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Are Home Solar Panels Worth It?

It’s true that you can potentially lower electricity bills and increase your home’s value if you embrace solar energy, but before you rush to invest and install solar panels, keep in mind there are a number of factors that can affect whether you’re a good solar panel candidate.

Here are the most important factors to consider when thinking about investing in solar panels

Cost of your electricity

Your savings will depend on a number of financial factors, starting with your monthly electric bill. Do you spend a significant amount each month on power bills, or are these bills low versus homes of comparable size in your area? It’s typically more beneficial to switch to solar if you spend a lot on electricity, but keep in mind that energy costs can vary based on demand, availability, climate and time of year.

Cost of solar equipment

The initial costs of solar panels can give most homeowners sticker shock, with all-in investments running between $15,000 – $25,000 for an average size home. The costs are dependent on the how many panels you need (i.e., your energy usage) and the kind of system you choose. Solar installation companies can help guide you and provide estimates based on your home. Keep in mind that installation and maintenance costs are only part of the expense. You’ll need to allow for regular cleaning and possible technology upgrades that help the panels run efficiently.

Tax credits and incentives

Before you decide that solar is just too expensive, you should know that there are government incentive programs which can offset the high upfront costs of solar . The current federal solar tax credit – which covers systems installed on or before the end of 2022 – allows homeowners to deduct 30 percent of solar costs from their taxes. The solar tax credit reduces to 22 percent in 2023 and, unless the credits are renewed by government officials, could expire in 2024. You may also be eligible for state-specific incentives above and beyond federal credits. Did you know that, for a solar power system costing $30,000, U.S. homeowners can save as much as $8,000 with the 30% federal tax credit in 2022?
Refer to the Database of State Incentives for Renewables & Efficiency (DSIRE) website to learn about solar incentive programs in your state .

Net metering

The DSIRE website can also indicate if your state offers net metering, which provides you with another way to save money. Oftentimes, homeowners with a rooftop solar panel system can generate more electricity than they will actually use, which creates excess power that can be sent back to the grid. This power is essentially sold back to your local electric company via net metering. Not all states offer this incentive, and not all states buy solar electricity back at the same rate, so do your research.

Location, location, location

Just as solar incentives vary by location, so too do electricity costs and power consumption. If you live somewhere with higher electricity rates, you’ll realize greater savings with solar. These rates – and the amount of electricity produced – are based on kilowatt hours, which are typically priced slightly higher in colder states. Otherwise, solar panels work just as well in warm and cold environments, though sunlight is, understandably, a factor in the ability for panels to store and generate electricity.

Sunlight exposure

It’s no surprise that sunshine and solar power go hand-in-hand. The more direct sunlight on the panels, the more electricity can be produced. Still, plenty of homeowners who live in areas with lower amounts of sunlight choose to take advantage of solar panels.

Your home’s orientation and exposure to the sun

On a related note, your home’s placement in relation to the sun and how much shade you get affects how much energy can be created by solar panels. Homes that have roofs facing south or west typically fare better. Trees can obstruct your roof from sunlight, and if your roof has limited space, a steep slope or an abundance of roofing tiles, installation could be difficult. You can always upgrade or repair your roof to accommodate solar panels or even consider cutting back trees that block critical sunlight, but this cost will need to be factored into the decision-making process.

Longevity

How long do solar panels even last? You can expect quality solar panels to meet your energy needs for at least 20 – 25 years. This is excellent news for most homeowners, whether you plan to stay in your home long-term and want to reduce your monthly electricity bills, or whether you plan to move sooner and want to increase your home’s resale value. Be sure to check the solar energy system warranty to ensure you’re covered if there’s an issue, and to see if the warranty is transferrable to a future homeowner.

Consultations and quotes

To further ensure you’ll get your money’s worth, you want to go with the best solar installation company for you, and that means comparison shopping. Aim to get several quotes from reputable companies. Usually, these assessments are free and will include a review of your roof, your current energy consumption and costs, the type of equipment being offered, possible government incentives or other rebates, and an ultimate estimate of how much your panels will cost – which helps clarify your long-time investment and long-term savings. You may also find it useful to access an online application that can estimate energy production and the cost of energy consumption.

AmeriSave has solar consultants that can also help you navigate the entire process and provide a free consultation on everything from how much energy you need to the costs and financial incentives you are eligible to receive. For more information on solar, you can also checkout the resources from energy.gov.

Once you’ve gathered the estimates and assessed the factors, you may still be wondering if solar panels are a good investment. It’s a big decision, after all. Experts differ on how long it can take to break even and ultimately see a Return on Investment (ROI) with solar panels, but the general range is thought to be five to ten years. And as the green trend gains more and more momentum, the demand for green living (and thus solar panels) can not only can help the earth, but simultaneously increases your home’s resale value.

Disclaimer: The information contained herein is general in nature and not intended to provide you with specific tax advice or recommendations. Contact your attorney, accountant, tax or other professional advisor with regard to your individual situation.

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