Solar System Costs And Tax Implications For Landlords
The price of installing a solar system has an effect on how long it takes a landlord to recover their costs. When youre planning to install a solar system at your rental property, you should get more than one quote and consider using an approved Clean Energy Council Approved Solar Retailer. A retailer should help you understand if your property is suitable for a solar system, the best system size and what the installation costs might be.
You may be able to claim depreciation on the cost of the solar system. Talk to your accountant about how a solar system at your rental property could affect your tax, or contact the Australian Taxation Office for more information.
Solar Panels For A 1500 Square Foot House
The average home in the United States is roughly 1500 square feet. With a home of this size, the typical electric bill comes in around $100 month. In order to cover the electricity for this home, you would need an estimated 15-18 solar panels.
For example, a typical fridge may be rated for 250 watts and runs for 4 hours a day. 250 watts X 4 = 1000W. A 1k watt is equal to 1 kWh of energy in a day.
This, of course, is a general estimate and eclectic usage, sunlight hours, location, and the type of panels can change this amount.
Condo Solar Panels: Characteristics Of Successful Solar Projects For Condos Associations
Because solar projects in condominiums involve multiple stakeholders, they are inevitably more complicated than installing solar on a single-family home. Its good to know that youre set up for success before you start the process of going solar. Most successful solar condo initiatives have a few things in common:
- A solar champion: Having a resident who acts as the primary advocate for the project will ensure that everyone involved understands the value of installing solar.
- Support of the condominium association: Association support is necessary for any project to go forward. Without it, the complicated process of installing solar on a condominium can become an impossible task.
- A contractor experienced in working with condominiums: Having a solar installer who understands the unique circumstances of condominium solar projects will give you support throughout the process and access to the information you need.
- A high percentage of owner-occupied units: Unlike owners who rent their property to tenants, unit owners who occupy their units will see direct benefits from a solar PV project, making it easier to get their support for a solar investment.
Recommended Reading: How Long Do Solar Lights Last
Is My Roof Compatible With Solar Panels
Whether youre thinking of installing solar panels on your current roof or re-roofing first, there are a few things to consider to make sure your roof will accommodate solar panels. The good news is most types of roofs are compatible with solar panels. However, roofs today arent usually installed with solar in mind, so you may have to make some adjustments to your current roof. Or, if youre installing a new roof, you can keep these factors in mind in order to optimize your new roof for a solar installation.
Besides the age and condition of a roof, the main aspects that affect its compatibility with solar panels are:
- Material
Lets take a quick look at each of these factors.
Did You Take Advantage Of Rebates
The cost of installing a solar panel system in your home can cost anywhere between $10,000 and $30,000. The good news is many states, cities and solar companies in the United States offer rebates for installing solar panels on your roof. Before your project begins, ask your contractor what options they have and if they dont have any options, they should know of rebates that are offered by the state and city.
Overall, the government really wants to get people interested in investing in solar power. The Department of Energy itself offers as much as 30% in savings through rebates and tax credits. Your local utility and electricity providers might also offer savings.
Don’t Miss: How To Sell A Sole Proprietorship
Number Of Residents And Amount Of Energy You Use
Households with more members normally use a higher amount of electricity, and this also means they need more solar panels to increase energy production.
Electricity usage is a very important factor, as it determines how much power must be generated by your solar panel system. If your home uses 12,000 kilowatt-hours per year and you want to go 100% solar, your system must be capable of generating that amount of power.
What Happens To Excess Power Generated
The average UK home with solar panels will use only 25% of the electricity it produces. Mentioned above, smart export guarantee tariffs can generate money for your solar-powered household when it comes to excess energy produced. Money is paid back to households in England, Scotland and Wales for the electricity generated from solar panels that is not used. The excess energy is then exported back to the National Grid for use in other homes and businesses.
Moreover, adding a solar battery to your home will not only save you more money but will stop any free solar energy going to waste. Heres how:
- A solar battery works by storing any extra electricity produced by your solar panels that isnt being used in your home by devices.
- A solar battery will also keep your home powered when the sun isnt shining, such as during the night.
- According to gas and electricity supplier E. ON, a solar battery can reduce your annual energy bills by up to £560 .
Don’t Miss: Can Solar Panels Work On A Cloudy Day
Calculating Solar Power Costs
Once the above costs and benefits are determined, a solar system can theoretically be evaluated using the discounted cash flow method. Outflows at the beginning of the project would consist of installation costs , and inflows would arrive later in the form of offset electricity costs .
