Solar enthusiasts and advocates are raving about the environmental benefits of residential panels. Solar companies are promising you thousands of dollars in savings. Still, you do not want to simply buy into the hype and listen to people throwing some ballpark figures around. The upfront investment of having a mini power plant above your head is hefty and leaves you wondering if it pays off at all. The tricky thing is the answer to this question is not cut and dried. It depends on a matrix of different factors we have to take into account.
Across the globe, the prices of solar panels are dropping—an average system costs 60% less than just seven years ago.
A common residential solution these days falls in the $15,000-$20,000 range. And in general, solar systems require little to no maintenance, so there are not many costs to worry about in this area. The only major thing is the converter, which has to be replaced every 20-25 years.
So, it is estimated that a 4kW system reduces annual bills by $110-$290. On the other hand, reliable systems like Skylight Energy high-output 5kW ones can pay for themselves. For most systems, you have to wait for several years for the financial benefits to really kick in, although depending on your situation, it can also take a decade or two.
Note that government schemes and incentives can really make things easier for you. For instance, in the US, the federal Residential Renewable Energy Tax Credit decreases the upfront costs (equipment and installation) by 30%. Moreover, many states and municipalities also offer rebates, sales, and property tax exemptions that bring the expenditures down.
So, the million dollar question is how long does it take to recoup the investment? Well, the numbers above now have to be compared against aspects like the size of the system, your location, electricity prices in the area, size and type of the roof, and electricity use.
Let us start with the fact that panels’ efficiency depends on hours of daylight, not hours of sunshine. Yes, they generate electricity even on gloomy and cloudy days. Therefore, to increase the solar gain, homeowners can place panels of south-facing roofs, where there is ideally minimal shade throughout the day.
Furthermore, you also have to ask yourself how much are you paying for electricity right now. The rates vary wildly depending on where you live. Those who are on the higher end of the spectrum stand to benefit more financially. For example, people in states like Massachusetts are more inclined to go green because they pay 21 cents per kilowatt-hour, which is 70% above the national average.
Playing it smart
Once that is sorted out, you need to take your time shopping around and comparing offers from solar companies in your area.
Local providers and smaller contractors tend to cater to residential users better than national-scale solar coronations. Also, you want to do yourself a favor and steer clear of cheap panels. High-quality products are more reliable and have higher production capacities (efficiency ratings). Yet, there is no need for an overkill, something that far exceeds your electricity needs.
Before taking the plunge, use online solar calculators that are more reliable than your back-of-the-envelope calculations. Namely, you can receive an accurate estimate of how much you will save and how long will you have to wait for the investment to pay off.
Finally, figure out the best way to finance the system—buying or leasing it. Making a purchase in cash allows you to make the most bang for your buck. Then again, it is not hard to justify taking a loan either. If you plan to stay in your home for a long period of time, chances are that investing in solar panels makes financial sense.
Cover all the bases
Technology is becoming more and more affordable, but you still have a lot of ground to cover. First and foremost, it is essential to pick a system that is the right fit for your household. So, do your homework: run the numbers and see how the math holds up. Factor in all the moving parts that affect the system’s electricity production and efficiency.
Get the right combination of price and quality after reviewing various bids and options. Look beyond immediate financial avail: aim to reap the juicy benefits that wait further down the road. It is time to tap into renewable sources of energy, avoid grid dependency, and enhance your household budget.
Lucas is a real estate agent and renewable energy consultant with many hobbies and passions, but above all, he enjoys the most spending time with his wife – Mara. He also likes Lord of the Rings. He, actually, very much likes Lord of the Rings. He is a regular contributor at smoothdecorator.com