Eco-conscious homeowners rely on many different green building materials and techniques to achieve their goals of an energy efficient and environmentally friendly home. A number of materials, installation techniques, and appliances can help, but the one thing that has been increasing in popularity as it decreases in price is solar panel installation.
Solar panels can have a significant impact on the amount of fossil fuel-derived energy consumers use in their homes each year. While the amount of savings varies by state, even a small reduction in dependency on traditional energy sources can have a profound impact on both a household budget and on the environment.
The number of solar panels installed in the United States has grown by around 13% in the last year, with projections showing that the industry will only continue to grow. While there are many considerations to be made before purchasing solar panels, including how much sunlight the house gets, the cost of energy in the area, and how long someone intends to live in a home, many homeowners find that the benefits far outweigh the initial costs. And with the cost of installation dropping each year, more homeowners are beginning to make the switch.
The cost to install solar panels
To power a 2,500-square-foot home, the typical household would install a 6KW solar panel, for a cost of around $18,000-$20,000 on average. There are many factors that can influence the total cost of an installation, however.
The average size of homes in the U.S. has been in decline for the last few years; smaller homes won’t require as much energy to run, and would therefore be compatible with smaller, less expensive panels. Homes that see a lot of sunlight are also better able to make the most of photovoltaic energy, while homes that have more shade may require more panels or panels placed at a distance from their home, increasing installation costs.
Batteries, whether the homeowner chooses panels or photovoltaic shingles, and how many panels the home ultimately needs can all change the final cost of installation, even before tax credits, rebates, or other incentives that may lower a homeowner’s out of pocket expenses.
The return on investment
ROI for solar panels can be measured in a few ways. The first is immediate return – the savings that homeowners will realize on their electric bills each month. This savings can vary tremendously based solely upon where the homeowner lives, as well as on other factors such as how much energy the household typically uses in a month. The state of California has the best ROI on solar panels, with an average yearly savings of around $1,500, while Washington state gets the lowest ROI with an average yearly savings of around $409.
ROI can also be seen in other ways, however, that go beyond energy bills. For example, most home-buyers are willing to pay around $15,000 more for a home with solar energy than a similar home without. So, even if they plan on selling their home in five to 10 years, they’re still coming out ahead.
Finally, because solar energy is a clean energy source, homeowners also see benefits that transcend savings. Relying more on clean, eco-friendly energy sources means a healthier environment to live in. And because the cost of energy continues to climb each year, homeowners will continue to see returns on their initial investment that will multiply over time, rather than diminish the way some other home improvements will.
Other considerations on ROI
In addition to the long-term return on the investment of getting solar panels, there are other immediate benefits as well. These include ways to offset the initial cost of the panels, reducing their installation by as much as $10,000 in some areas.
One consideration is the tax credit. Until the end of 2022, homeowners can get a tax credit that is 26% of the cost of their solar panels. After this, homeowners can deduct a large percentage of the cost of the system from their taxes. The amount varies by year, and from 2022 and onwards, it is possible to deduct 10% of the cost.
Renewable Energy Certificates are also available, which can further offset the initial cost of the installation. Homeowners receive energy certificates at specific times of year, and they can sell these to utility companies, letting the system pay for itself.
Individual states also may offer rebates and incentives as well, such as performance based incentives and cash rebates. Some states do provide more credits and tax breaks than others, but nearly all will offer some form of credit that can go toward paying for the new system.
Money saving tips
The total amount that homeowners will pay to install a system, and how much they can save will vary. However, there are ways to save regardless:
- Federal tax credits will be going down each year after 2022. Therefore, installing a system before 2023 will likely produce the biggest payoffs.
- Installing panels in an area that will see the most amount of sunlight during the day will also help homeowners save more, because they’ll be generating more energy. This will further reduce the amount of energy they use off the grid and can enable them to sell some of that energy back to the utility companies instead.
- Homeowners who aren’t ready to take the plunge should consider leasing panels. While this will negate a lot of the long-term benefits and the increased property value, leasing still lets consumers get the benefits of energy savings each month.
Solar panel installation can make a big difference in how energy is used. Done correctly, it can save consumers thousands in the first year of use, and increase the value of their homes. It’s a savings idea worth considering for many.
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