Investing R15Â 000 into a solar geyser could be the best investment you ever make. And it is socially responsible investing — which is all the rage at the moment. With cash returns in the region of 11% and stock market investments looking very risky, you could have a guaranteed annual return of 12% or higher from your solar geyser — and that’s before Eskom hikes its rates.
The average household electricity bill is about R500, of which up to 50% is taken up by the geyser if you have not already taken steps to install a timer or insulate the geyser.
Studies have shown that by installing a solar geyser electricity used to heat the geyser is reduced by 60%. Solar geysers do still require some electricity usage, but installing a geyser for R15Â 000 would save you R150 a month on electricity. That is a 12% tax-free annual return on your investment.
If you install a timer and insulate your geyser you would use even less electricity and increase the return to about 14% a year. You would not be able to liquidate your investment but it would add to the value of your home and thereby improve your balance sheet. And best of all, this investment will keep up with inflation.
Even higher returns
Once Eskom’s expected price hikes and subsidies are factored in, the return on investment increases dramatically. Electricity prices are expected to double in the next three years, which means households will be paying R1Â 000 a month on average for electricity. That means by installing a solar geyser your monthly saving increases to R300 a month, a whopping 24% return on the investment.
Eskom has started to roll out its subsidies on solar geysers and, according to the official suppliers list, it offers a saving of R2Â 500 on average. However, additional requirements — such as timers and an official certificate from an electrician — add to the cost, so the total saving comes to about 10%. But this does improve the return on investment.
At current electricity prices your return increases from 12% to 13%. Although the exact extent of the electricity increases is yet to be seen, one thing is certain — every year that electricity bill is just going to get higher, guaranteeing an increasing return on investment well above inflation. In addition hot water is guaranteed during load-shedding and you are doing something to save the Earth and alleviate electricity shortages in South Africa.
Alternative energy discounts
Theo Covary, director of Unlimited Energy, says Absa recognises the financial benefits of energy efficiency. These are assets which increase the value of houses — so it’s a no-brainer.
Absa home loan clients qualify for a 10% discount on all energy- saving purchases including solar water heating, insulation, uninterrupted power supply units, generators. Free energy consultations are available if Absa service providers are used.
Absa is providing financing for these products through its home loan even if you do not use one of their suppliers — although you will forfeit the discount if you use your own supplier.
Considering that one is paying about 13,5% interest on a home loan, the savings after the discount would make this financially viable at current electricity prices and will certainly start to become a very attractive option once Eskom’s rate hikes begin.