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Maurie Backman has been writing about personal finance for years. A firm believer in educating readers without boring them, she Learn More
The Economics Arent Right For You
There are several factors, some of them discussed above, that can negatively affect the economics of solar. If these factors apply to you, you could find that you stand to save little to no money by going solar.
Here are the factors that adversely affect your financial return from installing solar panels:
- High upfront costs for your solar energy system. This is usually because solar equipment and/or installation costs are expensive where you live.
- Space restrictions mean that you cant install a solar panel system large enough to deliver adequate electric bill savings.
- Roof issues such as shading or non-ideal direction or angle negatively affect your homes solar potential.
- Low energy costs – you dont spend much on electricity to begin with.
- Unfavorable financing: Your solar loan comes with a high interest rate or onerous conditions .
- Lack of incentives: Youre not eligible for solar incentives that can substantially reduce system costs, such as the solar tax credit or SRECs .
The combination of one or more of the above will reduce your monthly savings as well as the overall payback period of a solar investment.
Now, its entirely possible that despite these factors, you can save thousands or even tens of thousands of dollars over the life of your solar panels just make sure that this is the case before you take the plunge.
The Reality Of Free Solar Panels
In almost all cases you are better off purchasing a solar system, even if that means taking the time to shop around for the best rate on a home equity loan or HELOC. You can read our guide to solar financing to help figure this out – it has a handy cash-versus-loan calculator.
The only time where it could make sense to go with a solar lease or PPA is if your credit isnât great and you are unable to obtain favorable financing from your bank. In this situation, third-party ownership might be your best choice if you want to get solar panels on your home. If you do go this route, just be sure that you understand all of the potential pitfalls.
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Consider All Of The Costs
Solar panels will almost certainly save you money in the long run, and the longer you stick with the renewable energy source, the more you will end up saving as you watch your utility bill shrink. However, there are costs that need to be considered.There is the initial up-front cost of the panels, which can be quite expensive. You will want to consider if it is possible to pay for this expense outright or if you will need to finance the purchase. Make sure you account for the interest rate and how it will accrue over time. You can also rent solar panels.The installation process itself will likely require hiring a contractor, and you’ll have to account for the costs associated with that including any modifications needed around your home to accommodate the solar panels. Permits may also come with a one-time fee. Finally, consider the potential maintenance that will be required over the lifespan of the panels.
Dont Buy Solar Power If Your Roof Is Completed Shaded
Having partial shade on your roof is no longer the major issue it was a few years ago. By using Enphase Micro-Inverters, solar output in shady locations can still deliver great value for money.
However, on roofs that have serious shade issues, it is important to understand that micro-inverters dont increase output from a panel in shaded environments, rather they make each panel independent from the rest of the array so that if one panel is shaded it is only that one panel that is affected.
This means that if your roof is completely shaded for most of the day, for example from a neighbouring building, then solar power may not be suitable for your house or business. Yes, premium panels such as the LG Solar NeON 2 module will work better than others in low light conditions, however, there are no panels on the market that work well in heavily shaded conditions, because panels work off light rather than heat, and it is only when they have direct sunlight that they start performing well.
It is worth remembering that for many houses, shade is only an issue in the winter months, and as a solar system produces much of its annual output in the summer half of the year, it is normally worth checking with us to see to what extent shade will impact your systems performance, a lot of the time it is not as bad as you may think.
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Your Quote Appears Too Good To Be True
Youve heard the old saying: if its too good to be true, it probably is. And unfortunately, it applies to the solar industry.
The massive growth in the solar industry means that the rise of highly-rated local solar companies has also been accompanied by fly-by-night operations.
The latter category of companies offer solar panel installations at bargain-basement prices, either because they offer low-quality equipment or because they have an unsustainable pricing model that will see it out of business within a few years.
Given that solar panels are designed to last at least 25 years, we recommend you steer far away from such solar cowboys.
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Using Solar Energy At Home: 6 Pros & Cons You Need To Know
We all know that the climate of our Earth has been changing in a very rapid manner. The temperatures are rising that cause heat waves in multiple regions. Some regions in the third world countries have been battling with the epidemic of the shortage of water.
