Are solar panels worth it for your home?

Are solar panels worth the investment for your home?

If you’re thinking of going solar, you probably have a few questions to ask, the most important one being – are solar panels worth it?

With the rising cost of electricity from traditional sources together with the declining cost of solar panels over the last several years, many American homeowners have started thinking of going solar and are asking themselves – are solar panels worth the investment? Whether solar panels for home are actually worth the money depends on a few major factors such as, your home’s location, whether your roof is suitable for solar panels, how you use your electricity, what your local utility charges for the electricity, how much is your monthly electricity bill and what is the payback period of the investment in solar panels.

Here in this article I have tried to explain all the things a homeowner needs to know to make an informed decision about installing a solar power system for his house. The article should help the homeowners to make the financial calculations required to find out the viability of solar panels for home and to ascertain – are solar panels worth the investment?

Are solar panels worth it – how to determine?

Here are 7 major factors you need to consider to determine – is going solar worth it?

1. How much is your current electricity bill?

Your current electricity bill is one of the major factors to find out – are solar panels worth the investment for your home? The higher your monthly bill, the more likely you’ll benefit from switching to solar. The solar panels generate power by itself and can, therefore, greatly, if not entirely, offset your monthly electricity bill.

However, the electricity rates and usage are not stable. Therefore, if utility’s electricity prices fluctuate or your energy consumption changes, the amount of your savings shall also vary. Location of your home largely affects electricity rates. Homeowners, therefore, need to check the electricity prices in their area to ascertain – are solar panels worth it for their homes? The electricity rates in your location can be checked from the U.S. Energy Information Administration website .

2. How you are going to finance your solar system?

Financing option for the solar panels for home i.e. whether to buy outright or to lease the solar panels, will have major impact on your system’s long-term value.

If you can afford to buy your solar panels outright (by cash) you’ll save more than with any other option. However, you can also go for a solar loan. If you have enough finance, the best choice would be to go for a secured solar loan, which means you use your home as collateral. The rate will be lower than an unsecured solar loan, and the interest will be tax-deductible.

While solar Leases and Power Purchase Agreements (PPAs) require no down payment and promise a maintenance-free option, but they come with a lower savings which will typically be just 10 to 30 percent of your utility electricity bill. Moreover, in solar lease, since you don’t own the panels, it won’t raise the value of your home, and you may not be eligible for incentives.

3. Is your roof suitable for solar panels? 

Your home’s current exposure to sun is an important point to decide – are solar panels worth it for your home?

Your Home’s location, the roof’s orientation toward the sun and the amount of shade affect a solar system’s output. More exposure to the sun means more energy produced and a greater potential to achieve higher solar savings.

South-facing roofs are the most productive for solar, followed by west-facing and then east-facing roofs. North-facing roofs are the least desirable for solar, and many people rule them out. Next you are to see if  the size and angle of your roof is suitable to decide -are solar panels worth the investment for your home?

You need about 100 square feet of area per kilowatt of solar system. For an average residential solar system of 5 Kw rating, you’d need roughly 500 square feet of roof space. The ideal angle for solar panels is 30 degrees, but they can be installed on roofs having angle ranging from zero to 45 degrees. It is also important to minimize shading from nearby trees, buildings and other obstructions on the roof. If your roof is lightly or even moderately shaded, solar panels may still be viable.

You can estimate the efficiency of your solar panels with the help of the Solar-Estimate calculator which calculates how much power a given sized array of solar panels will produce given your location.

You may also like the related post: High efficiency solar panels – how they matter for residential solar

4. How much do residential solar panels cost?

According to the Center for Sustainable Energy residential solar panels for a standard system of 5 Kw rating costs, between $15,000 to $25,000 ($3 to $5 per Watt) before tax credits and incentives. But negligible long-term expenses can make up for the upfront costs. Once installed the maintenance costs of the solar system are very small. A typical solar panel installation is expected to last anywhere up to 20 years or more with little change in the amount of electricity produced.

