Investment Cost Of Your Solar Panels
Take your solar system size in kW, and multiply it by the price per kW for solar panels. Then, subtract any tax incentives to get your Investment Cost.
Investment Cost = Tax Incentives
You can calculate that too, depending on what percentage of your energy needs you want to meet with solar:
System size = ÷
I know, this is a long formula, so take a look at our example here.
Example #1:
- Your daily energy use is bang-on average at 30kWh.
- You want to cover 80% of your electricity bill with solar.
In America, sunlight hours range from 4-6, so well call it 5. System efficiency accounts for imperfect panels, shading and soiling, and energy loss when converting the direct current produced by the panels into more useful alternating current . While efficiency changes from installation to installation depending on the equipment and local weather, the National Renewable Energy Lab uses an average of 77% efficiency for their research and solar calculators, so thats what well use as well.
So our system size would be: ÷ = 6.2kW system size
Take this number, and apply it to the Investment Cost formula. According to a 2016 solar installation cost benchmark from NREL, the average price of solar panels is around $2.93/W . Subtract the federal tax credit which saves you 30% of the solar system price.
Thus, Investment Cost = 30%.
= $18,166
= $12,716 total investment cost going solar
N.B This did not include any state incentives, which would lower your investment cost.
Do I Need To Buy A Solar Battery If I Install Solar Energy Panels On My House
In short, no.
In most areas, it is not necessary to buy a solar battery when you install solar panels on your roof. This is because most utilities offer some form of net metering, which effectively allows homeowners to sell the excess energy their solar panels produce to the power company, instead of physically storing it in a battery.
Even though battery storage is getting cheaper, it still has a relatively long payback period. For example, the Tesla Powerwall only costs around $12,000, including installation, but it will still take almost 10 years for it to pay for itself.
Another important factor when deciding are solar panels worth it is how high your electricity rates are and whether or not your utility offers retail net metering. Places with high electric rates and full retail net metering are often some of the best places to install solar.
With that said, it may be worth considering installing solar with a battery system if you live in an area that does not offer net metering.
Do Solar Panels Increase The Value Of My Home
Investing in solar energy could help you if you want to sell your home in the future. As more people are growing concerned about environmental issues, renewable energy could make your property more attractive, and potential buyers may be interested in how the panels could save them money.
Remember that your home’s resale value won’t match your investment size exactly. You can’t expect a £5,000 solar PV system to increase your house’s value by £5,000, but it will still raise it.
You also have to consider the quality of your solar panel system. If you invest in new, top-of-the-line panels, the value they add to your home could be considerable.
To determine how much solar panels will affect your home’s value, talk to a local estate agent.
Are you ready to make the switch to solar panels? Simply fill in the contact form and GreenMatch will provide you with up to four quotes from qualified suppliers in your area. Our service is completely free and incurs no further obligations.
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You Need To Know How Much You Pay On Your Electric Bill
This estimate assumes you will get all of your power from solar. While some homes will be able to get 100% of their electricity from solar, or even sell some surplus energy back to the grid, others will still have an electric bill to supplement usage. This will vary widely from home to home, depending on how many solar panels are installed, normal energy consumption and more. Get more tools to calculate your home’s potential savings here.
Now you have a sense of how much energy you’ll save, login to your electric utility company account and calculate an average of your last several electricity bills. Go back at least six months, if possible, to account for seasonal temperature changes and other fluctuations in cost. Let’s assume you get 100% of your usage from the panels and currently pay an average of $125 per month in electricity bills, or $1,500 per year. Now you have the information you need to estimate the payback period for solar panels.
How Much Will I Save
There are set-up costs for installing a solar system, so households that use a lot of power will benefit more initially, as their savings will more quickly pay off the investment cost.
However, solar can be effectively generated and used by any type of household so you can start saving money straight away.
Individual results will vary but our customers regularly save 50% and more off their power bill. And some savvy users have even saved up to 90% over the summer months, by making their home as energy efficient as possible.
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How Much Do Solar Panels Save In 2021
Residential solar panels not only help you reduce your carbon footprint, they help you save money on your utility bills, as well. Rebates and incentives like the federal solar tax credit can help you save even more and make installing solar panels even easier.