All of these factors point to one solution that we all must focus on before it is too late. That solution is to conserve our natural resources and not let them go to waste!
The concept of solar energy is not new and has been around for years. It is something that makes sure that none of the energy is wasted, but in fact, conserved.
The sun rays reach our Earth every day without any cost. It is wise to use that energy for the betterment of our own environment.
Solar energy works by converting the energy from the sun into electricity for homes/offices. Consider our sun to be as powerful as a nuclear reactor. Only in this, the entire process is natural.
A nuclear reactor contains an immense amount of energy, so we can only imagine how much energy the sun radiates. The sun releases tiny packets of energy that travel from the sun to Earth in every hour of the day, there is energy in those tiny packets that can satisfy the global energy needs of electricity for a year at least.
We already know how many underdeveloped nations are still fighting to provide electricity to their towns and cities. Solar energy can be the answer to that crisis. It doesnt take much of our resources and provides us with enough electricity.
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What Are Other Ways That I Should Pay For Solar Panels For My Home
If you want to get solar panels for your house, you basically have three ways to pay for them:
- Pay cash.
- Take out a loan, then pay cash.
- Get a solar lease or power purchase agreement.
The first two are pretty self-explanatory: the solar contractor installs solar panels on your roof or in your backyard, takes care of the permits, and connects your system to the grid. When theyâre done, you pay the invoice.
If you donât have the cash in your bank to cut a check, you can take out a loan. If youâre a homeowner, a home equity line of credit or a home equity loan are common ways to use the equity in your home to get a loan at a favorable rate. Itâs generally much, much cheaper than carrying a balance on your credit card.
Whether you take out a loan or not, by purchasing your system youâll almost always gain the highest financial benefit. One big reason is that, as the owner of the system, you keep any solar incentives. This includes at least the 26% federal tax credit, and many state and local rebates are also available across the country.
To help you figure all this out check out our article on paying for solar panels, which includes a simple cash purchase versus loan calculator.
How To Save Money Going Solar
One of the biggest advantages of installing residential solar panels is a 30% federal tax credit on the total cost of a system. That means homeowners but not renters can subtract the credit from the federal income taxes they owe, in effect reducing the price of their solar purchase by nearly one-third.
Congress authorized the credit through 2019, but it will decline to 26% in 2020 and 22% in 2021 and then disappear. The credit could save the average homeowner $5,000 or more , according to EnergySage, a solar marketplace with a calculator to help estimate savings.
It may seem obvious, but access to sunlight is important. If your roof is deeply shaded by trees, mountains or buildings, solar panels wont work well. Unsurprisingly, California leads the nation in residential solar capacity, but some of the others in the top 10 may surprise you.
Its important to have a basic idea of how the panels work as well. Also known as photovoltaic panels, they are mounted on the roof of a house and use sunlight to produce electricity. An important part of any solar system is a box called an inverter, which often is installed in the garage and converts electricity produced by the panels into the kind thats required to operate home appliances .
You Can Use Your Solar Panels Even Without Sunlight
Many people think that solar panels only work when the sun is scorching during the day and fails to light or even do any powered job you want to do.
However, at night, there is no sunlight, but the solar panels can convert and store the little light to energy for use.
Since most solar panels have batteries which act as energy banks, they have enough light to be used at night or any other time when there is no sunlight.
The cells which stores solar energy converts the energy they have to electricity and can be stored for use when required later.
Most street lights use solar panels, and because they have power batteries they conserve the energy from the sun during the day, and then they transform it to electricity which is used for lighting at night when there is no sunlight at all.
Since the solar panels can be used even at night, it is possible for a consumer to use the solar energy as electricity to do any work they want at any time of the day or night without any worry of bills or the sun.
As a result, most people who use solar panels can switch their lights on anytime for use, whether its at night or daytime.
Talk To A Solar Panel Contractor To Determine Your Best Option
Ultimately, solar panel installation companies have worked with all types of properties including properties surrounded by trees. They know how to maximize the efficiency of your solar panels. Theyll be able to determine if you should cut down trees, trim trees, or just leave them there. Request a free estimate and see what your local solar panel company says about your tree situation.
