People swear that worshipping the sun is making them money! Will it work for you? These are the questions to ask.
With the ability to reduce your electric bill, your tax liabilities AND your carbon footprint, all while adding to your home equity, isn’t upgrading your home power system with solar a no-brainer? Maybe. Unfortunately, it’s not on everyone’s radar, some people are skeptical, and some can’t even take advantage of it. Is it the right investment for you? Here are the main factors in determining your solar future.
Read more: Will Solar Panels Save You Money?With the passage of the dubiously named “Inflation Reduction” Act and the Residential Clean Energy Credit it contains, many homeowners are finding solar to be more than just a way to earn greenie points, but save some green as well. The incentives cover a variety of renewable energy projects, including wind, solar water heaters, heat-pumps and more. We’ll dive into those topics in the future, but here we’ll focus on solar.
SUNLIGHT. IT’S WHAT SOLAR PANELS CRAVE.
Solar panels need sun, right? If you have a nice, wide-open expanse of roof pointing anywhere but north that’s a good start. It CAN get a little more complicated than that if you have vent-pipes sticking out everywhere or you have a complex multi-pitch roof, but in general if you see sun on a major portion of your roof for most of the day, go ahead and proceed to the next question.
WORKAROUND
If you don’t have at least one roof surface with great sun exposure we still have options. Ground-mounted systems can qualify for most or all of the same incentives as roof-mount, if you have room for them. Solar water heaters take up less space than photovoltaic, and since solar thermal is generally more efficient than photovoltaic, the “bang for your buck” can be excellent. Or maybe wind is your local resource of choice! This, too, qualifies for many major incentives.
Whole House BATTERY BACKUP (with solar?)
Battery backup batteries can unlock the ability for you to “power through” blackouts in style. You may also be able to take advantage of the “time of use” billing offered by many utilities, allowing you to lower your power bill while also helping make the grid more efficient. Another bonus is that they can also EV fast-charging in your own driveway a possibility. Keep in mind, though, that certain incentives do require some amount of solar power in conjunction with a battery. Talk to an energy consultant for details.
ELECTRICITY RATES
One of the solar projects I’ve encountered that impressed me the most was a beautiful sun-room in the middle of a snowy Utah winter. Not only did this sunroom offer a beautiful sunny patio to have a cup of tea in, but it also heated the entire house during the day with beautiful, free sunshine. Photovoltaic is somewhat different from solar thermal, but you get the point. You don’t have to be in California or Hawaii to make solar a good investment. But it helps. The main reason is electricity rates.
The biggest difference between solar in California versus a place like Utah isn’t the amount or quality of sun, it’s that Californians pay double or triple what people in many other states pay for their power. This can amount to thousands of dollars more spent on electricity per year. Californian taxpayers further incentivize solar with tax rebates, tax credits, etc.
If you’re paying average or above-average rates for your power, you should probably check this box and move on to the next question. If you’re paying a below average rate ($0.17 / KWH and climbing fast), congrats, but solar still could pencil out for you if you use a lot of power, you qualify for incentives, or you need a big federal tax write-off.
Also keep in mind that the renewables landscape is constantly changing. California seems to be stepping down their “NEM” net-metering incentives, while other states are increasing incentives. But we should expect solar to continue to increase in appeal. The International Energy Agency concluded in 2021 that “In most markets, solar PV or wind now represents the cheapest available source of new electricity generation.” Advancements in technology and manufacturing should only continue to favor solar. In addition, the average electricity price nationwide saw more than 20% inflation between June 2021 to June 2023, so the importance of this factor is likely to continue increasing.
FINANCIAL INCENTIVES
This one is fairly straight-forward. Do you pay taxes? Would you like to pay less? If so, check this box as a “probably” and go talk to an accountant (or dig into the IRS guidelines) to verify whether you can take advantage of the IRS Residential Clean Energy Credit. This federal tax program allows homeowners and businesses who install solar (and/or certain other renewable energy projects) to deduct 30% of the total cost of the project from their tax bill.
Less straight-forward but still rewarding are the sundry local incentives to consider. Across the U.S. there are various local incentives. While they’re all worth looking into, if you can’t take advantage of the federal tax credit, these local ones probably aren’t enough on their own to check this box off.
FINANCING
Solar projects can be expensive, $10,000 to $30,000 or more. Fortunately, solar can pay itself off (unlike other construction projects). Also fortunate is that there’s financing. One nice thing about financing a solar project is that you get to see right up front how much your “solar bill” will be for the term of the loan (with options from years to decades). This allows you to directly compare that to the power bill you will be offsetting and choose the lower of the two (assuming you like money). Your monthly solar bill should be less than your monthly power bill within the first year, if not from day one, otherwise proceed with caution. There are some sleazy salespeople out there, as well as bad financing packages with “amazing” low rates but usury-grade fees.
SAVE THE PLANET! (or, you know, at least look busy)
It goes without saying that solar is hard to beat for it’s environmental impact. More than a quarter of your carbon footprint probably comes from your electricity usage. Another huge chunk is probably from driving, but don’t go EV without researching their dark side!. Of course there are countless other ways to show off your inner Captain Planet, too, and it might make sense to prioritize some of these before solar, depending on your lifestyle and other goals. If you haven’t insulated your home, for instance, that’s one of the smartest financial and environmental moves all the cool homeowners are making. And of course there are the countless smaller things, and some that only seem small. Want a 1000x investment? Buy a piece of string to dry your clothes on! But still, if you think you’re ready to invest in a clothesline AND solar, brilliant!
CONCLUSION
Obviously there will be other questions to answer regarding a construction project like modernizing your home power system. Our in-depth post on choosing a solar installer can help with some of those, but if you checked more than one of the above boxes solar is probably a brilliant investment for you. If so, talking with a knowledgable energy consultant is the next step and I know the right people. Reach out if you have questions not covered in this article. I’ll do my best to answer, and point you in the direction of vetted solar professionals who can get you the rest of the way to that beautiful moment when you pull the plug (so to speak) on your utility bill, and start looking at your roof in a whole new way.
