Are Solar Panels Worth It? What You Need to Know to Decide
October 18, 2021
Are solar panels worth it?
Solar panel systems have numerous benefits, but how do you know for certain that they’re worth acquiring for your home? Here we’ll explain some of the pros and cons of home solar panels to help you decide.
ADVANTAGES OF SOLAR ENERGY FOR YOUR HOME
LOWER COST OF ELECTRICITY
The number of regular telecommuting employees has grown 173% since 2005 according to a 2020 report by the financial institution Fundera. And electricity usage and utility bills will only continue to increase for many households as more and more people shift to working from home during the pandemic.
Adding solar panels to your home can help offset increased energy costs, helping you save money while you work remotely.
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. According to Zillow, solar panels boost the selling price of a home by 4.1%.
Additionally, a 15-year, eight-state study by Lawrence Berkeley National Laboratory showed a home price premium between 0.78% and 1.05% per kilowatt (kW) of solar.
The Federal Solar Investment Tax Credit (ITC) is a dollar-for-dollar reduction in your federal tax liability equivalent to 30% 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 will roll over into the next tax year as long as the solar ITC is still in effect.
The tax reduction is scheduled to decrease to 26% in 2033 and 22% in 2034, after which it will expire.
MINIMAL MAINTENANCE COSTS
Solar power systems require minimal maintenance costs. Any damage 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’s warranty.
REDUCED ENVIRONMENTAL IMPACT
Solar power allows you to harness the energy of the sun and power your home or business without contributing to local air pollution. Most electricity is still generated by burning fossil fuels, with coal and gas accounting for 59.6% of the nation’s net sourcing.
By installing solar panels and sourcing your own renewable energy at home, you’re contributing to a cleaner environment and a more robust electric grid. Solar panels also have a usable life of 40+ years and are recyclable once they reach their end.
INCREASED ENERGY INDEPENDENCE
Generating your own energy through solar makes your household more self-sufficient by freeing you from relying entirely on energy companies and grid electricity. A home solar panel array combined with a high-capacity backup battery or generator provides the ability to source your energy on-site as well as store any excess energy for emergency use.
[Related: Energy Independence Through Solar]
DISADVANTAGES OF SOLAR ENERGY FOR YOUR HOME
Your system cost is a function of the brand and type of solar panels you choose, the size of the system, 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.
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.
[Related: How Much Do Solar Panels Cost?]
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 break-even 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 one to two 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 installation cost worthwhile. The amount of solar power that can reach your home depends on where you live, how much shade covers your roof (trees or roof structures such as chimneys create roof shade), and the direction your roof is facing (south-facing is best).
Whether your roof is brand-new or not doesn’t matter, but it needs to be in good condition in order for solar panels to be installed properly. If you need major roof repairs in the near future, you should wait until those repairs are complete before considering solar.
Your roof type can also make solar impractical. The most common roof type, composite shingle, makes for a straightforward installation. A standing seam metal or clay tile roof is more complex; your cost will likely be higher, and you’ll 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 panels.
[Related: What Is the Best Roof for Solar Panels?]
RISING SOLAR PRICES AND POTENTIALLY LIMITED SUPPLY
Many components of solar panel systems are made in countries whose manufacturing industries have been disrupted for several months due to the COVID-19 pandemic. These global supply chain disruptions are likely to cause increases in the price of solar panels, inverters, and related equipment due to limited availability.
Going solar now protects you from higher prices or panel shortages in the future.
SUMMARY OF THE ADVANTAGES AND DISADVANTAGES OF SOLAR PANELS FOR YOUR HOME
- Lower cost of electricity
- Higher home resale value
- Lower taxes
- Minimal maintenance costs
- Reduced environmental impact
- Increased energy independence
- Upfront cost
- Payback time
- Not ideal for every home
- Rising prices and limited supply
FIND OUT IF HOME SOLAR PANELS MAKE SENSE FOR YOU
Solar power offers environmental and financial advantages to homeowners, but only if the residence is a good fit for installation. Check out our online solar potential calculator to see if your home justifies the investment.
HOW MUCH DO I CURRENTLY PAY FOR ELECTRICITY?
The higher your electricity rate, the faster solar panels will return their investment 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 the incentives, rebates, and available financing options.
HOW MUCH WOULD I HAVE TO PAY FOR A SOLAR SYSTEM?
Acquiring solar panels for your home is a significant investment, but with the continued availability of great financing options, you can usually go solar with no money down.
This means you can invest in solar right now while leaving your money in the securities markets until they recover. This is an economic benefit of solar energy that’s especially relevant during tumultuous times. Fortunately, federal, state, and local rebates, tax credits, and other financial incentives will reduce upfront and total life costs.
HOW AM I GOING TO FINANCE MY HOME SOLAR SYSTEM?
Paying for your system outright will make sense if you have sufficient liquid assets available to invest. Solar provides a low-risk return rate 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.
[Related: Saving with Solar]
DOES CLIMATE IMPACT SOLAR PANEL VIABILITY?
Going solar anywhere in the United States has benefits; but some places get more sunlight than others, which will increase the efficiency and energy production of your solar panels. For example, Texas, Florida, and Colorado are particularly well suited to solar.
Consider how much sun your home gets. If you have heavy tree cover or other shade obstructions over your roof or property, solar panels might not make the most sense for your home.
FIND OUT IF HOME SOLAR PANELS MAKE SENSE FOR YOU
For more information on who we are and what we offer, contact us today by calling +1 (877) 397-9344 or completing our online inquiry form.
“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