Rather than using DCF, the viability of solar power is usually evaluated by calculating the levelized cost of electricity , then comparing it to the cost of electricity charged by the local utility. The LCOE for household solar will typically be calculated as cost/kilowatt-hour the same format commonly used on electricity bills. To approximate the LCOE, one can use the following equation:
LCOE = Net Present Value of the Lifetime Cost of Ownership / Lifetime Energy Output
The useful life of a PV solar module is generally assumed to be 25-40 years. The cost of ownership includes the maintenance costs, which must be discounted to find the NPV. The LCOE can then be compared to the cost of electricity from a utility remember, the relevant price is that which occurs during times at or near peak PV solar production.
Pros And Cons Of Solar Panels For Your Home
Like most things, solar power has its benefits and drawbacks. At the same time, some economic costs may be defrayed by the social benefits to the environment and lowering your carbon footprint, which exceeds pure monetary evaluation.
-
Green energy that lowers your carbon footprint
-
Net metering allows you to sell back excess energy produced
-
You may be eligible for certain tax breaks
-
Installation and maintenance costs still high
-
Solar only works when the sun is out
-
Parts of the system need to be replaced every few years
-
Some tax breaks may have expired or will be expiring
Also Check: What Is The Difference Between S Corp And Sole Proprietor
Join A Community Solar Project
Depending on where you live, there may be community solar projects you could join. A community solar project allows people in a specific community or area to come together and purchase a solar system as a group.
Instead of installing your solar panels on your own roof or backyard, you help fund a utility-grade installation. The power produced by the system is exported to your local electric utility.
Virtual net metering is then used to reduce your utility bill, based on how much you contributed to the project.
How community solar works. Image credit: United States Environmental Protection Agency
This allows you to benefit from solar savings even if you don’t own a property. As long as you stay in the same general area of the community solar project, you benefit from the savings. This gives you greater flexibility and allows you to move into a new rental property as needed.
Because you’re going in with other households and businesses to get a much larger system, you can benefit from economies of scale. Installation efficiencies and lower equipment costs mean that large-scale solar projects can generate power more cheaply than a household system.
A major disadvantage of community solar projects is that they aren’t available everywhere. In fact, there are currently only a few states that allow them. Even where they are allowed, they are large projects that require approvals and agreements with many stakeholders, so it can be difficult to get them off the ground.
Further Resources For Solar Condo Champions
To provide detailed guidance on solar power for condominiums, the Massachusetts Department of Energy Resources developed A Solar Guide for Condominium Owners and Associations in Massachusetts in 2015. While this guide is intended for Massachusetts residents, it offers useful advice for condo residents across the country. If youre a solar champion ready to start considering solar for your condominium building, this guide will provide you with comprehensive information for every step of the process.
You May Like: Do It Yourself Solar Water Heater
How Much Is Your Energy Bill
Knowing how much you pay for energy is the first step in evaluating whether your house is a good candidate for solar. The main question is, will it save you money? In some areas, electricity is very inexpensive. For most homeowners, the electricity bill is a dreaded monthly expense. The general rule is that solar makes the most financial sense for someone with a monthly electricity bill of at least $75. Why? Because going solar replaces utility energy with solar energy, and we want our customers to see a return on that investment by paying less for that energy. A utility bill of $75 is the threshold at which residential solar customers will see solar savings. There are several ways to go solar, depending on a customer’s needs and goals. SunPower offers zero-down lease, loan and cash purchase options each with different benefits. Ask your local solar expert about local and federal incentives and electricity policies where you live.
The overall idea is to pay less than you currently pay, lock in your electricity rate and save money by generating your own clean energy onsite.
Solar Power For The Home: Costs
Solar power is capital intensive, and the main cost of owning a system comes upfront when buying the equipment. The solar module will almost certainly represent the largest single component of the overall expense.
Other equipment necessary for installation includes an inverter , metering equipment , and various housing components along with cables and wiring gear.
Some homeowners also consider battery storage. Historically, batteries have been prohibitively expensive and unnecessary if the utility pays for excess electricity that is fed into the grid . The installation labor cost must also be factored in.
In addition to installation costs, there are some further costs associated with operating and maintaining a PV solar array. Aside from cleaning the panels regularly, inverters and batteries generally need replacement after several years of use.
While the above costs are relatively straightforwardoften a solar installation company can quote a price for these for a homeownerdetermining subsidies available from the government and/or your local utility can prove more of a challenge. Government incentives change often, but historically, the U.S. government has allowed a tax credit of up to 30% of the systems cost.
