Why Leasing Isn’t A Bright Idea
The steep up-front costs for a residential solar system can make a leasing companys sales pitch sound pretty appealing: Pay little or nothing and save hundreds of dollars per year on average. Leasing can also look seductively simple compared with buying: Theres no need to shop separately for an installer and financing you just sign on the dotted line. So its not surprising that 72 percent of the people who installed residential solar systems in 2014 did so through leasing or another type of third-party arrangement. But the reality is not quite so sunny.
Your Savings Will Be ModestPeople who lease their solar systems save far less than those who buy them outright or with a loan . Many leases contain an escalator clause that can further reduce savings by increasing payments 3 percent per year. So if youre paying 12 cents per kilowatt-hour in year one, with a 3 percent escalator, youll be paying 18.2 cents in year 15. That means that if the cost of energy doesnt rise as quickly as the contracted lease payments increase, your savings could evaporate.
You Lose Control of Your RoofLeasing companies want to maximize their profit, so theres a chance you could wind up with more panels than you want and that they could be installed in highly visible placessuch as facing the streetwithout any regard to appearance. To avoid that, check the final system design and placement before signing the lease. It could be different from the initial mock-up.
How Much Do Residential Solar Panels Cost For An Average 2000 Square Foot Home
Solar panel cost is often measured as the cost per watt of solar. This makes it easy to compare the relative value of solar systems of different sizes in terms of the watts of power they can produce.
Our data shows that the average cost of a residential solar system in 2021 is $2.85 per watt, before the federal tax credit. At that price, a typical 7 kilowatt home solar system would cost $19,950. The cost would fall to $14,763 after claiming the 26% solar tax credit.
The cost of residential solar panels has dropped dramatically over time. In fact, it has fallen over 70% in the past decade.
In 2019 alone, the cost of solar dropped by 5%.
Should You Wait For Solar To Become Cheaper
In large part because of the stubborn nature of soft costs, if youâre wondering if you should wait for costs to drop further, we would recommend not to wait. Only 36% of the cost of a home solar installation is related to hardware costs, so waiting a few years wonât result in the kind of dramatic price drops weâve seen in the past. Solar hardware is already very cheap.
However, waiting until youâre financially able to purchase the system rather than take a PPA or lease is a good idea.
The other important issue is that federal and local incentives for solar will eventually expire. The federal tax credit will be dropping in value in 2020 and disappear for residential customers by 2022.
This transition is driven by cheap renewable-energy technologies. Today, either wind or PV are the cheapest new sources of electricity in countries making up around 73% of world GDP. And as costs continue to fall, we expect new-build wind and PV to get cheaper than running existing fossil-fuel power plants. In China, unsubsidized renewables undercut coal in 2023-24, and in the U.S. they undercut natural gas in 2024-25.
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Theres Nowhere Else To Put Solar Panels
The roof is the most common place to put solar panels but its not the only place they can go.
You will find homeowners placing solar panels in other places, such as in their backyard or on secondary structure on their property.
If both of the circumstances below apply to you, then youre out of luck.
- Ground-mounting isnt possible for you: Ground-mounted solar refers to solar panels installed on the ground using special mounts to angle them towards the sun. While this may be an option for farms and ranches, it is rarely feasible in cities and suburbs where there is less open space to work with.
- No other structure available: The last option to consider are buildings like carports or sheds, or backyard structures like gazebos, pergolas and patio covers. If you dont have any of these, or they lack suitable surface areas, it means that youre going to hold off on solar panels for the time being.
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
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What Maintenance Is Required For Solar Panels
There is very little maintenance required for solar panels. It is recommended that you clean your solar panels once or twice a year to avoid dirt and buildup. However, this might not be necessary if your area gets regular rainfall or if your roof is steep, which allows debris to easily fall off.
It is worth checking to see that all junction boxes are sealed and watertight once every five years.
Because there is almost no maintenance required, you dont need to worry about additional maintenance costs.
