Solar Panels: Are They Worth It and Can You Afford Them?
If you are looking into renewable energy and have been debating whether or not solar panel costs are worth it, it is best to do some research on installation benefits and drawbacks. The primary benefit and most important factor to consider is the long-term cost savings. But solar panels have several other advantages, including helping the environment and increasing a home’s value. Keep reading to learn more.
Read: How to Get Cash Back on Your Everyday Purchases
Are Solar Panels Worth the Cost?
The easiest way to figure out if the cost of solar panels is worth it is to use a solar panel cost calculator. This will help you find the actual savings you might receive. First, input your current energy usage which you can find on a recent energy bill and the typical number of solar hours for your region. Then it’ll be easier to understand the costs and savings around solar panels, net metering and electricity rates.
On average, the total cost of solar panel installation can range between $15,000 to $25,000, according to the Center for Sustainable Energy. However, solar panel installations can cost much more or less than that depending on the system size you’re installing and how comprehensive you want it to be. Here are five key things to consider with solar panel costs:
How long do solar panels last?
The cost savings from solar panels.
How long does it take for solar panels to pay for themselves?
Environmental benefits from solar panels.
Will solar panels increase the value of your home?
Your Federal Solar Tax Credit qualifications.
1. How Long Do Solar Panels Last?
According to EnergySage, the majority of solar panels will last at least 25 years — even as much as 30 years if they’re kept in good condition. When factoring in the advancements in technology, they can possibly last even longer.
Energy output decreases over time — about 0.8% per year — but older solar panels will still generate electricity, just less. Although it may be common sense, regular cleaning and maintenance can help ensure longevity with solar panels.
2. The Cost Savings From Solar Panels
Solar panels can generate 100% of a home’s electricity needs in some circumstances and can cut normal costs by 75%. With average electricity bills ranging from $100 to $200, the savings add up once the initial solar project hits its breakeven point.
3. How Long Does It Take for Solar Panels To Pay For Themselves?
So, how long does it take for solar panels to pay off? This depends on energy prices in each state, how much electricity is used in a household and whether a solar loan is used.
Some states, like Hawaii and Massachusetts, take as little as five years to fully pay off. In other cases, such as Louisiana and North Dakota, it could be as much as 16 years. All in all, average estimates fall between nine and 12 years for the length of time it takes to pay off solar panels.
4. Environmental Benefits From Solar Panels
Being powered naturally by the sun, solar energy is renewable. Solar panels help every individual contribute to a smaller carbon footprint. A push by more consumers toward solar panels will lead to fewer fossil fuels being burned, which helps reduce air pollution and carbon emissions.
5. Solar Panels Can Increase the Value of Your Home
Some studies conducted by Zillow suggest that solar panels can increase the value of a home by up to 4%. This can be an excellent incentive to research solar companies to see what solar panel systems cost in your area if you are looking to sell your home.
6. Federal Solar Tax Credit 2023
From 2022 to 2032, U.S. taxpayers can take advantage of a 30% tax credit on solar photovoltaic installations. Anyone who has installed a solar PV system between 2017 and 2034 can also apply for a tax credit. Not only are solar panels better for the environment and your monthly electricity bill, but you also get government-backed incentives and rebates to install them.
The tax credit can be used against labor costs, such as installation and inspection as well as sales tax and specific equipment. Energy storage devices generating more than three kilowatt-hours are also covered. Below is a rough idea of how much a solar installation will cost in 2023 once federal tax credits are deducted.
Solar Panel Costs With Federal Tax Credit Benefit
Solar Panel Tier | Initial Cost | Price With the 30% Federal Tax Credit Applied |
|---|---|---|
Low End | $5,000 | $3,500 |
Average | $25,000 | $17,500 |
High End | $40,000 | $28,000 |
The price of starter solar panels — or any type, for that matter — can vary significantly depending on the area of residence. As the average cost per watt of energy depends on the state, some areas will be more positively affected than others.
There are some states that offer savings on solar panel costs, thanks to the U.S. government’s trillion-dollar infrastructure bill. Illinois, New Jersey, New York and New Mexico offer solar panel cost savings of 20%. For Washington, D.C. and Colorado, 50% savings are expected.
Where Can You Get Solar Panels?
Several renewable energy companies sell and install solar panels in the U.S. Some of the top options to choose from include:
Sunrun
SunPower
Sungevity
ADT Solar
Blue Raven Solar
Green Home Systems
Palmetto Solar
Tesla
Final Take To GO
Solar panels are a good investment for consumers who want long-term cost savings on their electricity bills. However, there is a stiff up-front cost. Nonetheless, when tax incentives and home valuations are taken into account, solar panels are worthwhile for those sitting on an extra stash of cash.
FAQ
Here are answers to some frequently asked questions about solar panels.
What is the average cost of a solar panel?
Depending on the system size or how elaborate your installation is, solar panels currently can average between $15,000 to $25,000, according to the Center for Sustainable Energy. However, many solar panel installations run well below or above that. Make sure to do your research on what solar panel installation would work best for your property and financial needs.
Do you really save money with solar panels?
Yes, eventually you really can save money with solar panels as you would get 100% of your home's electricity needs generated. In some circumstances, you could cut normal costs by 75%. However, solar panel installation can be expensive so it may take some time to fully feel the financial benefits. For example, in Hawaii and Massachusetts, it can take as little as five years to be fully paid off, whereas in Louisiana and North Dakota, it could be as much as 16 years. On average, it takes between nine and 12 years to pay off solar panels.
What are the best renewable energy companies that can install solar panels?
Renewable energy and solar panel installations are becoming more and more popular so you can now shop around to find the best solar panel installation options near you. Here are some great renewable energy companies to consider:
Sunrun
SunPower
Sungevity
ADT Solar
Blue Raven Solar
Green Home Systems
Palmetto Solar
Tesla
How many solar panels do I need for 2,000 kWh per month?
This can be on a case-by-case basis, however, for the average 2,000-kWh-per-month household, anywhere between 39 to 46 solar panels would work. You would need to install high-wattage solar panels ranging between 315 watts to 375 watts to create a 14.34-kilowatt system.
How long does it take for solar panels to pay for themselves?
On average, it may take between nine to 12 years to have solar panels pay for themselves. Many factors come into play when determining the amount of time it will take for solar panels to pay for themselves. Some factors to consider are:
Energy prices in each state
How much electricity is used in a household
Whether a solar loan is used
If you applied the Federal Solar Tax Credit
David Granahan contributed to the reporting for this article.
Data is accurate as of Sept. 1, 2023, and is subject to change.
This article originally appeared on GOBankingRates.com: Solar Panels: Are They Worth It and Can You Afford Them?