How much you actually save depends on many factors, including your power usage, local electricity rates, and the size of your solar system. So when you see statistics on how much solar energy saves on average, those numbers arent taking all of these personal details into account.
Luckily, weve created our solar savings calculator that analyzes all of this information. When you use our solar savings estimator, you get an idea of how much you can save with solar panels on your specific home – an estimate that is tailored to you.
Below, we dive into how much solar panels save on average, and what you can learn by using our calculator.
Solar Panels Save The Environment
When you install solar panels on your home or business, not only are you saving money, but youre also reducing your negative impact on the environment. Not only are you able to save money on your electricity bills with solar panels, but youre also doing something good for Mother Nature, and that makes an investment in them even more worth it.
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Tax Incentives Can Help A Lot
Homeowners can receive a one-time tax credit of 26% off the purchase price of a solar system. If the initial solar panel investment typically costs around $20,000 in your area, the tax credit would net you $5,200 when you next file taxes.
What’s more, some utilities offer incentives and rebates for installing solar power. Check with your local energy supplier to see if they offer any incentives.
Solar Panels And Energy Monitoring
Most solar panels systems today have an integrated sensor for monitoring your household power use. This lets you view your real-time and historical electricity usage from an app on your phone. With real-time energy monitoring, youll quickly learn which devices in your house are energy hogs. You could be surprised how easy it is to make even more electricity savings using this information.
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Estimate How Long It Will Take To Pay Off Your Solar Panels
First, multiply your solar panel cost by 0.26, which is the tax credit you receive for installing your system. If you spend $20,000 on it initially, your tax credit is $5,200. That takes your initial investment down to $14,800.
Now, let’s factor in energy savings. Divide your initial investment by the $1,500 you typically pay the electric company per year that’s how long it’ll take for your savings to equal the amount you spend. Using the example above, you’d divide your initial investment of $14,800 by $1,500: The result is a payback period of just under 10 years.
That might seem like a long time on the surface, but solar panels can easily last 25 years.
You can further expedite your payback period by selling renewable energy certificates, or RECs. These are measured in megawatt hours of electricity that come from a renewable source. Electric companies must purchase some electricity from renewable sources, meaning you could save more by selling energy generated by your solar panels.
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Youre Not Eligible For Incentives And Rebates
When it comes to solar power, government incentives and rebates are extremely important.
The most important of these is the solar Investment Tax Credit , which is offered by the federal government and has helped grow the solar industry by 10,000% since its enactment in 2006. The ITC is currently worth 26% you can use it to save over a quarter of the price of your solar system. This incentive can play a huge role in improving the payback period of a solar system purchase.
Additional incentives are usually available at the state level, and sometimes at the local level, as well. Right now, 38 states offer net metering, a valuable incentive that allows you to sell your electricity to the utility company at retail rates, while other states, such as New York, offer state tax credits worth thousands of dollars.
But if youre in a situation where you dont qualify for incentives the federal tax credit, for instance, only applies if you pay federal taxes to begin with then solar energy may not be right for you.
Learn more: Find out which solar incentives and rebates you qualify for
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How Much Do Solar Panels Save The Average Homeowner
When we talk about solar savings, we are actually talking about avoided energy costs, or the amount of money you would have spent on your electric bill had you not installed solar panels on your home.
The average annual electricity consumption for a U.S. residential utility customer is 10,694 kilowatt hours per year, which is an average of about 877 kWh per month.
When you multiply that by the national average electricity rate of $0.13 per kWh, youll find that the typical American family has electricity bills totalling around $1,390 per year. This means that if enough solar panels were installed to cover this electricity usage, the average household would save by going solar would be about $1,390 per year.
Heres a list of the average solar savings that the typical homeowner in each of the top 50 U.S. solar cities are likely to see for a 6 kW, cash-purchased solar energy system on their home:
| City |
*Electricity cost reflects average of existing rate plans from largest utility in each city
**Savings assume full retail net metering, actual net metering policies will vary by state and utility company
**Production forecast assumes installation at optimal title and azimuth with no external shading and typical isolation conditions based on data from the National Renewable Energy Laboratory
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How Much Does It Cost To Install Solar Panels
How much does solar cost to install? On average, it costs around $13,142 to install a solar system. How much it costs to install solar panels depends on how many solar panels you need to generate energy for your home. The good news is, how much solar panels cost upfront is offset by the savings and return on investment they earn.