Recommended Reading: What Are The Best Solar Panels For Home Use
Energysage Is Here To Help You Find Solar Panels For Home
Whether youre still doing your research, or youre ready to contact a provider and schedule installation, choosing to invest in residential solar panels can be a daunting task. But, its important to remember that your investment will increase the value of your property and pay dividends in the long run. If youre considering the pros and cons of solar panels for your home, get the answer to your most asked questionis solar really worth it? And, if youre ready to go solar, start comparing quotes by signing up for a free account on the EnergySage Marketplace.
How Can You Make The Most Of The Energy You Generate
To make the most of the energy you get from your solar panels, think carefully about when you use your appliances.
Elliot Clark says: Saving running appliances such as dishwashers and washing machines for the sunniest parts of the day will make your usage more efficient. You can also get a solar diverter if you have or are thinking of getting a hot water cylinder or thermal store, so any electricity generated that your property does not use can be diverted to heat water for you to use for washing or heating.”
“Hot water cylinders are likely to make a comeback as they are often used with heat pumps, and storing your excess electricity as hot water will reduce the demand of energy of your heat pump.
Batteries could be another way for homeowners to store excess electricity produced by their solar panels to use at another time but there’s still some way to go before the technology makes this a viable option. Currently, these special batteries are bookcase size, and are so expensive and the cost would likely outweigh the benefits. They can also only store energy for a certain amount of time typically for a few weeks, at the most.
Recommended Reading: Why Should I Go Solar
Talk To Your Building Manager About Switching To Solar Energy
If you live or work in an apartment or office building, you might consider speaking with your building manager or landlord about switching your building to solar power. If they can afford the initial investment, there are so many benefits to installing solar panels for your entire building. According to solar power company Intermountain Wind & Solar, doing so can: help your entire building save on energy costs result in the generation of surplus energy, which your building manager can then sell to the local energy company and increase property value and therefore draw in new potential residents.
Understand How To Pay For Solar
There are many options when it comes to financing a rooftop solar panel system purchase the main three are a cash purchase, solar loans, and solar leases or power purchase agreements .
If you can afford it, paying in cash for your rooftop solar panel system is the most surefire way to save money over the lifetime of your system. With full ownership of your panels and no interest to pay on a solar loan, youll usually see the highest return on a solar investment with a cash purchase.
Want to own your system from the get-go, but need assistance with that upfront cost? A solar loan might be right for you. Solar loans lower the up-front cost of your rooftop solar system to $0, so you can buy your system and then pay off your loan in monthly increments. For many solar shoppers, your monthly loan payments will be similar to your electric bill before solar.
Solar leases and PPAs require no money down, but the catch is that you do not own your solar system you are only hosting it for a third party that sells you the electricity it produces for a fixed rate. Importantly, when you enter a solar lease agreement or PPA, you are not entitled to any tax incentives because you dont own the system.
Don’t Miss: Are Solar Panels Tax Deductible
Why Install Solar Panels At Home
Consumers are becoming increasingly aware of the need to use green or renewable energy. New research from Citizens Advice reveals that two-thirds of householders are thinking about making their homes more energy-efficient in the next 12 months, while in a study from NatWest 55% of homeowners said they have plans to make eco-friendly improvements to their property over the next decade.
Solar and wind are now the lowest cost ways to generate electricity and, unlike other more traditional types of energy, they won’t run out. It’s not surprising, then, that fitting solar panels on the roofs of domestic properties is a popular home improvement, with an estimated one million systems on houses across the UK. They are not cheap, but in the longer term they should help cut your electricity bills as well as your carbon footprint, while you also get paid for the extra energy you generate.
What Is The Best Roof For Solar Panels
Solar energy isnt just what you use to power on a few porch lights or a watch. Today, solar energy is harnessed more and more as a way of going green and saving money. There are now close to 2 million solar installations in the U.S., and that number is expected to double by 2023.
One reason people are now installing solar panels in increasing numbers is that it has become much more affordable to do so. In fact, the cost has come down by more than 70% in the past eight years. Additionally, you can enjoy tax incentives, including the federal Investment Tax Credit and, in many cases, state tax breaks, as well.
If you are one of the many American homeowners who care deeply about the environmental benefits of cleaner energy, then there has never been a better time to consider installing solar panels on your roof. Solar panels can help your home become more energy efficient, which also increases the value of your home, all while helping the environment. If youre looking into having solar panels installed on your roof, you likely have some questions, such as can I put solar panels on my type of roof and how will solar panels affect my roof? Lets take a look at some answers to these common queries.
Also Check: How Much Does It Cost To Solar Power Your Home
