Guest Post: Thank you to Erin Vaughan writer for Modernize who wrote this article and for sharing your knowledge about Solar energy and if going solar is the right decision for your family.
Purchasing a solar energy system for your home is a tricky matter. While panels can cut your monthly bills enormously, they aren’t exactly cheap, and that means it can take a while for your energy savings to catch up to your initial investment. Thankfully, however, there are many government tax credits and utility programs that offer massive discounts on your upfront costs—you just have to know where to get them.
We at Home Improvement Leads love a great deal, and we know that when it comes to solar, the mathematics can get a little murky. That’s why we compiled this article, to help you understand how to calculate your expenses and savings—so you can decide if solar is right for you!
Solar energy can make your monthly utility bill disappear
The biggest benefit to going solar is the savings on your monthly electricity bill. Depending on the size of your system, and the amount and intensity of the sunlight in your area, you could potentially eliminate your monthly bill, which is great, because who likes paying bills? But that’s only if you correctly calculate your annual energy usage. To get started, try tracking the amount of kilowatt hours you use each month—it should be listed on your energy bill. Make sure to look at how your energy consumption changes throughout the year. If you live in a dry, warm area, you’ll probably have the lowest consumption numbers, whereas if you live in the southeast or in the north, heating and cooling can drive up your costs. Just to give you some idea, the average home consumes around 1,000 kilowatt hours per month, and runs up around $115 in electricity per bill.
Solar energy systems can take a while to pay off
To completely cover your home’s energy use, you’ll need to purchase equipment that can generate quite a bit of energy—that means you may be looking at a seven to ten kilowatt system. And that can cost quite a bit; expect to pay between $20,000 to $40,000 for the equipment alone. Meanwhile, you’ll also have to put up money for labor costs and permitting fees, as well as sales and property taxes if you live in an area that does not have an exemption for solar equipment. That can bulk up the price a lot—expect these costs to add several thousand dollars to your system price, meaning it will take longer to start to save you money. In fact, it could take between 20 to 30 years for you to earn back the initial expenses of installation.
Some locations have generous incentives that can save you money
The only problem with that equation, however, is that it doesn’t take into account some of the hefty incentive programs available to homeowners that invest in solar for their rooftops. The federal Residential Renewable Energy Tax Credit, for instance, is available to any household with a qualifying system, and it returns homeowners 30 percent of their initial installation and labor costs, shaving off thousands of dollars. Meanwhile, some states also have their own similar incentives—they’ll either pay you a flat rate or a percentage of your equipment costs, or they’ll give you a certain per-watt incentive based on your system’s expected output or rated capacity. If you live in an area that’s very pro-solar, like Hawaii, California, New York, or Massachusetts, you could be saving hundreds or thousands of dollars.
And your energy provider may credit you for energy you provide
Meanwhile, almost every state has a net metering program—that means your electricity provider is required to credit your household for extra energy you return to the grid. For instance, say it’s a very hot, sunny summer day. Your system may generate well over the 80 to 90 kilowatt hours per day it takes to keep your home powered. So the utility company collects that excess energy and distributes it to nearby homes and businesses—and they pay you for being an energy generator. In some places, your energy provider will allow you to cash out these credits, or roll them over to your next utility bills, which can save you hundreds annually.
While it’s difficult to predict exactly how long it will take you system to make you money (that depends on how much energy you’re able to generate, as well as what kinds of incentives are available to residents in your area), you’ll start saving when your total monthly energy savings are enough to make back what you paid on equipment and installation costs, minus any incentives you were offered. For most people, this will take several years, but after that, your system virtually runs for free!