Do You Really Save Money with Solar Panels?
The rising cost of electricity and increasing environmental concerns have caused many homeowners to look for new, renewable, and clean energy sources as a solution. Basically, solar panels work by using sunlight to generate a flow of electricity. But do you really save money with solar panels?
There are advantages and disadvantages to installing solar panels. Many times, the cost is the deciding factor. Since the sun is a renewable resource, many homeowners are asking if solar panels are worth the upfront costs.
In this article, we will learn the advantages and disadvantages of installing a residential solar system and how much money you can save with solar panels.
Do You Really Save Money With Solar Panels?
Solar power can save you a substantial amount of money. How much direct sunlight you get each day, as well as the size and angle of your roof, will play a factor in how much you can save. Local electricity rates will have the biggest role in determining whether or not solar can really save you money.
It’s right to be skeptical, as there are tons of investments out there that do not deliver on their promise of saving you money. So, why should you go solar? Solar energy is so attractive because it bears the promise of decreasing your electric bill each month. This is renewable energy’s biggest selling point as a product and home upgrade.
The savings will outweigh the cost of installation, as they will last you for years to come. Not only is solar energy clean, but it also provides you with the most stable form of energy.
Some people turn to solar because they want to go completely off-grid. Some areas in the world do not have access to grid power, so solar panels are the best solution in those scenarios.
How Much Do Solar Panels Save?
To understand how much you can save by installing solar panels you need to start by reviewing your electricity bills. You will need to add up how much you are spending on electricity each year.
The average electricity usage in a U.S. household is 11,000 kilowatt-hours (kWh). The national average electricity rate is $0.1308. It is estimated that most households in the U.S. will spend around $1,430 each year on electricity.
Most of the cost associated with solar panels comes from purchasing the panels and having them installed. The cost varies depending on the type and size of the system you choose to install.
To determine the true cost of going solar, review your electric bills to get a better understanding of how much energy you are using each month. From there, you can more easily consult with a solar representative and choose a system that will generate the amount of power you need.
There are also a few different ways to pay for solar panels. Buying panels outright is often the simplest and most cost-effective method. However, if you cannot afford the upfront expense, there are lease or power purchase agreement (PPA) options that still allow you to cash in on solar power savings without so much expense at the beginning.
While going solar can be expensive upfront, there are many incentives for going solar. For example, the government offers homeowners incentives for installing solar panels. A residential federal tax credit will allow you to claim 26% of installation costs for systems that are in service by Dec. 31, 2020. That’s a big saving!
The federal tax benefit is a credit, not a rebate, so you won’t automatically receive a refund unless you have overpaid on taxes throughout the tax year and the credit now puts you in the position to receive a refund.
The federal tax credit will always reduce or even eliminate the amount of taxes you owe for the year by the amount of the credit as long as you have the tax liability for it to count against. The tax credit can also be taken over multiple years in case you don’t have enough tax burden to take it all at once.
Depending on your state, you may also be eligible for extra incentives like property tax exemption, fee reduction, expedited permits, or even refunds. Some areas even allow homeowners to sell excess solar power to local utility companies (feed-in tariff programs).
Are Solar Panels Worth it?
You might be wondering if solar panels are worth the investment. Sure, there are incentives for installing solar panels. What about after a year or two? Is the savings that great?
- Solar panels are a truly renewable energy source. Solar energy is available everywhere in the world, every day of the week. Unlike some other energy sources, we can’t run out of solar power. As long as we have a sun, we will have clean energy.
- Solar panels reduce electricity costs. How much do solar panels save on electricity bills? That depends on the size of your solar power system and your usage. Plus, if you generate more energy than you need, you might be able to sell some of it back to the local power company for even more savings.
- You can collect and use solar energy on cloudy or rainy days, but your system won’t be as efficient as it is on sunny days. Solar panels are weather dependent. They need sunlight to gather energy effectively. A few rainy days in a row could have a noticeable effect on your available solar energy. Also, since solar can’t be collected at night, you might need to consider battery storage if you’re planning to use your system to cover 100% of your nighttime consumption beyond net metering.
- Storing solar energy can be expensive. Unused solar energy needs to be stored. You can purchase large batteries for storing energy if you’re off-grid. However, it is expensive so it’s more cost-effective to stay connected to the grid (assuming that’s an option) and only use your solar energy during the day while taking advantage of net metering or your battery back-up.
Answering our initial question of, “Do You Really Save Money with Solar Panels” can come down to personal preferences and energy consumption.
What About the Electric Bill?
Many people make the mistake of thinking their electric bill will go away entirely after installing a solar power system. However, you will continue to have an electric bill from your local power company as long as you are connected to the grid. Installing solar panels will not eliminate your bill even if you completely offset your electricity usage.
To understand why you must understand net metering. It’s a policy in most states which allows you to send any energy produced by your panels – that doesn’t get used immediately – to the grid. That energy is exchanged for credits on your electric bill. Net metering allows you to draw energy from the grid at night without paying extra.
Solar Panels Save More Than Just Money.
Solar panels can also reduce your carbon footprint. Financial returns are a major incentive for going solar, but money isn’t the only reason to install solar panels. Many people choose to install solar panels as a way to help the environment by reducing carbon emissions. One standard size solar panel system can offset the emissions produced by one automobile in a single year.
What about resale?
Wondering whether or not solar panels add monetary value to your home? Fortunately, this was addressed by a 2019 Zillow article where 3rd parties found a home’s value was increased by 4.1%.
The increase in value does however depend on location. Solar panels are more common in states like California, so homeowners there are more likely to have advantageous results when selling their homes.
Selling a solar home will bring up questions on the buyer’s side, so many realtors advise that homeowners wait until the panels have “paid for themselves” before selling or to at least have a solar consultant ready to explain clearly how the savings work to the buyers.
Solar panels really do save money, so sellers can benefit from showing potential buyers the electricity savings their panels provide as a means of proving their value.
The advantages of installing solar panels include a contribution toward saving the planet, saving money on electricity costs, and even an increase in the equity of your home. With all these benefits, it’s easy to understand why more and more homeowners are choosing to install a solar power system.
Do you really save money with solar panels? With a close evaluation of your energy consumption’s and the benefits that solar offers, most individuals would agree that installing a solar system does save you money.
If you’re ready to learn more about the specific costs and incentives associated with installing solar panels for your home, contact Harness Power. You can call us at 949-478-5597 or fill out our online contact form and someone will get back with you.