You may be considering tapping into the sun’s energy to power your home, but know that putting in solar panels can be a process that isn’t the same for everyone. “Going solar is, for many reasons, a smart and admirable thing to do — if it’s the right fit and the right time for you,” says Zak Elgart, clean energy manager at Relay Power in the Boston area.
Before moving forward, you’ll want to consider the immediate expenses that adding solar panels will generate. You can also evaluate long-term benefits. Weighing the immediate and ongoing impact will help you make the right decision when it comes to solar panels for your home.
[See: 12 Ways to Save Money Without Trying.]The Initial Cost of Solar Panels
Adding solar energy as a power source involves much more than just installing the panels. “Part of the process of going solar should include a detailed site survey, where any outside costs regarding roof replacement, tree removal, electrical upgrades and usage factors are identified and calculated into the project,” Elgart says. You may find that your roof needs to be repaired or upgraded to support the panels.
In addition, if your roof is scheduled to be replaced soon, such as within the next five years, that will be an important cost factor to consider. “Solar modules will last for 25 years, which is also the rated life of many shingle roof products,” says Steven Hegedus, professor of electrical and computer engineering at the University of Delaware and a senior scientist with the Institute of Energy Conversion. “You don’t want to have them installed on a roof that only has five to 10 years left in its warranty life.” Some solar installation companies operate with local roofing companies and may offer you a package deal.
Adding solar panels will differ from other roof projects. “There are costs associated with permitting, interconnections, system design, inspections and much more,” says Jayson Waller, founder and CEO of Powerhome Solar, who is based in Birmingham, Michigan. After installing the panels, you’ll have to pay for maintenance on them, which might include cleaning the panels once or twice a year.
You may be eligible for a federal tax credit, along with state and municipality tax credits, depending on where you live. The current value of the federal solar tax credit is 26% until 2022. “This is significant for eligible homeowners because it gives them a dollar-for-dollar reduction in the amount of income tax they would otherwise owe,” Waller says. State and municipality tax credits vary. Some places, such as South Carolina, offer a 25% state tax credit on solar installations. If you live in South Carolina, you could receive a 51% credit on the net cost of your solar panels from the federal and state incentives.
[Read: Tax Write-Offs You Shouldn’t Overlook.]The Long-Term Value of Solar Panels
After you’ve paid the initial upfront costs of solar panels, you may realize several monetary benefits over time. “Many states, cities or utility providers have incentives called solar or renewable energy credits that provide small payments to the owner for the electricity they generate,” Hegedus says. Most states also have a policy known as net metering, which allows you to sell any electricity you don’t use back to the grid. “If your state does not have this policy, you might want to consider batteries to store your excess energy and use it yourself at night,” Hegedus says.
As the years go by, you may recoup the initial costs of your investment, and then can continue saving on energy bills. “The cost of a residential solar rooftop system has fallen dramatically in the last five to eight years,” Hegedus says. “Payback time depends strongly on the price you pay for electricity and the amount of sunlight.” While the time frame will vary, in many areas you’ll have paid off your investment in six to eight years.
Solar installation companies can often work with you to provide an estimate of the long-term value. “I would recommend getting three quotes from local installers,” says Joshua M. Pearce, a professor of materials science and engineering at Michigan Technological University. “These will generally come with their predictions of the economics of the system.” You can also use a solar calculator to evaluate long-term benefits, such as this one from the U.S. government.
[See: 10 Ways to Save Energy and Lower Your Utility Bills.]How to Decide if Solar Panels Are Right for You
If you plan to live in your home for the next decade, you may be there long enough to recoup your initial cost and reap the energy-saving benefits of solar power. Homeowners that move or sell may be able to highlight solar panels as a feature of the property. “Adding solar panels and storage can potentially increase the home’s value,” Waller says.
Determining the initial costs, along with how you’ll pay for them, can also be important. For instance, if you pay cash for the installation, which can frequently range from $10,000 to $40,000, you’ll often have to give the amount upfront. You’ll then receive some funds back in the form of tax credits and other state or local benefits. If you take out a loan to pay for the installation, there may be interest rates and other terms to consider.
Solar power systems can be installed in both southern and northern climates. “Panels will protect your roof and work in all environments,” Pearce says. “Even in extreme cold environments you don’t have to worry about issues like snow much.”
After weighing the pros and cons, the ultimate decision will be up to you, your budget and future home plans. If you’re not planning to move in the near future, going solar could be an investment with a long-term reasonable rate of return. “It’s an exciting time and if your home and financial situation line up for it, you can save energy, money, the planet and make a legacy move you can be proud of,” Elgart says.
