Going Solar: Is It Worth It?
Everywhere you look, people are putting solar panels on their homes. If you’re concerned about the price of electricity, or if you want to reduce your use of fossil fuels, you may be looking to make the leap too!
But is solar really worth it? Will it save you money over the long term? And are all these tax incentives people are talking about?
What Does it Cost to Install Solar?
Before going solar, you need to figure out the up-front expenses that adding solar panels to your home will generate. Solar panel installations typically start between $13,000 and $17,000, before tax credits. Since these tax credits vary by state, the exact price you'll pay for solar installation will depend on where you live, the company that installs the panels and the unique attributes of your home.
Four Things to Consider When "Going Solar"
Federal tax credit - Yes, you may be eligible for a federal tax credit, but you'll need to act fast! In 2022, there is a 26% tax credit for solar systems that are installed, which drops to 22% in 2023. The tax credit expires starting in 2024 unless Congress decides to renew the benefit.
State tax credit - Many states offer additional tax credits for going solar. In fact, the 10 states that provide the biggest incentives are not necessarily the "sunniest" states. They are: New York, Rhode Island, Iowa, Connecticut, Maryland, New Mexico, Colorado, Massachusetts, New Hampshire and New Jersey.
Sun Exposure - The more sun exposure, the more energy you will generate, and in turn, the faster you'll be able to make a return on your initial investment.
Your Solar Company - Like any home service, the price you pay for the work will depend on the company you choose, so it's important to shop around and get a few different estimates from qualified, licensed installers.
Will Solar Panels Pay for Themselves?
On average, it takes about 9-12 years for solar panels to pay for themselves. Make sure to look into what your city or utility provider offers, as many have credits that serve as payments to you for the electricity your solar system generates including a plan called "net metering", which enables you to sell any extra electricity that you generate back to the grid.
In time, you'll be able to recoup the upfront costs and continue saving on energy bills. Of course, this time frame will be based on factors such as your sun exposure, the amount of your upfront expenses, the incentives in your state and how long you remain in your home.
The Bottom Line
If you're not planning to move for many years, going solar can be a great choice from a long-term financial perspective. In most states, you can recoup the investment within 9-12 years, and recent studies have shown that solar panels can increase your property value.
Even if the cost of solar power is found to be marginally more expensive than electricity purchased from a utility, homeowners may wish to install solar power to avoid future potential fluctuations in energy costs, or may simply wish to look beyond their personal financial motivations and use solar for "green" living.
To find out if solar is right for you, connect with a licensed installer to receive a free quote.
Posted in Savings 101