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Dont Forget To Remove Branches And Leaves From Solar Panels
Solar panels are designed to resist environmental damage. Unless a large tree falls onto your roof, its unlikely your solar panels are going to be damaged by a minor windstorm. The only real maintenance you need to do, as a solar panel owner, is to remove trees, branches, and leaves from your solar panels periodically. This ensures your panels are always operating at maximum efficiency.
It Is Renewable And Clean Energy
The second benefit of solar energy is that it is clean energy. While one may argue that solar panels also generate pollution, that emissions are only limited to the manufacturing process and not after that.
As we mentioned above, climate change is real, and the harmful gasses are causing most of it. Power plants and factories emit these gasses. These gasses are harmful to the environment and the ozone layer as they are causing the rise in temperature.
Solar energy is a cleaner alternative to conventional energy sources. Solar panels do not emit any kind of gases, which is a huge advantage.
Once you set up your solar panel, you can sleep peacefully knowing that you are not playing a part in negatively impacting our climate and atmosphere. You may need to continue to test your solar panels over time.
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Which Things Should You Watch Out For
Not every large solar installer that sells solar leases and PPAs are guilty of these practices. Also, regulations vary from state-to-state, so even if a company is known for poor practices in one state, that doesnât mean you would have the same experience.
The most important thing you can do is demand a paper copy of your contract, and read it carefully before you sign. Donât let a salesperson rush you into a signature – sign only when you fully understand what youâre committing to. Remember: these contracts are usually 20 years or even more, so take the time to really know whatâs in them.
If necessary, pay a lawyer to review and explain the contract to you. The relatively small legal fee is worth it if it saves you a big headache down the road.
The Power From Solar Panels Can Make Use Of Un
In most countries, there are substantial pieces of land that are either un-utilized or underutilized due to various reasons.
The need for more solar power to meet the needs of its consumers has made the solar power companies think to make good use of the un-utilized and underutilized lands to set their solar panels on these lands.
With the low prices at which these companies buy the pieces of underutilized land, they can set their solar panels and generate enough solar energy that is required by their consumers.
The solar farms they set aside harvest enough solar energy, and they store it in larger batteries for distribution to their customers.
Setting solar farms in the un-utilized and underutilized land is one of the ways of making such pieces of and productive.
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How Much Will You Save With Solar
The first question youre probably wondering if youre considering going solar is: how much money will you save? And for good reason! Afterall, solar is an investment so youll want to understand your payback period before making any decisions. Most property owners will break even on their solar investment in seven to eight years but as you start exploring your solar options, there are a few key questions you should ask to approximate your personal return on investment:
Enjoy Independence From The Grid
Feeling shackled to the grid? Solar panels can provide the solution. Basically, the more energy you generate, the less you need to purchase from energy companies.
While the average solar PV system wont give you complete independence , adding a solar battery or two will empower you with genuine self-sufficiency. This way you can store any unused energy for a rainy day .
If you want to avoid using the grid while youre out and about, you can even get flexible solar panels for your off-grid road trips.
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The Current Financial Benefits Of Installing Now Versus Down The Road
The final thing that influences your timing for installation is the cost of energy versus the amount of savings youd see if you installed now. The section below goes into details with calculation formulas for this purpose.
However, the anticipated increase in non-renewable energy costs is also going up, so that should be included in the estimations.
You can see a Year-on-Year comparison on average energy costs per state here: .
Your Homes Value Will Be Increased
Solar panels are well-known, but they are still incredibly rare if you compare the number of the population who actually uses them. Due to many benefits, solar panels can increase the value of your house, and it should not come as a surprise. Many studies have been conducted, and they found that installing solar panels for your home can increase the market value of the house.
More buyers are interested because that will also save them the hassle of going through the installation process.
At the moment, you may not see it as a benefit, but in the longer run, it can be incredibly profitable for you. Whenever you decide to move out of your house or move to a different town, you will be able to earn some extra cash.
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