A Solar-Powered Home: Will It Pay Off? Is It Right For My Home?
Is it suitable for my home?
Perhaps the most important factor in determining if solar panels are suitable for your home is to note the current price of your electricity bill. Generally, homes that see a monthly electricity bill of $75 or more will see savings after switching to solar power.
The location of your home can also be a huge determinant of how long it will take to break even in your investment. Not only is local weather coming into play here (i.e. the amount of sun your panels will get), but so are your local energy costs and the solar incentives or rebates that your state may or may not offer.
You will want to spend time noting the amount of sunlight that your roof receives as far as weather. While direct sunlight is not necessary, excessive shading on your roof will hinder the amount of power that your panels can generate. It is wise to seek expert consultation before making a decision. They will be able to give you the best advice as to where to place your panels and if your roof is in proper condition. (Pro-tip: Your roof should be in excellent condition and not nearing the end of its life before installing solar panels. They may last up to 40 years, and you won’t want to pay the cost to remove them to repair an old roof!)
Paying for Solar
Installing a solar panel system requires a hefty sum of cash upfront — on average, the cost falls between $15,000 and $25,000. This is to cover both the purchase and installation of the solar panels required for the system. However, the power that your solar panels can provide will significantly offset the costs in the long run and tax incentives that are offered for going solar.
Solar loans and leases: Are they available to me? Which is better?
For many, the cost of installing a solar panel system might be prohibitive. In those cases, you may look to solar loans and leases as a way to finance the costs associated with transforming your residential power supply. No matter where you live across the country you will be able to find a lender to offer you a solar loan. Conversely, solar leases are still not legal in many states across the country.
Both solar loans and solar leases can allow you to access the benefits of solar energy without having to spend a large sum of money upfront. You may find yourself wondering which option is right for you. Regardless of which you choose, your initial payments will likely be less than the cost of your electricity bill. However, for most solar leases, the monthly payment tends to increase at a predetermined rate of about 1-3% each year for the duration of the term (generally 20 to 25 years). On the other hand, solar loans are more likely to come with a fixed monthly payment over anywhere from 5 to 20 years.
How long will it take for solar power to pay for itself?
Investing in solar power is an extended play. You will eventually see savings; however, it will be some years before you “break-even” or reach “solar payback.” When determining how long that will be, there are three factors to look at: the cost of solar power, available incentives, and the savings that you will incur from not paying foot electric power. Once you have these numbers, the formula is easy.
Step 1: Subtract the value of the incentives you will receive up-front from the gross cost of installing your solar power system.
Step 2: Find the value of your annual savings by totaling your avoided electricity bills and any additional incentives that would be paid out over time.
Step 3: Divide your answer from Step 1 by the number you calculated in Step 2. This will give you the number of years it will take to break even and achieve a state of “solar payback.”
As with all things, it’s essential to shop around when looking for a solar panel system. Comparing quotes and finding the best one could result in a shorter payback period. For comparison, you may want to note that the average payback period for investment in solar power is around eight years. Not bad at all when you take into consideration the fact that most solar panel systems will generate power for your home for 25 to 35 years?
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