Are Home Solar Panels Worth It?

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Are solar panels worth it?

There are many benefits of solar panels, but how do you know if solar panels are worth it for your home? In this post, we explain the pros and cons of solar panels for your home, and finally help you answer the question: are home solar panels worth it?

Summary of the advantages and disadvantages of solar panels for your home

Advantages

  • Lower cost of electricity
  • Higher home resale value
  • Lower taxes
  • Minimal maintenance costs
  • Reduced environmental impact

Disadvantages

  • Upfront cost
  • Payback time
  • Not ideal for every home

Advantages of solar energy for your home

Lower cost of electricity:

Rooftop solar panels can increase your home’s resale value with a return on investment (ROI) that is higher than many other types of home improvements. RealEstate.com found that solar panels boosted the sale price of starter homes by 40 percent, more than any of the other 28 design features analyzed. A 15-year, eight-state study by Lawrence Berkeley National Laboratory study showed a home price premium between 0.78% and 1.05% per kilowatt (kW) of solar.

Higher home resale value:

Rooftop solar panels can increase your home’s resale value with a return on investment (ROI) that is higher than many other types of home improvements. RealEstate.com found that solar panels boosted the sale price of starter homes by 40 percent, more than any of the other 28 design features analyzed. A 15-year, eight-state study by Lawrence Berkeley National Laboratory study showed a home price premium between 0.78% and 1.05% per kilowatt (kW) of solar.

Lower taxes:

The Solar Investment Tax Credit (ITC) is a dollar-for-dollar reduction in your federal tax liability equivalent to 30 percent of the cost of your solar energy system. You can take the full deduction when your system goes online or over time. Any unused credits can be rolled over into the next tax year, as long as the solar ITC is still in effect. The ITC was recently extended by the government but with reduced benefits after 2019. The tax reduction decreases to 26 percent on January 1, 2020, to 22 percent at the beginning of 2021, and to 10 percent at the start of 2022.

Minimal maintenance costs:

Once installed, there will be minimal costs to maintain your solar power system. Any damage resulting from storms or other natural events will be covered by your homeowner’s insurance, and any necessary repairs or replacements should be covered by your system warranty. Be sure to check the manufacturer’s warranty to understand what equipment is covered and for how long (find out more about SunPower’s 25-year power, product, and service warranty).

Reduced environmental impact:

Solar power helps you lower your carbon footprint in a meaningful way and does not create local air pollution. Most electricity is still made by burning fossil fuels, with coal and gas accounting for 70 percent of net generation in Texas (source: EIA). By installing solar panels and making your own renewable energy at home, you are contributing to a cleaner, more robust electric grid.

Disadvantages of solar energy for Your Home

Upfront cost:

Your system cost is a function of which solar panels you choose, the size of the system, the types of panels you choose, and the incentives that will offset your out-of-pocket cost. You may be eligible for federal, state, and local solar rebates that will lower your cost. If you do not have a federal tax burden (for example, if you are retired), the Solar ITC will not benefit you.

Buying your system with cash only will reduce your total investment but will take time to pay back. Financing can reduce or eliminate your upfront out-of-pocket costs but will lower your lifetime savings.

Payback time:

Solar is a long-term investment, and whether you pay cash or choose to finance the system, it will take some time to see a return on that investment. However, once you pass the breakeven point, you will continue to reap the savings from your solar investment for decades. But what if you aren’t planning to stay in your home for the length of the payback period? The increase in home value will likely still make solar a good investment, as long as you aren’t planning to move in the next 1-2 years.

Not ideal for every home:

Unfortunately, not every home is a good candidate for solar. You need a certain amount of unobstructed sunlight to make the cost of installation worthwhile. The amount of solar power that can reach your home depends on where you live (Texas is lucky to get a lot of sunlight generally), how much shade covers your roof (from trees or roof structures such as chimneys), and the directional exposure of your roof (south and west facing are best).

You do not need to have a brand-new roof to be a good fit for solar panels, but your roof does need to be in good condition. If you need major roof repairs in the near future, you may want to wait until after those repairs are completed before considering solar.

Your roof type can make solar impractical. Composite shingle, the most common roof type, makes for a straightforward installation. A standing seam metal or clay tile roof is more complex, which means your cost will likely be higher and you will need to find an installer who has experience with those roof types. Ground mounted solar may be an option if your roof is incompatible with solar.

Find out if home solar panels make sense for you

The advantages of solar power for Texas homeowners include environmental and financial benefits, if your home is a good fit and you can justify the investment. Calculate your home’s solar potential or get a consultation with one of our solar experts.

How Much Do I Currently Pay for Electricity?

The higher your electricity rate, the faster solar will pay back for you because the value you get for producing your own power will be higher. Solar may still make sense in places where electricity costs are low depending on government incentives and policies as well as the financing options that are available, but generally speaking solar is more financially attractive in places where electricity rates are higher, such as Hawaii and New York.

How much would I have to pay for a solar system?

Even though solar costs are at historic lows, installing solar panels on your home is still a significant investment for most people. You should make sure that you are financially comfortable enough to make that investment. Fortunately, there are federal, state, and local rebates, tax credits, and other financial incentives that reduce the upfront cost of solar.

How am I going to finance my home solar system?

Paying for your system outright may make sense for you if you have sufficient liquid assets available to invest. Solar does provide an attractive rate of return with low risk relative to other investments such as the stock market. That said, many people choose to take out a loan to pay for their system. Financing your solar system through a lender reduces the upfront cost and can often be structured to eliminate your electric bill by effectively replacing it with a loan payment. The loan has a shorter term than the life of a solar power system, which means that you will get significantly more financial benefits when your loan is paid off.

Does the climate in which I live impact whether or not home solar panels are worth it?

Solar can make sense anywhere in the United States. Some places get more sunlight than others, which will increase the efficiency and production of your solar panels. Texas is particularly well suited to solar. At an individual level, your home must receive sufficient sunlight to make solar worthwhile. If you have heavy tree cover or other shading over your roof or property, solar panels may not make sense for your home.

Find Out If Home Solar Panels Make Sense for You

The advantages of solar power for Texas homeowners include environmental and financial benefits, if your home is a good fit and you can justify the investment. Calculate your home’s solar potential or get a consultation with one of our solar experts.

“My system has been up and running for 1 year and has produced 5% more power than expected. Our highest electricity bill has been $9.21 and we haven't had any issues, from the installation through our first year of energy independence."

–Jay M., Texas homeowner