Making the switch to solar energy might raise a few questions about affordability. For residential property owners who are contemplating taking the leap in adopting renewable energy as an alternative power source within their home, solar panel installation costs will surprise you. But, in a great way!
As electricity costs continue to rise, and families like yours are looking for ways to save, going solar is your ticket to a bright investment. Financing solar panel installation is much less risky than taking out a second mortgage for household renovations that may or may not produce a return on investment when you decide to sell your home. If you can justify redecorating your space, then taking steps to improve the function and value of your home should be an easy choice.
When you’ve relied on public utilities for so long, setting up your own energy production can seem like a large undertaking. The fact is, a solar PV system is a home improvement that adds value. The cost for a residential solar power installation can vary greatly depending on such factors as your location and property size. But generally speaking, it runs anywhere from $15K-$30K. The good part is that the majority of today’s new residential solar customers actually end up paying far less, and you could easily become one of them. Since incentives and costs vary greatly by state, get a more accurate assessment on the solar panel installation costs and how much you can save from a professional installer.
Here are several factors that will offset the cost of your investment:
Reduced Monthly Bills
Once your solar array is plugged in, costs for your utilities drop immediately. The supply of energy that the system creates to power your home depends on sun exposure, and of course, sunlight is free! But, here’s even better news; solar panels do not need direct sunlight to work. Solar energy systems still draw some power from light on cloudy days, although at a lower rate.
When the sun is at its brightest, the system can sometimes produce more power than you are using at that moment. In which case, electricity flows back into the grid to be used by another building. Many states offer net metering where your utility company essentially credits your account for unused energy that your system produced. When you are using electricity , but the solar panels are not generating it, like at nighttime, you would draw your power from the grid. At the end of the month the utility company only charges you for the “net” electricity used, hence “net metering.”
The Federal Tax Credit for solar energy is still available in 2017. The solar energy tax credit allows you to claim 30% of the project cost as a credit against your total tax liability for the year. This is not a deduction from your income, it is a dollar for dollar tax credit against your total tax liability. Combined with state-sponsored programs, tax credits for solar energy projects help substantially.
A lesser-known selling point of owning a solar energy system is earning Solar Renewable Energy Credits. Clean electricity production is monitored by state governments in an effort to reduce fossil fuel consumption. You are awarded credit for each megawatt-hour of clean energy produced, even if your home used the energy. To incentivize clean energy, companies buy your credits at auctions and special marketplaces, or you can arrange your own exchange. The dollar amount differs in each state and is subject to change, but the revenue generated from the sale of SRECs accelerates the payback of your initial investment.
A nationwide study conducted by the US department of Energy’s Lawrence Berkeley National Laboratory reports that a standard 5kW system could increase your home’s resale value by as much as $20,000. Real estate markets vary by location, so ask a realtor in your area how much home buyers are typically willing to pay for a solar powered home.
You can calculate your expected payoff with some simple math that accounts for energy savings and the incentives against the payments on your loan. While everyone’s circumstances are different, expect that your returns will be more than 10%.
The financial impact of lower bills and more revenue is the biggest motivator for getting “turned on” to renewable energy.