“Are solar panels a good investment?”
With the growing concern for energy conservation, more and more people are turning to renewable resources. This is the reason why solar panels are becoming increasingly popular.
But what’s the truth about solar panels? Let’s find out.
Solar photovoltaic systems are typically marketed as a great means to save money on your electricity bills. Along with that, they help in reducing your carbon footprint so you become more eco-friendly. With the gradual fall in solar prices, and incentives such as net metering, solar tax credits, and utility refunds, the solar industry has received a massive boost.
However, you need to factor in other things such as your location, utility costs, and roof availability when planning to go solar.
Keep reading to find out everything you need to know before installing solar panels into your home.
What’s Solar Power and How Do Solar Panels Work?
Solar energy is simply the energy derived from the light and heat that’s produced by the sun that reaches the Earth. Through the use of modern technology, this solar energy can be converted into solar power or electricity. As a result, it can run your electronics, heat your homes, boil your kettle, and more.
The key behind this technology is the photovoltaic cell that takes in renewable solar energy and converts it into electricity. One good thing about these cells is that they don’t need bright sunlight to function. They just need light, even if the day is otherwise cloudy.
A solar panel is constructed using multiple photovoltaic (PV) cells within layers of silicon, bunched together into modules. The top surface contains unstable atoms. When light hits the panels, the electrons fly off to produce electricity.
There are a number of solar panel brands available in the market. With the right type and brand of solar panel and proper installation, you can go for years without any maintenance or performance issues.
Is Your Roof Suitable for Installing Solar Panel?
The roof size, its direction, and whether or not it’s shaded during the day are important factors to consider when thinking of installing solar panels. For optimum results, your roof should ideally be facing towards the south and pitched at an angle of approximately 30 degrees.
This doesn’t mean that the solar panels won’t work if your roof isn’t south-facing or is flat. It’s just that the power generated will be lesser.
The more space you have on the roof for the panels to be installed, the better. Also, there shouldn’t be any obstacles in the way of the light rays reaching the panels. These include walls and nearby buildings.
How Much Does a Solar PV System Installation Cost?
An average-sized residential solar power system is 5-6Kw in capacity. As per the latest official data, the average per watt cost of solar panels in the US is $3.18 (varies according to the state). This makes a total cost of roughly $19000.
This cost includes all of the components of the system and installation done by a solar company along with the inspection and permitting charges by the government and the utility company.
What Are Solar Tax Credits?
This is one of the solar incentives given by the US government in order to boost the renewable energy market in the US. The federal solar tax credit, which was previously referred to as the investment tax credit (ITC), is a law put forward by the legislature in December 2015 that allows a taxpayer to claim a 30% credit of the total cost of the installation of a solar PV system.
So for an installation cost of $19000, you will get a $5700 tax credit. So your total installation cost would go down to $13300.
Some states also offer a state solar tax credit, thereby reducing your state income tax liability.
What Is Net Metering?
Net metering is another important solar incentive that facilitates US homeowners who want to go for solar power in their homes.
During the day hours, solar panels are more likely to produce energy that exceeds your household needs. Through net metering, this surplus energy is sold to your utility company through the grid. This means your utility company will have to give you a credit against your electricity bill at the retail power rate per kilowatt-hour for the exported power from your solar system.
Thus, during the times of the month when you would use the regular utility power, your bill would be such that it compensates you for any excess solar power that you generated during the same month which was exported to the grid.
What Other Factors Impact Your Solar Panel Investment?
Rising Electricity Prices
The price per kilowatt hour of energy is linked with inflation. So, the higher the electricity prices go, the more you will save by not having to pay regular electricity bills.
The money you use to buy and install a solar panel system could be kept in a savings account. You can, therefore, earn interest on it. Therefore, keep this factor in mind when calculating your overall returns from a solar panel investment.
Decreasing Cost of Solar Panel Installation
The cost of installing solar panels is falling rapidly. With a continuously declining trend, you can expect the initial investment to be recouped in a less amount of time.
Not to mention, it is a young technology and has questionable appeal to homeowners. Over time, the installations will get more and more attractive as they will blend in more with the house and surroundings, for example, solar roof tiles.
Solar Panels Can Increase Your Property Resale Value
Studies show that installing solar panels can boost your home’s resale value compared to similar properties available in the market. Homes equipped with solar energy systems not only have higher property values but also sell more quickly. More and more appraisers are taking this factor into consideration when valuing homes at the time of sale.
So, Are Solar Panels a Good Investment?
With the declining initial solar panel installation cost, increasing electricity bills and government-backed solar incentives, solar panel investment is definitely worth considering.
Not only do you earn a considerable return on your investment after a few years, but you also contribute towards the betterment of the environment and demonstrate your commitment to sustainability.