Reading: Are Solar Panels Worth It?
That growth has been made potential by rapid technological advancements. In the lapp timeframe, the cost of a amply -installed organization dropped from $ 7.14/watt in 2010 down to around $ 2.50/watt in 2021. That means you can go solar today for about one-third of what it would have cost ten years ago, while distillery reaping the lapp benefits of renewable energy. With the rapid growth in solar technology and the decrease in pricing, is solar however worth it for the typical homeowner in 2021 ? That ’ s the question we ’ ll set out to answer in this article. ( here ’ s a immediate compendious, though : if you own your home and associate to the grid, the answer is most likely “ yes. ” )
Comparing the Costs of Solar
If solar is getting cheaper, and the engineering is improving all the time, does that make it a better investment than early options ? To answer that, it ’ s not adequate to compare the cost of solar against historical benchmarks. We have to look at how clean energy stacks up against alternative methods of delivering exponent to your home because solar panels are in truth only worth the investment if they can outperform the other options on the grocery store. For grid-tied systems, the mathematics is reasonably simple : you compare the cost of solar against the monetary value of buying power from the utility company to estimate the grid-tied rebates payback period. ( Don ’ metric ton worry—we ’ ve written this article to walk you through the mathematics. ) These calculations can besides be applied to evaluate off-grid systems. rather of utility power, though, you ’ ll want to compare solar to the costs of running a baron line to your property ( if possible ) or look at option power sources, like wind, hydro, or a trustworthy generator. Sometimes a combination of methods ( like solar + a backing generator ) may be the smartest option .
How Solar Pays For Itself
Grid-tied homeowners buy electricity from the local utility company at a set electricity rate. The national modal in the US is around 13 cents/kWh. When you go solar and connect to the grid, that utility circular is reduced ( or completely eliminated ) because you are generating your own power alternatively of buying it from the utility, helping you save money. To figure out whether solar panels are worth the investment, plainly compare the life cost of utility exponent against the life cost of going solar. We use a 25-year timeframe to measure “ life ” possession because that ’ s the standard length of a solar empanel guarantee. Let ’ s breakage out the calculator and do some mathematics. We use national averages for these examples, but make sure to plug in your own figures to see if solar panels are deserving it for you .
Step 1: Find your local utility rate.
To figure out the life cost of utility power, you ’ ll motivation to determine your stream utility costs and average energy use over twelve months : 1. Determine how much you currently pay for utility power. The rate is typically printed on your electric bill. If you can ’ t find it, you can besides Google “ price of electricity in ( your placement ). ” Example: The national average cost of electricity is about 13 cents/kWh. 2. Find your average energy usage over 12 months. Figure out how many kilowatt-hours of electricity you use each month. Your use will be higher in months where you have to run heat or A/C, so it ’ randomness ache to get an average for the whole year as opposed to a random calendar month ’ s net income meter. 3. Calculate the lifetime cost of utility power. Multiply your results from the previous two steps to get your average monthly electric bill. then multiply by 12 months ( for a annual circular ) and again by 25 years ( to arrive at the life cost of utility power ). Example: 867 * $ 0.13 * 12 * 25 = $33,813. $ 33,813 is the price of buying baron from the utility over 25 years. Keep this calculate handy. In the end, we ’ ll compare it to the monetary value of owning solar over the same fourth dimension period so you can determine if solar panels are deserving it in the long melt .
Step 2: Estimate solar system size and installation costs to answer are solar panels worth it.
adjacent, you ’ ll motivation to determine what size solar dialog box arrangement you need and the estimate cost of solar panels : 1. Estimate the size of your solar system. Use our solar jury cost calculator to determine what size system you would need to cover your use. You fair need the 2 two figures above, along with your ZIP code ( so we can look up how much sunday you get in your placement ). The calculator returns a system size and cost estimate to use for our purposes here. You can besides compare the system size recommendation to our pre-packaged systems to hone in on an claim cost for solar financing. ( Don ’ deoxythymidine monophosphate forget to add tax to the published prices. ) Example: This 6.3 kilowatt system produces about 870 kWh/month, perfect to offset our use of 867 kWh/month from step 2. The arrangement costs $ 9,669 at the time of issue. We ’ ll add another $ 1,500 as a harsh calculate for taxes, ship and let fees. Total cost estimate: $11,169. 2. Add installation costs. Local solar installers charge around $ 1/watt to install a system, which would amount to $ 6,300 for the 6.3 kilowatt ( 6300-watt ) organization linked above. many of our customers choose to install their own system to save this lump of cash which dramatically changes the payback calculations. If you do decide to hire person to complete the solar control panel initiation, add that fee to the total price of going solar. Example: $ 6,300 if installed by a contractor / $ 0 if you DIY install .
Step 3: Account for tax credits and incentives.
If you have been wondering is solar power worth it, tax credits and incentives may be all you need to hear. The politics offers solar jury express incentives for going solar. Most people are eligible for the federal solar tax credit which presently returns 26 % of your sum facility costs as a credit toward your federal taxes. There may be local anesthetic incentive programs that stack with the federal credit for even more savings to help ensure your solar panels are worth the investment. The credit applies to your entire project upfront costs, not just the equipment. ship, permitting and contractor fees can all be claimed ( but your own labor can not be claimed if you install yourself ). 1. Subtract the total value of incentives you can claim from the costs you calculated in steps 2 and 3. That money is paid upfront, but returns to your scoop in the form of a credit issue forth tax season.
