The decision to switch to solar energy at your home is a big one, with numerous financial aspects to think about. Here is an in-depth guide that introduces the home solar system cost, and provides a better understanding of how feasible going solar is for you. A record 2 million people have installed solar panels in the U.S., according to EnergySage, thanks to dropping costs and growing environmental awareness. But what exactly does going solar mean for your wallet?
Initial Installation Costs
The initial installation cost of a solar panel system is often the most significant barrier for homeowners. This depends on the size and type of your system, which usually correlates to the energy needs of your household. A smaller system might cost around $15,000 whereas a larger system can set you back up to $40,000 before incentives.
Incentives and Rebates
The cost of solar panels has dropped significantly due to government incentives and rebates. The federal tax credit, also known as the Investment Tax Credit (ITC), allows homeowners to deduct 30% of the investment from their federal taxes. Additionally, many states offer similar tax credits plus rebates that can bring your net cost down by 50% or more.
Costs per Watt
To determine the real value of your system, one helpful measure is cost per watt. This figure offers a standardized comparison for panel efficiency and price, regardless of system size. Recent figures from EnergySage suggest the national average cost per watt is around $3.
Solar Panel Lifespan
Solar panels typically last between 25 and 30 years. Although they still produce energy after this point, their efficiency levels start to decline. Solar manufacturers, however, often provide a 25-year warranty that guarantees a certain level of efficiency throughout the solar panel lifespan.
Operating and Maintenance Costs
Unlike traditional energy sources, solar panels require very minimal maintenance. Most homeowners will only need to clean their panels once or twice a year. However, you may also need to budget for an occasional professional inspection and potential repairs after weather-related damage.
Utility Bill Savings
Once your solar panel system is operational, you will start seeing significant savings on your utility bills. Your actual savings will depend on factors such as how much energy your system produces and how much you consume. The average American homeowner saves about $1,400 per year after installing solar according to a study by North Carolina State University.
Net Metering
With net metering, you can get credit from your utility company for the excess electricity that your solar panels generate. This directly reduces your monthly electricity bills and can even result in negative balance if your system generates significantly more power than you consume.
Solar Renewable Energy Certificates (SRECs)
In some states, homeowners can earn Solar Renewable Energy Certificates for the electricity their systems produce. You can sell these SRECs on the open market, adding another income stream that helps offset the cost of owning a solar system.
Financing Options
If the upfront costs of solar panels seem daunting, there are financing options available. These include solar loans, power purchase agreements (PPAs), and leases, each of which comes with its own nuances regarding payment terms, interest rates, and long-term financial implications.
Appreciation in Property Value
Homes equipped with solar energy systems tend to have higher property values. How much they increase your home’s value depends on several factors, such as the size of the installation and where your home is located. A study from Lawrence Berkeley National Laboratory found that a typical solar installation could increase property value by a median of about $15,000.
Environmental Impact Costs
While it may not show up on any ledger, the environmental benefits of solar power also come with a form of cost savings. Using solar energy can reduce dependence on fossil fuels, leading to less air pollution and a lower carbon footprint. These avoided costs are often difficult to quantify but should not be overlooked in your decision-making process.
Storage System Costs
Want to store excess solar power for usage during non-sunny hours? You can include a battery storage system when installing your solar panels for an additional cost. Prices vary greatly depending on the size and type of battery, but a popular option — the Tesla Powerwall — comes with an installation cost range between $9,000 and $16,000.
Insurance Coverage
Your existing homeowner’s insurance policy might cover your solar panel system, but it is worth verifying this with your provider. If it does not, or you feel the coverage is inadequate, you may need to take out additional coverage, which brings another cost to the table.
The Payback Period
The payback period is how long it takes for your solar system installation costs to be recouped through electricity savings and other benefits. According to EnergySage marketplace data, the average U.S. homeowner breaks even on their solar energy investment in just over eight years.
Solar Consideration
In the final analysis, going solar at home lowers your energy bills, contributes to the environment, and increases your property value. The upfront costs might seem overwhelming, yet with incentives, rebates, and the considerable long-term savings, solar energy evolves as an attractive investment bringing auspicious financial benefits for you.