Connecting To The Grid
Most solar kits are designed for off-grid systems, which wouldn’t demand as much energy as the average home, such as tiny houses or sheds. A typical off-grid PV system costs about $2.50 per watt.
Grid-tied packages range from $2.00 to $3.50 per watt. The grid can be very useful, providing electricity at night or in times of low sunlight. Being connected requires more components, such as meters and safety equipment. You will need to consult your local utility company about regulations and hire a licensed electrical contractor to connect you.
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Residential Solar: Becoming Increasingly Cost
EnergySage just released its 9thSolar Marketplace Intel Report. Relying upon millions of transaction-level data points from the EnergySage Solar Marketplace between July 2018 to June 2019, the report provides a great thumbnail sketch of the U.S. residential solar industry. Key take-aways: average installed costs have fallen below $3 per Watt for the first time, and the price gap has narrowed between the highest quality panels and the next tier down.
Crashing the $3 ceiling
Just prior to the reports release, I had a chance to chat with EnergySages CEO Vikram Aggarwal. As he describes it, EnergySages mission is to make solar more accessible, affordable, and transparent to the customer.
For the customer in the past, engaging in the residential solar space was bewildering. It was hard to get quotes from installers, and even more difficult to compare apples-to-apples. So Aggarwal and his team set out to create a resource that customers could access in order to better understand the options available to them, and built an online platform that allows customers to compare custom solar quotes online from pre-screened, local solar contractors.
Residential Solar Installed Costs Have Stopped Dropping But People Are Getting Better Equipment
The latest report from Berkeley Lab shows that the installed cost of residential solar has flattened out in the past couple of years. In fact, in 2019, the median price rose by about $0.10.
On the face of it, that might make it seem like solar has actually started to get more expensive. It hasnt: costs continue to drop every year. In fact, whats happened is that residential customers are installing better equipment, and getting more value for the same money.
For example, in 2018, 74% of residential customers choose microinverters or power optimizer-based inverter systems over less expensive string inverters. In 2019, this number took a big jump to 87%.
Similarly, in 2018, the average solar homeowner was installing solar panels with 18.8% efficiency, but in 2019 the efficiency rose to 19.4%.
So while the invoice price that homeowners are paying for solar these days is flat or even slightly increasing, theyre getting better equipment for the same money.
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Cost Of Solar Panels: The Basics
The national average cost of solar arrays are around $3.75 per watt. And the average pv solar system is about 5000 watts, which amounts to $12,500 just to go solar .
Yet, though this still seems expensive, a solar power system costs about 12% lower than they did in 2015, and the costs just continue to fall.
Dont stop reading thereyoull miss the more important parts. .
How Much Does The Solar Panel System Cost
This is the hardest question to answer because there are so many variables. The cost of installing a solar PV system will depend where you live, the size of the system , complexity of the installation, and the panel type and manufacturer.
Always get at least three quotes from local installers before making your choice. Once you have some firm prices, you can compare the cost against the potential savings, and calculate your return on investment.
Subsidies and incentives may be available in your area to reduce the cost of your solar panel installation check with your government, state or local authorities.
Remember that solar panels and the associated electrical equipment may need cleaning and maintenance, so you should factor in the ongoing costs too.
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How Much Energy Does A Solar Panel Create
Although these may seem relatively small amounts of energy, when they are all converted into useful energy, these can be very powerful sources of energy.
These power plants run on very little energy but, when these are all used together at one time, this produces incredible amounts of energy.
As we move away from fossil fuels and move towards an alternative renewable source of energy, such as the use of solar power, this will be a key consideration for everyone who wants to use renewable sources of energy.
This means that we have a lot of potential for using this kind of energy for our homes and other places around our lives. But, we also have to consider the fact that this type of energy has some drawbacks as well.
One major disadvantage of using renewable sources of energy is that, it can be very expensive to create.
How Do Solar Batteries Work
Solar batteries can be installed alongside your solar panel system to store the excess energy it produces. When the panels don’t produce power at night, you can use the stored energy instead. Many solar battery storage options come with an inverter to convert the stored DC power to the AC power you need, but some require you to buy the inverter separately.