The number of solar panels you will need to power your house will depend on two factors:

• The amount of electricity you use;
• Your location which will determine how much electricity your solar panels will produce;

There are online solar calculators that can take your monthly power spend and location and work out how many solar panels you need and the cost involved based on prices of solar companies in your area. You can use this online solar panel cost calculator to find out how much your solar panels cost.

5. What incentives and rebates are available for your solar system? 

The government incentives and rebates which are available for installing residential solar system are also among the major factors to determine – is solar power worth it for your home?

The government offers homeowners significant incentives for installing solar panels as an alternate energy source. Many states also offer their own incentives on top of the federal tax credit for promoting installation of solar system.

Additional credits vary by location. If your state has a high solar ranking, you may receive extra incentives like cash back, property tax exemption, waived fees and expedited permits. In some states, homeowners with solar panels can sell excess power to their local utility companies. You can check the credits available in your state by reviewing the database of state incentives for renewables and efficiency.

North-eastern states like New York, New Jersey, Massachusetts, Vermont, and Rhode Island offer the best incentives. Two west coast states, California and Oregon, are also important leaders in solar energy incentives.

However, as solar panels are getting cheaper day by day, gradual reduction in the incentives that are available at present from state and city governments cannot be altogether ruled out.

 6. What is the average payback period of solar energy investment?

The average payback period of solar panels is another major factor to determine- are solar panels worth it for investment? The solar panel payback period is a calculation that estimates how long it will take for you to “break even” on your solar energy investment. Increased utility electricity rates and lower equipment costs are making it easier and less expensive for homeowners to own, rather than lease, their solar panel systems. Comparing the payback period of various quotes from solar installers is an easy way to comprehend the financial merits of each option, and identify the point in time at which your solar investment will start to give you return.

The typical average payback period for solar panels for home in the U.S. is between 6 and 8 years which is definitely better than any other investment.

7. Do solar panels increase your home’s value?

Multiple studies have shown that homes with solar panel systems are valued and sold at prices above similar homes in the area without having a solar system. The US Department of Energy surveyed 4,000 homeowners with solar power and discovered that buyers were willing to pay roughly $15,000 more for a house that included an average-size solar system (the study covered homes where the solar PV system was owned and not leased). This increase in property’s value may vary depending on a number of factors, which include the location of your house, the size of the solar installation and the base value of your property.

Thus increased property value of a house having a solar system is also a major factor to determine – is solar power worth it?

Before I conclude let me also address some of the related queries from the potential investors.

Do you really save money with solar panels?

Yes, solar panel system saves you money and brings a return on your investment in no time. Increase in property value and lowering of utility costs reduce the upfront costs of installing solar panels.

How long do solar panels last?

In case of new or well-built systems, solar panels can last for about 30 years. Solar panel manufacturers typically offer warranties of about 25 years or more.

Do solar panels damage your roof?

Solar panels basically are not bad for your roof if proper methods of installation are followed.

Do solar panels need servicing?

Solar panel system requires very little service and maintenance since it has no moving parts. However, to keep the solar panel system in efficient working order annual servicing of the system is recommended.

You may also like to read this related post: Home Solar Power System planning guide

Conclusion

On going though the major factors discussed in the article you must have by this time cleared your confusion when you ask yourself – are solar panels worth it for investment for my home?

With rising electricity rates in most parts of U.S, residential solar panel investment is increasingly an investment that makes sense for homeowners. Fortunately, the cost of solar panels for home has decreased significantly, making it a more affordable option to go solar now.

Now that you got your answer to the query – are solar panels worth the investment, all that’s left to do is to crunch the numbers and find a good and experienced solar installer in your area. If your roof is suitable for solar panels, your electricity rates are high and your state provides good incentives, it’s time to take a serious look at – is going solar worth it?

You may also like to read: Solar Power System for Home -planning guide