Solar power has become a major investment opportunity for many Americans in recent years. Whether you are a homeowner, business owner, industry, municipality, or utility, the potential to avoid future energy costs is significant.
However, are solar panels worth it?
Here is a simple guide to determine if solar panels will actually save you money and are worth the investment.
1. HOW MUCH DO YOU PAY FOR ELECTRICITY?
Your current energy bill has a huge impact on whether installing solar will save you money. Depending on where you live and your utility company, you could be paying anywhere from 8 cents per kilowatt hour (kWh) to 20 cents per kWh. The more you pay, the more you can save by installing solar panels.
By installing solar panels, you can partially or fully offset the amount of electricity you use. If you have a higher monthly energy bill, the greater your return on investment.
2. HOW MUCH DOES THE SOLAR SYSTEM COST?
The next step in deciding if solar power is a good investment is determining how much your solar panel system will cost.
The cost of a solar panel system is very dependent on a number of factors, including system size, equipment used, as well as time and complexity of the installation. The larger your solar system size, a higher quality of equipment, as well as a longer and more complex installation, the more expensive your solar panel system will be
3. WHAT SOLAR INCENTIVES ARE AVAILABLE?
There are numerous solar incentives available to consumers. These solar incentives can significantly reduce the initial cost of your solar panel system and reduce your solar payback period.
The federal government currently offers the Investment Tax Credit (ITC), also known as the solar tax credit. This federal solar incentive provides a 30% tax credit for the entire cost of your solar panel system, with no maximum limit. However, this tax credit decreases to 26% in 2033, then to 22% in 2034, and expires in 2035.
There are also many solar incentives offered by states, municipalities, and utility companies that can bring down the initial cost of installing solar power. Speak with your local solar company to learn more about available solar incentives.
You can also see our Oregon Solar Incentives Guide.
4. HOW ARE YOU PAYING FOR YOUR SOLAR?
Whether you decide to pay cash, take out a solar loan, or lease your solar panels, your decision will have a large impact on your solar panel system’s long-term costs.
Paying cash for your solar panel system will save you the most money over the lifetime of your system. You will pay no interest and can immediately start recouping your investment through reduced energy costs.
Taking out a solar or personal loan will provide the next best return on your solar investment. You will pay interest with a solar or personal loan, but you have the convenience of a monthly payment. If you get a favorable loan rate and terms, you might even be able to get your loan payment near or below what you currently pay your utility per month.
Solar leases and power purchasing agreement (PPA) are another financing option for your solar panel system. Solar leases and PPAs require no money down, provide easy monthly payments, and all maintenance is handled by the leasing company. The tradeoff with a solar lease or PPA is that you do not own the solar panel system, which reduces your overall return on investment. Once the term of your solar lease or PPA is up, the solar system is removed.
It’s also important to note that with a solar lease or PPA, you cannot reap the benefits of solar incentives. Those solar incentives go to the leasing or PPA company. By paying cash or taking out a solar loan, you still have the potential to be eligible for solar incentives.
Read more about your payment options for solar panels, and determine which is the best option for you.
5. CONSIDER OTHER BENEFITS OF SOLAR
There are other miscellaneous factors to consider when determining if solar is cost effective for you. One factor is the potential increase in your home’s value by installing solar.
According to multiple studies, including one by Zillow Research, solar panels can add 4% or more to a home’s resale value. Solar is a huge selling point for some families who don’t want the financial burden of a large and variable monthly utility bill, and they are willing to pay more for a home with solar panels.
The environmental benefits of solar are another large, though less calculable, factor when considering whether to install solar panels. Knowing that you are helping the environment and setting a good example for your children or your community is an intangible benefit that isn’t easy to calculate, but it can have a huge personal impact.
ARE SOLAR PANELS WORTH IT?
Solar power provides a way for many consumers to invest in long-term energy savings. However, determining if solar power is a good investment for you takes a bit of work.
Determining if solar is cost effective for you involves many factors, as you can see. Thankfully, there are local solar experts and online resources that help you along the way.
Contact Green Ridge Solar today to see if solar is the right choice for you.
You can also use our Solar Calculator to estimate how much you could save with solar panels.