Installing solar panels, which typically last over 25 years, can help you save an average of $1,346 annually on electricity bills. While the upfront investment might seem big, installation costs have lowered by over 50% in the last decade. Pair it with the incentives—like the 30% federal solar tax credit—and you are saving a fortune.
Then, there are environmental benefits of using a clear, green, and renewable energy source.
While solar panels sound like a dream, they do have drawbacks. In this article, we’ll help you decide if they’re worth it. Let’s begin.
Calculating Solar Panel Cost
The brunt of the expense of opting for solar panels comes initially from installing and purchasing the panels. A survey from Marketwatch showed 1,500 homeowners paid an average of $15,000 to $20,000 for solar panel systems. However, each solar panel installation is different, and reports show that installation alone can cost upwards of $25,000.
To calculate the ROI of installing a solar panel system, get a quote from a trusted solar installer in your area. However, the total solar panel cost will vary depending on the above-mentioned factors, your state, and the solar provider. Other factors impacting the final solar panel can include:
- Your solar system size
- Your home energy needs
- Type of solar panels
- Equipment like inverts or solar batteries
The ROI of this project will depend on several factors discussed below.
Solar Panels: 4 Things to Consider
People are transitioning to solar panels to lower their energy bills, increase property values, and reduce their carbon footprint. However, multiple factors can impact whether this significant investment will be worth it for you, including the following consideration.
Location
Solar photovoltaic (PV) cells, the core components of solar panels, work best in areas with ample sun exposure. Therefore, if you live on the sunny side of the earth (like California, Florida, or Texas), solar panels can be a great investment.
In case you’re wondering, here’s a map by Global Solar Atlas displaying the expected PV power output in each state– the higher the output, the more energy your solar panels will produce.
//Alt text: PV power in different USA states//
Energy Consumption and Rates
People install solar panels to offset their monthly electricity bill–if not eliminate it altogether. However, since electricity rates vary by location, your savings depend heavily on energy consumption and rates.
On average, a residential solar setup produces between 350 and 850 kWh per month. Compared with a US household’s average electricity consumption of 893 kWh, this can help you save 95% on your energy bill.
However, if you live in low electricity rate states or do not have high energy consumption to operate day-to-day, solar panels may not save enough to offset the installation cost.
Local and Federal Taxes
The Residential Clean Energy Credit allows taxpayers who install solar panels to reclaim 30% of the costs through the federal tax credit.
Here’s how it’ll look in numbers: if your solar panel setup costs $25,000, it’ll yield a credit of $7,500, which you can use to reduce the federal taxes owed. However, the credit isn’t refundable. But you can use the credit towards taxes owed in the following years.
Some states also offer extra incentives, such as property tax exemption, waived fees, and cashback. In a few states, solar panel owners can even sell the excess power produced to local utility companies.
Roof Desing
Your house’s roofing design and angle are crucial in solar panel installation. The system needs enough roof space to fit an adequate number of panels to meet your energy needs.
Solar panels are installed at an angle between 15 and 40 degrees for high efficiency. Fortunately, solar installers have special mounting equipment to adjust the panels to the correct pitch. However, this can complicate the installation, thus increasing the upfront cost.
Installing high-quality, more efficient solar panels can also resolve the issue. These help you conserve space when obstructions like skylights and chimneys limit roof space. But, again, such panels are more expensive than solar panels with a lower power outlet that requires more roof space.
Are Solar Panels Worth It?
In the US, the average payoff period for solar panel systems is 8.5 years. And once the system is paid off, you’ll enjoy a drastic fall in your energy bills. Plus, with solar panels lasting for 25 years and longer, you’ll save a fortune for 16 years of net savings.
Other than this, solar panels are worth it because they help reduce your carbon footprint. Home buyers are willing to pay over 4% (or $9,274) for properties with already installed solar panels – thus, it’ll also increase the value of your home.
You also have the option of a solar lease or power purchase agreement (PPA) through which you can lease their systems rather than committing to ownership. This will drastically reduce the up-front cost. However, the route will disqualify you from tax and government benefits and won’t increase your property value.
In Conclusion
Solar panels are an incredible option for power savings and going green. We’ve laid out all the cards above. Now, weigh the factors—location, taxes, up-front cost—to decide if solar panels are the right choice for you.
