It's best to buy if, although the initial investment associated with buying solar panels is no small thing, the panels will eventually “pay for themselves”, generally in less than 10 years. After that, energy savings can continue. Installing solar panels can be cost-effective not only by saving you money on your electricity bill, but also by increasing the value of your home. In fact, Zillow found that homes with solar panels sold an average of 4.1% more than comparable properties that didn't have this clean energy upgrade.
Depending on the value of your home, that could be a big boost to your bottom line. Solar panels can be one of the best investments for a home. And like any investment, you should consider how to get the most out of your money before committing to it for the long term. From local electricity costs to choosing a reputable solar installer, there are a number of things to consider when deciding if solar energy is a good option for your specific home (and whether or not you'll save enough money to justify the high initial costs).
That's why we've created a detailed guide that covers the 8 most important factors you should consider before buying solar panels. You should first check if your home is suitable for solar energy. Your location and the amount of your monthly electricity bills are two of the factors that most influence how effective your solar panels are and whether or not you will achieve substantial savings. There are also net metering programs in many states, which actually pay homeowners who generate excess solar energy (we'll discuss that later).
A quick way to assess if your home is suitable for solar panels, based on your location and monthly electricity costs, is to use our solar panel calculator. Photovoltaic (or PV for short) solar panels rely on adequate sunlight and prefer clear outdoor conditions for energy production. If your area gets four to five hours of direct sunlight every day, solar panels can generate enough electricity to power your home. What if you live in an area that doesn't get much exposure to the sun? Believe it or not, solar energy could still be a great option.
On cloudy days, solar panels continue to work, only at lower production levels. To meet these conditions, you would only need a larger system to cover your electricity bill. For example, a 300-watt solar panel in Massachusetts would normally produce 0.9 kWh per day, while the same panel would produce 2.25 kWh per day in super sunny Arizona. Interestingly, solar panels work best at moderate temperatures of 77 degrees Fahrenheit or lower.
This makes places with cold and mild weather conditions, such as San Francisco, ideal for solar panels. For best results, solar panels should be oriented to the south and tilted at an angle, depending on the latitude of your location and the season you are in. The roof inclination should also be between 30 and 45 degrees to maximize the entry of sunlight. If you don't have a south-facing roof, it's not a decisive factor.
In fact, there are many homeowners who don't and continue to see huge savings on their electricity bills. The output of solar panels also tends to balance out over the seasons, so if the roof slope is shallow, for example, it can still produce enough energy. A shallow roof works best during the summer months, while a steep roof generates more production during the winter season. On the other hand, you can still install solar panels, even if you have a completely flat roof.
If your roof isn't suitable for solar panels, you can choose to install a ground mounting system, as long as you have space on the ground. In addition to the physical equipment, you also pay for the labor and permit costs associated with the installation. One of the main components of a solar energy system is the solar panel. The costs of solar panels vary depending on their level of efficiency, technology and whether they are manufactured by a top-tier brand.
While Tier 1 solar panels tend to be more expensive than Tier 2 brands, it's usually worth raising the price. The mounting and shelving components are used to fix the solar panels on the roof at a specific angle to maximize the entry of sunlight. Hardware refers to the small parts, screws, and accessories that hold the mounting system together. All of these components are bundled together and are rarely purchased separately.
Each one has its own set of advantages and disadvantages, and its price varies. You can learn more about each type of inverter, as well as which one is best suited for your specific solar system, in our solar inverter buyer's guide. Installation costs vary and are largely dependent on the quality of the solar installer. When choosing a solar energy company, it's a good idea to request quotes from local companies, as they are the ones that can easily solve problems that arise while the system is operating.
The company you choose for your solar installation is important for many reasons, but perhaps the most important is to ensure that you get a complete installation that will last for years. Accredited solar installers tend to be around for a long time and tend to offer better guarantees for their service, and these benefits translate into peace of mind for homeowners in the long term. Permits are the most time consuming part of the solar installation and can take between three days and three weeks to complete. However, the bright side is that your installer will handle the process for you.
Electrical work, such as wiring and electrical connections, is carried out by a licensed contractor or installer. Landlords do not apply for this type of license. Your installer must have the proper certification or license to perform electrical work on your roof. If leaves, branches, snow, or dirt build up on the panels, you should remove them with a blower, water hose, or soft brush to keep the system running smoothly.
Most solar panels are lightly cleaned two or four times a year, and you can easily do it yourself. While solar panels rarely need to be repaired, the manufacturer's warranty will most likely cover any malfunctions or faults. You see, when your system produces excess energy, it's sent to the grid. Your local electric company then buys that energy from you and you receive credits for the transaction.
Most retail net meter programs allow you to roll over your credits to the next month, which is especially useful for reducing energy bills during the winter seasons. Net measurement rates and policies vary across the country. Net solar measurement is currently available in 38 states and in Washington, D.C. There are several programs available that can help reduce the initial costs of solar panels, and they include the federal solar energy tax credit, state and utility incentives, and local rebates.
Savings in the form of a tax credit for solar energy are issued by the U.S. UU. Federal government in order to reduce initial costs related to solar panels and their installation. There are several state-level incentives you can opt for to further offset the initial costs of solar panel installations.
Some states offer their own tax credit, such as Arizona, while others have performance-based incentives, such as solar renewable energy credit programs (SREC). SRECs are currently available in New Jersey, Massachusetts, Pennsylvania, Maryland, Washington DC. Available incentives depend on your location and your ability to qualify for programs. In some cases, you may be eligible to receive multiple incentives and rebates in your state.
