Homeowner’s Guide to Going Solar
Consumers have different financial options to select from when deciding to go solar. In general, a purchased solar system can be installed at a lower total cost than system installed using a solar loan, lease, or power purchase agreement (PPA).
If you prefer to buy your solar energy system, solar loans can lower the up-front costs of the system. In most cases, monthly loan payments are smaller than a typical energy bill, which will help you save money from the start. Solar loans function the same way as home improvement loans, and some jurisdictions will offer subsidized solar energy loans with below-market interest rates, making solar even more affordable. New homeowners can add solar as part of their mortgage with loans available through the Federal Housing Administration and Fannie Mae, which allow borrowers to include financing for home improvements in the home’s purchase price. Buying a solar energy system makes you eligible for the Solar Investment Tax Credit, or ITC. In December 2020, Congress passed an extension of the ITC, which provides a 26% tax credit for systems installed in 2020-2022, and 22% for systems installed in 2023. The tax credit expires starting in 2024 unless Congress renews it. Learn more about the ITC.
Solar leases and PPAs allow consumers to host solar energy systems that are owned by solar companies and purchase back the electricity generated. Consumers enter into agreements that allow them to have lower electricity bills without monthly loan payments. In many cases, that means putting no money down to go solar. Solar leases entail fixed monthly payments that are calculated using the estimated amount of electricity the system will produce. With a solar PPA, consumers agree to purchase the power generated by the system at a set price per kilowatt-hour of electricity produced. With both of these options, though, you are not entitled to tax benefits since you don’t own the solar energy system.
Navigating the landscape of solar financing can be difficult. The Clean Energy States Alliance released a guide to help homeowners understand their options, explaining the advantages and disadvantages of each. Download the guide.
Renewable Energy Source
Fossil fuel remains a resource in declining supply that, when burned to create energy, releases harmful byproducts into our atmosphere. Solar power has the potential to help us minimize our use of fossil fuels and the impact we have on the environment.
Reduces Electric Bill
Solar energy can help most consumers power their homes as an alternative or supplement to purchasing electricity from a grid. With power prices on the rise, consumers stand to save a considerable amount on monthly power bills by switching to solar.
Energy Independence
A home reliant entirely on solar power features the capacity to function entirely off-grid, especially when supplemented with a solar battery system to maintain power during non-daylight hours. These battery systems can also turn solar systems into emergency backups during power outages.
Solar Panels Increase Home Values
According to the National Renewable Energy Laboratory, every dollar a solar panel saves you on your electrical bills increases the value of your home by $20. Also, homes with solar panels sell for four percent higher than those without them. If a home has solar panels, its owners will be saving money in the long run, increasing its appeal and value.
Long-Term Savings
The start-up costs for a solar system represent a significant expense, but the costs are usually mitigated by savings on the electric bill. Consumers can often break even on the investment—usually within six to 10 years—and then start reaping the benefits well before the system needs replacement or considerable maintenance.
Low-Maintenance Costs
Once installed, a solar system requires little maintenance as long as it remains unaffected by environmental factors. If panels are kept clean and free of debris, they should continue to function without any additional action by the consumer for many years.
Regarding maintenance, professional service for your panels can cost between $140 to $180, while an annual inspection or cleaning can cost about $150. However, solar panel warranties typically cover them with performance guarantees.
Benefits the Community
A process known as net metering allows consumers to sell excess electricity their panels produce back to the utility company, further reducing utility bills. This often reduces a community’s reliance on fossil fuels, as well.
Diverse Uses
Solar energy is extremely versatile, and can provide power not only to our homes and appliances but to places where channeling power from a grid is impractical or impossible, such as remote, off-grid regions, satellites and boats.
Rising Power Prices
The price of electricity has been on the rise for the past ten years and remains unlikely to decrease in the near future. Solar power can help the consumer keep bills low and with net metering, many consumers can even sell extra energy back to the utility company to turn rising electricity prices to their advantage.
Technology Is Improving and Prices Are Decreasing
Technology has improved tremendously since the early days of solar power and advancements continue to be made every day. Better yet, despite these advancements, solar’s ubiquity appears to have driven its cost down, making solar more accessible to more consumers. Many state incentive programs and a federal tax credit can also help consumers minimize the out-of-pocket amount they spend on a new solar system.
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