My wife and I decided to have solar panels installed on our house last summer. It took a few months for our panels to actually get installed and be approved and we have been living on solar power for the past two months or so. I’m thrilled with our decision and I wanted to talk about the process that we went through when deciding to go solar.
1. Why are you going solar?
This may seem like an obvious first question but it is one that needs to be answered. For some people, solar energy is about saving the earth and making your lifestyle more sustainable. For others, it’s about the tax rebates (which can be significant). And finally, for others, it is about lowering their electricity bill to save money.
For us, it was all about the dollars and cents. When we broke down the numbers (I’ll show you how to do this in an upcoming post) of how our solar panels will cost us, it was the same amount we pay for our electricity bill currently. When they are totally paid off, we make money. We also recently purchased an electric car and our energy usage has gone up as a result. Solar panels were an easy way for us to save some money long term while make our electric car even less expensive to operate.
2. Are you already trying to lower your energy bill?
If your goal with going solar is to lower your electricity bill you may want to explore things you can do NOW. LED light bulbs, a programmable thermostat, and many other things can be done to lower your electricity bill. As a good proof of concept, do a few energy saving things in your home and see what the impact is. You may find that the money saved by updating a few items is significant.
For us, our electricity bill averaged out over the year is about $100. All of our appliances are under five years old and all of the light bulbs in our house are LED. We have gas heat, so our electricity bill usually follows the temperature. As temps go up, so does our bill.
3. How old is your roof?
Solar panels get installed directly onto your roof through a rack system. If your roof needs to be replaced within the next 5-7 years, you may want to replace your roof before installing solar panels. The cost to replace a roof can be as much as $5,000 extra to have the panels taken off and then placed back on. This can significantly increase the cost of solar panel ownership.
In our situation, our roof has 10-12 years left on it. We plan on having our panels paid off in about 2-3 years and will use the money saved over that time to not only pay for the extra cost of the roof, but also the roof replacement itself.
4. How much do you want to spend?
I will dedicate a separate post to owning vs. leasing solar panels but at the end of the day, it comes down to how much are you willing to spend to go solar? The basic breakdown is this:
- Leased: No upfront costs, decreased energy bill, no tax benefits
- Owned: Large upfront costs, decreased energy bill, multiple tax benefits
We decided to purchase our solar panels. The panels cost a total of $36,000 once it was all said and done. Out of that, Maryland gives us $1,000 check and the federal government gives us 30% of that price back in a tax incentive. In our case, it works out to $10,800. Additionally, we will receive about $90 a month for the next five years for the energy we produce as part of the SREC program. All tolled, we will get a total of $17,200 back over the next five years. And that’s not including any money we earn from producing our own energy. So roughly half of the cost of our system is covered through tax incentives. I will go into the whole financial part of owning a solar panel system in a future post, but for us, it works out to about $200 a month (which is really less when you count in that we have no electricity bill and get a check for $90 each month).
5. How long are you planning on being in your home?
One of the most important things to consider when breaking down the cost of solar panels is how long do you plan on being in your home. If you lease or own, the terms of the lease or loan generally are about 20 years long. If you know that you are going to be moving before that deadline, it might not be worth it for you. Under the various options for lease agreements, you could be stuck paying off the rest of the system if your buyer does not want to take over the lease. On the same side with owning, the system doesn’t truly start making money for you until about 10 years out. Again, it’s a long-term plan, but one that can be very beneficial for your pocketbook and the environment.