If you’re concerned about the price of electricity, you may be looking for other energy sources, such as tapping the sun.
“By investing in solar energy, consumers can lock in the cost of their energy and avoid ever-increasing utility costs due to energy rate inflation,” says Tim Deters, content manager at Green Ridge Solar, a solar company based in Tualatin, Oregon.
There is an initial upfront cost to install solar panels. With electricity, the utility bills are ongoing. “Once a solar installation is paid off, your energy bills will be a thing of the past,” Deters says.
Before moving forward, you’ll want to consider the immediate expenses that adding solar panels will generate. Solar panel installations start between $13,000 and $17,000, before tax credits. The exact price you pay will depend on the state where you live, the company that installs the panels and the needs related to your home. You can also evaluate long-term benefits, which may include not paying utility bills.
[READ: How to Estimate Your Utility Costs.]
The Initial Cost of Solar Panels
The purchase of the solar panels is the largest upfront cost, although there are additional startup expenses. You’ll need an inverter, which could cost $1,000 or more, and batteries that might cost up to $10,000 or more.
“Many solar manufacturers currently offer 25-plus year production and product warranties, guaranteeing the panels will produce at least 90% of their original power output after 25 years and no product defects,” Deters says. After installing the panels, you’ll have to pay for maintenance on them, which might include cleaning the panels once or twice a year, which could cost an average of $400 a year.
“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,” says Zak Elgart, clean energy manager at Relay Power in the Boston area. You may find that your roof needs to be repaired or upgraded to support the panels.
4 Things That Affect the Cost of Solar Panels
Federal tax credit. You may be eligible for a federal tax credit. In 2022, there is a 26% tax credit for solar systems that are installed; in 2023, the tax credit will be 22% for systems installed.
State tax credit. There are also state tax credits that vary depending on where you live. The 10 states that provide the most incentives for solar panel installations are: New York, Rhode Island, Iowa, Connecticut, Maryland, New Mexico, Colorado, Massachusetts, New Hampshire and New Jersey.
The installation company. The price you pay for installation will also depend on the company you choose, and the price of contractors in your area. Larger, national companies may offer different quotes than smaller, local firms as well. Research your options and ask for several quotes before making a final decision.
Sun exposure. Sun exposure will make a difference too. “The more sun exposure a consumer’s solar panels have, the more power they will produce and the shorter the solar payback will be,” Deters says.
[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. Look into what your city or utility provider offer, as many have credits that serve as payments to you for the electricity your solar system generates. 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.
Many solar companies offer financing options with their installation packages, and you might be able to get a payment plan that has set monthly payments which are below your current electricity bill. That’s the case at the company SunPower, a San Jose-based residential solar company with a history of more than 35 years.
“With the right financing option, homeowners typically see savings on day one with a monthly payment less than your average electric bill,” says Peter Faricy, CEO of SunPower. “In many cases, solar is the cheapest form of electricity. The amount you save depends on local factors including state incentives, electricity costs in your area and the size of your solar system.”
Will Solar Panels Ever Pay for Themselves?
On average, it takes between nine and 12 years for solar panels to pay for themselves.
As the years go by, you may recoup the initial costs of your investment, and then you can continue saving on energy bills. The time frame will be based on factors such as your sun exposure, the amount of your upfront expenses, the incentives in your area and the length of time you remain in your home. If there is a power outage in your area, the solar system could keep your home functioning. In this way, the panels might be viewed as an insurance that pays for itself as well.
[See: 10 Ways to Save Energy and Lower Your Utility Bills.]
How to Decide if Solar Panels Are Right for You
There are criteria to consider before making a solar investment. Start by weighing these factors to evaluate if they are a good fit.
The length of time you’ll be in an area. 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. The system could increase the value of your home.
Your current financial situation. Looking at your income and savings can help you determine if you want to add solar to your home. For instance, if you pay cash for the installation, 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.
Your location. Solar power systems can be installed in both southern and northern climates. The panels will provide the protection your home needs from the elements. However, if you live in an area with little sun exposure, it could take longer to fully recover your investment.
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.
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The Cost of Solar Panels ? and Are They Worth It? originally appeared on usnews.com
Update 04/14/22: This story was previously published at an earlier date and has been updated with new information.
