Dandelion Renewables customers often ask us about an alternative measure, so called simple payback. The strength of this measure is in the simplicity, but it does not recognize the time value of the money spent on future inverter replacements, maintenance costs for wind, insurances and solar module degradation.

Solar and wind projects can be treated as investments with revenues calculated as avoided utility costs. Representing the projects from this angle allows to estimate Return On Investment (ROI). As any other project measure, the ROI is very dependent on input assumptions, such as grid price projections, project life and others. When the customer is clear about the ROI assumptions, he/she can compare the investment in the own power generation with any other alternative investments in socks, mutual funds, bonds, etc.

That is where a question about how risky is each of the investments comes into play. Unlike most investments on the market, investments in renewables and especially in solar power typically reduce your overall household portfolio risk by hedging away the risk to future commodity price swings.