For years the media has touted the benefits of “Going Green” in terms of conserving resources, reducing pollution and saving money. What hasn’t been discussed are the hidden costs of investing in hybrid cars and home improvements like solar panels and green appliances.
Between 2005 and 2009 hybrid cars doubled in market share in the US. Saving money on gas was a tangible benefit visible every time drivers checked their monthly bank balance. As gas prices continue to rise, more and more drivers are buying hybrids. More hybrid drivers means more tickets and more crashes. The result is that insurance rates for hybrid drivers are skyrocketing. Some estimates suggest that these rates will go up 20% or more in less than a year — and continue to climb. Only part of that rise is due to more bad drivers owning hybrids.
Replacement parts for hybrids are more expensive, which means that after a collision, insurance companies generally have to pay out $180-$200 more to repair a hybrid than a non-hybrid. Overall, there is a 6.5% difference in repair costs and that applies to general repairs and maintenance of a hybrid, not just accident-related repairs. Most mechanics aren’t familiar with hybrid cars, leaving drivers to take their vehicles back to the dealership for repairs, which leads to higher labor costs. It can also take weeks or months longer to find replacement parts which can leave drivers having to pay for alternative transportation while waiting for their vehicle to be road worthy.
Greening the Home
In 2009 homeowners spent $49 billion remodeling their homes with energy-related improvements. That was a 29% increase since 2003. Ideally, investing $18,000 to 24,000 in solar panel installation is supposed to make payments to the local electric company disappear and the savings in electric bills should repay the initial investment in about six years. However, some utilities require an annual fee to stay connected to their grid and maintenance and repair costs associated with the system can add $5,000 or more to the cost of the system. New estimates suggest that it will take 10-13 years for such systems to pay for themselves.
In fact, any energy-saving system or appliance is going to require specialized cleaning, replacement parts and upgrades. Because these items are still considered niche products, local DIY stores do not necessarily carry replacement parts or cleaners, especially for those who live in smaller communities or rural areas. As with hybrid cars, it can be difficult to find repair mechanics trained in these systems, which can increase both the costs of repairs and the time it takes to locate a qualified professional to do the repair.
The one benefit of energy-efficient upgrades has a hidden downside. Green renovations can raise the value of a home by a significant amount, which is good when it comes time to sell the property. In the interim, however, homeowners are looking at higher property taxes and insurance rates to cover that increased valuation.
Finances aren’t the only reason that people invest in green technologies. For early adapters and environmentally-minded individuals, these figures are just part of the investment in protecting the earth. Those who are looking at going green as a way to save money need to look at all the costs associated with their choices and not expect to achieve repayment of their initial investment for many years.
Thanks to Starlight Investments for this article.