You can then use it as a solar battery generator to power electricity needs. This helps people looking to mitigate electricity costs, prepare for disasters or be completely off-grid. Homes still on the electrical grid can offset their consumption with backup energy and run on battery power until the storage is depleted.
The amount of electricity a solar battery can deliver at once is measured in kilowatts . Kilowatt-hours refers to the total amount of energy utilized over an hour. The U.S. Energy Information Administration states the average American home consumes 901 kWh per month, or 30 kWh a day. With a battery that provides 2.5 kWh, you would need 12 batteries for sufficient daily power.
Since solar batteries self-discharge, the stored solar energy depletes over time. The rate of self-discharge depends on the type and age of the battery. Newer batteries typically deplete at a rate of 1% to 2% per month, whereas older batteries could deplete by as much as 2% per week.
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But Realize Financial Incentives Will Disappear
As you contemplate your exact timeline, be aware that as the popularity and accessibility for solar power increases, the government incentives will decrease. Since more and more people are able to afford solar power, the government is less pressed to encourage people to do it.
With that in mind, the current federal renewable energy tax credit is 30 percent through 2019. After that point, it will be phased out for residential use. That means that if youre considering going solar, this is the year.
If youre not sure how accurate this assumption is, look at it this way.
- Formerly, the Golden State offered rebates up to $15,000 for installing solar power systems. However, since California has dived into the use of solar, the rebate programs have been eliminated because it was no longer as critical for the state to support this.
- Massachusetts used to offer a $9,000 range rebate program. However, the program has since ended and homeowners are now only eligible for the tax credit which is capped at just $1000. Someone who installs a $10,000 system doesnt get much of an incentive for this anymore.
- New York offers rebates for homeowners who install solar power. The rebate gives $1 per watt installed. But as the popularity of the program and number of installs goes up, the rebate will drop 85% to only $0.15 per watt.
Be sure to explore your statewide incentives right now to understand what you could save if you install this year before the federal programs drop.
What Is The Average Payback Period For Residential Solar Panels In 2021
The solar payback period refers to the amount of time it takes for the electric bill savings from your solar panels to equal the amount you paid for the system. The average payback period for a residential solar system in 2021 is about seven years.
A payback period of seven years equates to a return on investment of approximately 14%. However, this varies greatly by state and even by regions within states.
Calculate the solar panel payback period for your home based on your location, electric use and current local solar system prices
Once you have generated an accurate payback period, you can compare this to the returns you see on other types of investments:
- Long-term government bonds currently have returns between 0.1% and 2%
- Zillow estimates that home prices increase between 3% and 5% annually
- The stock market has risen around 9.5% historically
As you can see, residential solar panels stack up favorably against all of these other investment options – and this is even before we consider the increase in a homes value caused by the solar panel installation.
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Cost Of Solar Panels: Why You Need To Know More Than The Basics
While these steep up-front costs can often make a homeowner reserved about the investment, a closer look into solar options show that residential solar systems are actually much more affordable than you might think.
Many homeowners are now leaving the outdated methods of fossil-fuels and trading them in for residential solar panels.
Why? Because its better for the environment, yes. But mostly, its about those green energy savings.
This cost of solar panels has gone down significantly over the years, and its even more affordable now with tax incentives, gov. rebates, and solar programs.
The Alternative Energy Solar Project is using the 30% incentive as well as private funding from investors to lower energy bills and the cost of solar panel installation for American families.
Using those tax incentives and investments, Alternative Energy Solar provides no-cost residential solar panels to middle-class homeowners around the U.S. If youre interested, you can get a free quote and information from here.
Alternative Energy Solar estimates that they will save individual homeowners up to $2,400 a year. And using solar energy vs. fossil-fuel energy actually saves homeowners thousands of dollars over the years just in energy bill cuts.
Thats not a small amount of money. Thats why its so important you understand your options when it comes to solar energy.
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.
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