The average cost of solar panels and their upfront cost can be offset by the federal tax credit, which currently sits at 26 percent. After 2020, the tax credit will step down to 22 percent. So the sooner you take advantage of the full credit, the better. The federal tax credit was created to encourage investment in solar systems and renewable energy, and claiming it is a matter of filling out the right IRS Form.
Besides the federal tax credit, solar panels increase property values while lowering utility bills. Compared to gas or electric heating systems, solar panels save you much more in the long-run. Your solar panel system can pay for itself in three years!
What To Consider Before Choosing Solar Panels
If you are thinking about having solar panels installed, youll need to consider whether your roof is suitable, including whether it is big enough and how much sunlight it gets.
Youll also need to think about what size solar panel system you need. Its important to ensure the size is big enough to cover your homes energy needs, but also that you dont end up with a large surplus.
You may also want to think about installing a solar battery or energy storage system which will store the electricity your solar panels generate. This will allow you to store electricity generated in the day to use at night, helping you to become more self-sufficient and reduce the amount of electricity you use from the Grid.
Although you dont usually need planning permission for the installation of solar PV panels, it is also wise to check with your local authority in case there are any restrictions for example, if you live in a listed building or a conservation area.
You should also inform your home insurance provider to ensure they will cover solar panels and find out whether your premiums need to be adjusted.
Finally, make sure you get several different quotes from companies to compare installation costs. It may be best to look for a certified installer on the Microgeneration Certification website.
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Benefits Of Residential Solar Electricity
Solar energy is sustainable, renewable, and plentiful. As the cost of using solar to produce electricity goes down each year, many Americans are increasingly switching to solar. Now, there are over a million solar installations across the country. Below are additional benefits of switching to solar electricity.
What Factors Will Influence My Savings
Several factors can impact how much you save with solar. Learning more about these will help you understand their influence on your solar energy production and determine how quickly your investment will pay off.
- The panels. The size and efficiency of your solar panels plays a big part in the amount of energy they generate. Put simply, the more efficient a solar panel is, the more electricity it will create from sunlight, which means more long-term savings.
- Savings vs cost. Its also worth considering how much power your household uses and the cost of solar installation. These two factors will have a major impact on how soon you recover the investment cost.
- Battery storage. If you opt for a system with battery storage and generate more solar power than you use, you can sell this back to the grid. So, its worth bearing this in mind when doing your calculations.
Switching to solar will save you money from the first day you install, and for many years to come.
When it comes to how much youll save, the answer depends on a range of factors so its important to consider these as part of your decision.
If youre curious to find out more about what factors will affect your potential savings when you add solar to your house, download our new eBook Is solar the right choice for your home? 10 common questions and answers that will help you decide.
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Don’t Even Think About It
Nowadays there are so many small gaps for our money to trickle out of our pockets. Taxes, mortgage, and all kinds of monthly bills are all constant drains on our bank accounts. Solar panels, however, are not one of these drains.
Once a solar panel system is installed, all it will do from then on is save you money. Solar panels last for decades, no matter which type, so the odds of having to replace one are slim.
They are famously resilient, require almost no maintenance, and on the slim chance that something does go wrong, most solar panel warranties last 25 years, meaning no money will have to come from you to repair it.
The fact that solar panels are a one-and-done purchase and require no further cost or attention is a huge boon. Take a look at our guide to the best solar panels on the market today.
How Much Can You Save With Solar Panels
Solar energy can save you money in two areas. First, it decreases the amount of energy you have to buy from the grid, thus lowering your energy bill. Second, you can earn money back through payments from the SEG.
Solar panel savings aren’t dependent on tariffs, though. In London, a could save you between £100 and £270 a year from lowering your energy bill. In areas like Manchester and Stirling, you could similarly save between £90 and £230.
Average Annual Savings by System Size| System Size | |
|---|---|
| 6 kW system | £430 |
*These figures are calculated using 250W panels and the average household energy consumption in the UK.
How much money you can save depends on how and when you use the solar-powered electricity. If you are home during the day and use your appliances then, you will get the most out of your investment, but if you only use appliances once the sun has gone down then you will need to draw from the national grid.
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