companies to offer them as part of their competitive package.

Another problem with feed-in tariffs is that they are often capped. You can only provide so much power to the grid per day, after which you no longer get paid. This limits the amount of money you can make.

3. Selling Power To Tenants

This is a fairly new concept but it is now actually possible (as a homeowner) to sell power to the tenants that live in your property.

The idea is being pioneered by a company called Matter.solar (see their article on how landlords can make money from solar energy) and it is actually a really great concept that can deliver investors a good return.

The idea is that landlords install solar power on their property and then charge the tenants for the use of that solar power.

The tenants get a cheaper rate than they would from the electricity companies (usually a discount of 20% or so) and landlords are able to make money from their solar panels.

It can also be in the contract that a portion of the feed-in tariff goes to the landlord and the tenants get a small cut of that also.

This is really exciting for property investors with multiple properties because it allows them to make more money than just the rent they collect. Matter claim the payback period is approximately 5 years, after which all money you make is cream.

4. Make Money In The Solar Industry

You can make money from solar panels by selling them, becoming an installer of solar panels etc but I’m guessing most people reading this article are looking to start a solar company they just want to make money from their own personal solar panels

Why Is Making Money With Solar Panels So Hard?

The major reason it is so hard to actually make money with solar panels is that it’s almost impossible to sell electrical power yourself.

Electrical power is distributed through the local/nation “grid”. Almost everyone pulls from that grid.

This means if you want to sell solar power you have to do it through that grid. Only problem is the grid isn’t an open market and has tight controls.

Your neighbour can’t say “I want to buy your excess power for Xc/kWh” they have to buy power through the centralised grid.

Also because electricity is so cheap and easy to access no one is going to pay you for electricity (maybe in portable battery form) to charge their phone.

Thus the best you can do is to make your own personal electricity bill $0 and take advantage of as many feed-in tariffs as possible.

Unless you’re going to form a large solar company I really can’t see any other ways to make money through your solar power.

If you have any ideas for how to make money through solar that I haven’t thought of please let me know in the comments section below.

Leave a Reply

Your email address will not be published. Required fields are marked. *

Related articles