For example, one of the best states for domestic solar energy is New York, not because of the overly sunny climate, but because of the various solar programs that are available. If you reside in the Empire State, you can receive incentives through the NY-Sun Megawatt Block program, the New York solar energy system equipment tax credit, and the state sales tax exemption. New York homeowners can also participate in the full net measurement of retail. At the other end of that scale, Louisiana and Oklahoma offer very limited incentives to opt for solar energy.
In these states, the only available incentives are federal tax credits and net metering (not at the full retail rate). Therefore, installing a residential solar system in these states may not make much financial sense. Initial reimbursements from manufacturers or programs at the municipal level allow you to save even more on the purchase of solar panels. However, these benefits are becoming less and less common today, as solar energy prices continue to fall and the number of installations is constantly increasing.
Local incentives and rebates vary by state. To learn more about the solar incentives available in your area and how to apply for them, see our guide to rebates for solar panels. A solar energy lease provides a quick way to install solar panels on your roof so you can start reducing your monthly electricity bill through net metering. The downside of this funding option is that you don't own the system, so you wouldn't be eligible for federal tax credits or local incentives.
Not only that, a solar installation under a lease agreement doesn't increase the value of your home and, in fact, you may find it difficult to sell it if buyers aren't interested in the system (and in taking the lease out of your hands). You can't save that much in the long run, either. As in a traditional lease, you must make fixed monthly payments to the installer or local solar company. For a lease to make financial sense, your monthly lease payments must be lower than your monthly electricity bill.
That said, there are no upfront costs associated with purchasing solar panels through a lease, so if you don't qualify for a loan or can't pay in cash, a lease would be a viable option. A power purchase agreement (PPA) is similar to a solar energy lease in that there are no upfront costs associated with the installation and you don't own the system. PPA contracts range from five to 25 years, and PPA rates are paid per kilowatt-hour. Therefore, for this option to work for you, the PPA rate must be lower than the kilowatt/hour rate of your local utility company.
Compared to other funding options, a PPA offers significantly lower lifetime savings. You should only consider this option if you can't qualify for a solar loan or the federal tax credit. Solar loans allow you to finance your system, in some cases without a down payment. There are some advantages that come from financing solar panels through loans.
They reduce the initial costs of solar energy ownership with minimal impact on your home budget. In addition, with a solar energy loan, you would still be eligible to receive the relevant federal tax credits and local incentives, which would allow you to offset the amount of your loan. Being eligible for credits and incentives is unique to loans and cash purchases only. Compared to solar energy leasing programs, a solar loan generates three times more savings over a 25-year period.
This is because, with a solar loan, you eventually stop paying for the system and are full owner of the unit. As mentioned above, with a solar energy lease, you will never own the system and will continue to make payments until the contract ends. Using cash to finance your purchase will provide you with the most savings. With 25 years of ownership, you would save almost twice as much compared to solar loans and five times as much as with a solar lease.
Cash provides the best savings for solar panels because it maximizes the life of the property and does not entail additional charges, such as interest rates on solar loans. You'll see your savings take off and surpass other financing options after 10 years. For this option to work for you, it's important to purchase and commit to your solar installation for more than 25 years. A residential solar panel system typically takes eight to 12 years to fully pay for itself, and the time needed to recover initial costs is called the solar panel payback period.
The good news is that solar panels are designed to last at least 25 years, which is more than the estimated solar payback period for an installation. Homeowners, solar panels are a great long-term investment that can add a ton of value to your home. In fact, depending on where you live, solar systems offer a better and more stable return on investment than the S%26P 500, with the added benefit of powering your home with clean energy. When evaluating whether solar panels are worthwhile for your home, first consider your location and your monthly utility bill.
You'll also want to focus on reducing initial costs and accelerating the return on investment through incentives and credits. In the world of solar panels, remember that cheaper isn't always better, and finding a balance between value and quality by committing to a solar installer is the key to enjoying a smooth and hassle-free experience for many years to come. Local solar companies are the best choice when it comes to making the transition to clean solar energy and reducing their energy costs. Check out our list of the top solar energy companies in your area to find a reputable, certified solar installer near you.
Paying cash or financing solar energy should depend on whether or not your system can pay for itself. If solar energy financing won't allow you to save until the loan is fully repaid, paying in cash makes more sense. But if you start saving right away, solar energy financing is perfectly fine. After all, if you pay a lot for electricity, generating even a portion of your electricity consumption through solar energy could provide you with substantial savings.
It's also best to pay in cash if the monthly repayment on your solar loan is greater than the savings on solar energy. There are situations where paying cash for solar energy doesn't make sense, even if you can pay the full price up front. To determine when your system will break even and pay for itself, it's important to understand how to calculate the payback time of solar panels. Many people mistakenly assume that paying in cash or applying for a loan depends entirely on whether or not they can cover the cost of solar energy.
Since installing a solar electrical system can cost tens of thousands of dollars, you'll have to make smart decisions about how to get a loan if you can't pay cash in advance. Using these criteria, some of the best solar loans for Australian homeowners include Pventi Green Loans, Humm Buy Now Pay Later Loans and Brighte Loans. Because Australia enjoys a lot of sunny days, it can take as little as 3 years for its solar system to pay for itself. Because homeowners in Massachusetts pay more for electricity and have higher monthly energy bills, they can save more if they use solar energy.
A study by the Australian Energy Council found that 3 KW, 4 KW and 5 KW solar systems in Adelaide, Brisbane, Canberra, Sydney and Perth have a payback of 5 years or less. .