Going Solar

The only good thing about the current recession is that gas (and energy) prices have remained depressed. However, I am fairly confident that we are just benefitting from a temporary lull. Once the economy turns around, we will soon witness gas and electric prices resume their inexorable march upwards. If you are seeking some predictability in future energy prices, going solar is one option. I have long considered installing photovoltaic panels or a solar water heater, but the economics of the situation never seemed attractive. So, instead of going solar to hedge future energy prices, I’ve opted for the Vanguard Energy Fund. If you can’t meet the $25,000 minimum, you can opt for the Vanguard Energy ETF option like I did.

You might think that such an investment offers no environmental benefits, but that is not true. The carbon footprint for investing in the Vanguard Energy Fund ETF is much less than for manufacturing and installing photovoltaic panels. And, while you may lose your investment in the Vanguard Energy Fund, don’t think for a second that the photovoltaic panels sitting on your roof aren’t depreciating like crazy as the performance of the solar panels degrade over time and solar panel manufacturers are able to drive down the costs of producing newer panels.

If all goes well, in 5-10 years, my investment in the Vanguard Energy Fund ETF will exceed the cost of installing a PV system, such that I can sell part of my investment to pay for going solar and still have money left in the bank.

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