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Do Solar Panels Save Money
Sean Jackson is a creative copywriter living in Florida. He has published work with Realtor.com, theScore, ESPN, and the San Francisco Chronicle. In his spare time, Sean enjoys playing the drums, failing miserably at improv, and spending time on the beach.
How Much Money You Can Save Using A Solar System? |
This story is part of Home Tips, a collection of practical advice for getting the most out of your home, inside and out.
More than 500,000 new residential solar panel systems were installed on rooftops last year, according to the Solar Energy Industry Association. Despite the greater uncertainty in the solar economy and industry in 2022, solar panels will almost certainly pay off in the long term. Panels purchased from reputable solar installers and optimized for the greatest energy production will save you more money over time. And there are even solar options for renters.
Residential solar installation costs vary due to size, local incentives, and local costs, but the average single installation costs around $20,000, according to energy analyst Wood Mackenzie. (Wood Mackenzie uses an average installation size of 8 kilowatts and averages $2.99 per watt. Many residential solar systems will be smaller.) Tax breaks and financing options can make solar more affordable.
With just some information and a little math, we’ll show you how to estimate the payback period on your solar panels and find out when they’ll start saving you money.
Solar Cheat Sheet: Your Complete Guide To Getting Solar Panels At Home
The payback period is the amount of time it takes to get your initial investment back. Solar panels can help you save enough money on energy bills over time to offset up-front costs. How much you save per month depends on the size of your solar system, your home’s energy consumption, and other factors.
Calculating the payback period will be unique to your circumstances due to the variability of up-front costs, as well as differences in energy costs based on your location. But here are some guidelines to help you predict when you will break even.
First, you need to estimate how much your initial investment will be. Along with the system fee, you must include possible installation and other costs as part of your service setup. Check cost estimates in your area and go from there.
Homeowners can receive a one-time tax credit of 26% of the purchase price of the solar system. If an initial solar panel investment normally costs around $20,000 in your area, a tax credit will run you $5,200 when you file your next taxes.
Can Solar Energy Save You Money Over The Long Term?
What’s more, some utilities offer incentives and rebates for installing solar power. Check with your local energy supplier to see if they offer incentives.
This estimate assumes you will get all of your power from solar. While some homes will be able to get 100% of their electricity from the sun, or even sell some of the surplus energy back to the grid, others will still have electricity bills to supplement usage. This will vary greatly from house to house, depending on how many solar panels are installed, normal energy consumption and more. Get more tools to calculate your potential home savings here.
Now that you know how much energy you’ll save, log into your electric utility company account and average out your last few utility bills. Go back at least six months, if possible, to account for seasonal temperature changes and other fluctuations in costs. Let’s assume you get 100% of your usage from your panels and currently pay an average of $125 per month in utility bills, or $1,500 per year. Now you have the information you need to estimate the payback period of a solar panel.
First, multiply the cost of your solar panels by 0.26, which is the tax credit you receive for installing your system. If you spend $20,000 initially, your tax credit is $5,200. That brings your initial investment down to $14,800.
How Long Does It Take Solar Panels To Pay For Themselves?
Now, let’s consider energy saving. Divide your initial investment by the $1,500 you normally pay the utility company annually; how long will it take for your savings to equal the amount you spend. Using the example above, you would divide your initial investment of $14,800 by $1,500: The result is a payback period of just under 10 years.
That may seem long on the surface, but solar panels can easily last 25 years.
You can further speed up your payback period by selling renewable energy certificates, or RECs. It is measured in megawatt hours of electricity that comes from renewable sources. Electricity companies have to buy some of the electricity from renewable sources, meaning you can save even more by selling the energy produced by your solar panels.
Several factors can increase your payback period. Before installing solar panels, you need to check the condition of your roof. The panels can last 25 years, so if your roof is not in top condition, you may have to carry out repairs before installing the solar panels. If this applies to you, be sure to add these fees to your initial investment.
Do Solar Panels Save Money? Yes. Here’s How
Overall, solar power can be an expensive proposition, especially with the up-front costs. However, the long-term efficiency they provide can offset the initial investment, resulting in savings for years to come. The products on this page may come from affiliate partners who compensate us. This can influence which products we write about and where and how they appear on the page. However, this does not affect our rating. Our opinion is our own. Here is a list of our partners.
With rising energy costs and rising temperatures, more and more people are looking to solar energy as a way to save money on their electricity bills. But how much money does solar energy save, and is it worth the investment? Let’s see.
The goal of having solar panels is to make your home generate its own power. This will then offset your electricity bill, if not completely eliminate it. If you generally have higher utility bills, you will likely benefit from switching to solar power.
However, if your electricity bill is consistently lower, you may not see much need to switch to solar, as the costs may outweigh the benefits.
How Solar Panel Save Money And Nature In Long Run? By Max Power Electrical
By reviewing your current and past electricity bills, you can begin to calculate whether solar power will save you money in the long run.
Also keep in mind that electricity rates are not stable. For example, ice and snow storms in southern states in 2021 caused many electric bills to triple, if not quadruple, because of the need for electricity. Of course, no one could expect something like that to happen, but if it worries you, getting solar power can ease those fears a bit.
The second step to see if solar energy can save you money is to evaluate your sun exposure.
See if you can save on your electricity bill by using a calculator that measures your potential savings (It’s a pretty cool tool!).
The Cost Of Solar Panels: Is It Worth It?
How much money does solar energy save after the upfront costs? Again, it will vary from house to house and state to state, but let’s look at the upfront costs for solar.
Of course, just like any remodeling or home improvement, you’ll want to look at a few companies in your area and get quotes. This isn’t to say that the cheapest option will be your best bet, but it’s still important to see what everyone has to offer.
Along with getting lots of offers, you also need to find out what your home really needs. For example, based on your consumption, you may need a bigger system. Or, if your roof is of a certain type, you may need different panels.
When getting a quote, be sure to listen to what you’re getting for the price. And don’t be afraid to ask questions and get clarity on what your home really needs to be self-sufficient.
Community Solar Members Save Money
And while it can save you money in the long run, it’s certainly an investment that must be made up front. So you also need to know and prepare how you will pay for it if you find the installation worthwhile.
While paying cash would (most likely) be the best option, solar systems can get pretty expensive. Solar energy systems can run up to $50,000. The average cost for a solar system (with installation) is around $20,000.
Since diesel is expensive, it’s also important to make sure you get a proper warranty with the system. And, if you live in an area like Arizona, you’ll likely need to have your panels professionally cleaned, which may cost money as well (unless you get a free maintenance plan).
Planning for these costs will also make installation more expensive, but can save you a lot of money in the long run.
How Much Solar Panels Cost
Last but not least, you will
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