Is it worth it to go solar right now?
According to the US Solar Market Insight Report, residential solar installations set an annual record in 2021. Solar installers completed over 500,000 projects in a year for the first time.
However, according to the same report, 2021 was also a year of increasing costs due to supply chain and trade issues.
Residential solar demands remain high. But homeowners may be reluctant to invest in solar if they’re unsure if the benefits outweigh the cost of solar energy installation.
Read on to find out if it’s financially sensible to install solar panels on your rooftop today.
Understanding the Cost of Solar Energy Installation
Determining if a solar power system for your home is the correct move begins with examining the installation cost. Then you can compare it to how much you can save money on utility bills over time.
The upfront cost of installing solar panels is about $20,000 after taking into account the federal tax credit or Investment Tax Credit (ITC). The prices can vary widely depending on the type of solar panels, system size, location, and labor costs.
Aside from the ITC, there are other ways of reducing your solar costs. You can avail of state tax credits and rebates depending on where you live.
Also, some states like Texas offer a 100 percent property tax exemption for solar. According to Solar Brave, solar systems can increase a property’s value by an average of $15,000 (find out more at https://solarbrave.com/). The good news is you won’t be taxed higher for the increased value of your home if you live in Texas or states with similar incentives.
The Payback Period
The payback period is the amount of time it takes to recoup your initial investment. You can estimate how long it takes for the system to pay for itself by looking at several factors.
First, you need to calculate your system’s energy production. The calculation can be very complex and considers your location, your home’s orientation, the size of the system, and other factors. Thankfully, the National Renewable Energy Laboratory has a handy calculator you can use for this purpose.
The next step is determining how much you will save by installing solar panels. Review your average energy consumption by going through your electricity bills for at least six months. Then compare it with your system’s energy production.
For example, let’s assume that your solar panels can supply 80 percent of your home’s energy usage. If you currently pay an average of $115 per month or $1380 per year, you’re getting savings of $1104 per year from your solar system (1380 multiplied by 0.8).
You can now come up with an estimate of the payback period by dividing the installation cost by the savings. Using the same example, if you paid $15,000 for your photovoltaic system after factoring in the incentives, the payback period is 13.6 years.
Is Solar Installation Worth It?
From the example above, 13 years seem like a really long time to earn back your investment. But keep in mind that solar panels can last for 25 years or more.
You can enjoy 12 more years of savings. You can even make money through “net metering” plans.
Overall, it’s up to you to decide if eventually seeing the benefits after the payback period is worth the cost of solar energy installation.
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