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Example: ( $ 11,169 + $ 6,300 ) * 0.74 = $ 12,927.06. once tax credits have been taken into account, you will have spent about $ 12,927 to install your system, assuming you hired an installer .
Step 4: Account for solar system part replacements.
You besides need to take into consideration the add expenses for solar separate replacements to answer the wonder of is solar worth it. To estimate the costs : 1. Look up the warranty on other components, specially the inverter. Budget for inverter replacements over the biography of the system if necessary. Panels are warrantied for 25 years, but some parts have shorter warranties. For exercise, the SMA guarantee is 10 years, and SolarEdge is 12 years. however, Enphase micro-inverters besides have a 25-year guarantee, so you don ’ t need to factor in surrogate costs on those. 2. Calculate the costs after deducting the value of the tax credits. Those replacements will happen in the future, after the federal tax credit has expired. In our case, we ’ ll assume 2 SolarEdge inverter replacements at their current cost of $ 1,595 each. Example: $ 12,927 + ( $ 1,595 * 2 ) = $16,117. This is our life cost of solar ownership. It includes equipment, facility, and substitution over the 25-year life of the system .
Step 5: Determine your return on investment (ROI).
Are solar panels worth it ? It ’ s time for the big bribe. To figure out how your solar investment compares against the cost of buying ability from the utility, you ’ ll want to estimate your come back on investment ( ROI ) : 1. Subtract the lifetime cost of solar (step 7) from the lifetime cost of utility power (step 2). The resultant role is your return on investment —the total sum you ’ vitamin d write on department of energy bills over 25 years. Example: $ 33,813 – $ 16,117 = $17,696. In this scenario, going solar would save you an estimated $17,696 over a 25-year period. not excessively moth-eaten ! Though solar is a meaning investment upfront, it proves to be that solar is worth it in the long run. Over 25 years, going solar costs less than half what you ’ d pay up the utility to produce the same amount of energy.
Remember, this dislocation assumes that you hire an installer to complete your project. many of our customers DIY their project which quickly accelerates their payback period and makes solar panels an even better investment. If you want to get the most bang for your tear, consider a DIY initiation to put the maximum savings in your pocket. Use our solar ROI calculator to help you estimate your return .
Factors That Impact Solar Payback Period
The case laid out above is based on national averages, but you may be working under different circumstances that can importantly alter the mathematics. That ’ sulfur why we encourage people to punch in their own figures and decide for themselves .
The # 1 divisor that moves the needle is the monetary value of facility. As we ’ ve mentioned, taking on a DIY install can save several thousands of dollars and dramatically change the payback mathematics. even if you choose to hire an installer, rates can fluctuate wildly, from 75 cents/watt to $ 1.50/watt or more for the british labour party alone. If you go this road, try to compare quotes from multiple installers to shop for the most competitive rate .
Value of Incentives
We ’ ve run the numbers to include the Federal Solar Tax Credit since most people are eligible for it. But you may be able to add on express or local incentives equally well, and some of those can be quite significant. Check our local solar incentives database to make sure you claim everything available to you .
These calculations assume you own your home, home solar system and plan to live there over the wax 25 years of ownership, owning the solar energy system quite than through a solar loanword. obviously, that international relations and security network ’ triiodothyronine always realistic. If you move during that prison term period, you ’ ll be felicitous to know that solar increases the value of your home, so you can recoup some of your investment if you decide to list it on the market. As you decide whether solar is worth it, think about whether you ’ ll be living in your family long enough for the investment to pay off .
In this article, we ’ ve assumed the system is being purchased outright. Committing to a solar lease or PPA ( ability buying agreement ) puts a meaning incision in the respect of solar, reducing your sum ROI. Under these schemes, you are not allowed to claim any credits or incentives—they are claimed by the installer, who owns the system. In addition, these contracts contain escalating pastime rates that eat into your energy bill savings over time. Entering into a lease or PPA can reduce or wholly negate your savings, depending on the terms of the condense .
Some areas receive more sun vulnerability than others, which means more prison term for the system to operate at vertex production each day. Systems in cheery areas will produce more ability each day, making them more valuable . That said, solar is hush financially viable in cold and cloudy climates —the ROI is less dramatic but however positive for grid-tied systems .
So…is solar power worth it?
For grid-tied homeowners, the mathematics is clear : solar energy costs less than buying baron from the utility company in the long run.
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The payback period is around 8-9 years if you hire person to install your system. When you measure that against the 25-year guarantee on your panels, you ’ rhenium looking at serious energy beak savings over the life of ownership. And if you decide to install it yourself, that payback menstruation accelerates to 5-6 years with the money saved on facility costs. More than anything, utilizing a solar power system reduces your carbon footprint and can minimize the effects on climate exchange. ready to learn more ? Grab a free copy of our Getting Started Guide or dive right field into the DIY Solar Workshop for a bit-by-bit overview of the summons of going solar.