While the average price of electricity has been rising slowly over the last 10 years, the cost of installing a home solar system is becoming more affordable. This creates a somewhat ideal scenario for investing in residential solar panels, and many people are turning to renewable energy to save money.
According to the Solar Energy Industries Association, the cost of installation for a home solar system has decreased by more than 70 percent in the past 10 years. From Q2 of 2015 to Q2 of 2016, solar prices lowered 18 percent, and since 2011, costs have seen a reduction of 63 percent. Data of this nature suggests solar arrays provide substantial value – and panel installations aren’t just for the rich anymore.
But how much can a person save by getting a solar energy system for a home? That depends on location, but on average, a homeowner could save anywhere between $10,000 and $70,000 over the life of a standard system. Several factors can affect solar panel savings, and the return on the investment is not immediate. However, in general, residents can save money with solar because of three key beneficial impacts of a home install.
Lower Electric Bills
Decreasing electric bills is one of the main reasons people choose to purchase solar panels for their home. Residential solar systems can help lower utility bills by producing free power that can be used in place of electricity from traditional sources. In many cases, this is achieved through net metering. This method takes the power from the solar system and uses it to supplement the power you use from the grid. In other words, as you use electricity, the meter moves up, and as power is produced by your solar array, the meter moves back down. Essentially, the solar output acts as a credit toward the bill, lowering the cost of consumption. In especially sunny places, the power produced may be more than what is used, and homeowners might be able to get paid for the excess.
Installing a solar array on your roof comes with substantial upfront costs, but many have found it to be worth the investment. Home solar systems have a long lifespan, usually about 25 to 30 years, and the energy savings will generally pay back on the initial investment in five to 12 years.
Tax Credits and Rebates
In addition to a lower electric bill, the government is taking action to make purchasing a home solar system more affordable. Those who install panels on their home by the end of 2016 can get a federal tax credit of 30 percent of what they paid. Individual states offer other tax breaks and incentives as well, such as waived fees, exemptions, rebates and accelerated permits. The savings available for each state are listed in the Database of State Incentives for Renewables and Efficiency.
Raised Home Value
With tax credits that help reduce the install price and lower electric bills every month the system is used, solar panels can provide homeowners with substantial energy savings over time. Even if you don’t plan to be in your home for 25 more years, you may still want to invest in solar power. Installing a sun array on a house you may eventually sell adds instant equity. In fact, research done by the Lawrence Berkeley National Laboratory reveals that buyers will pay more for a home with a residential solar system, as much as $25,000 more, than for a home without it.
Getting a residential solar array on your roof is a practical, low-risk way to keep more money. Although it requires a substantial initial investment, some banks are now offering solar loans specifically designed to help homeowners go green. The option to finance and the tax credits available result in more affordable installation, making a home solar system a great tool for increasing savings.