Are Residential Solar Panels Worth It In 2021
With the 26% federal tax credit reducing at the end of 2022, millions of American homeowners are asking themselves whether or not installing solar panels is worth it.
The answer depends on many factors including where you live, how much roof space you have, if your roof is shaded, how much power you use, what your local utility charges you for electricity, and the prices offered by local solar companies.
Our solar panels cost and savings calculator takes all of these factors into account when calculating the payback period and investment return for your specific home.
You can either dive straight into our calculator and get an accurate estimate of how much a solar installation can save you, or you can read on to get a closer look at how to determine if solar is worth it for your home.
Consider Solar Panel Financing
Another important thing to consider is how youll be paying for your solar energy system. While some homeowners may have $12,000-$20,000 on hand to pay for solar panel installation, most of us likely have to find another way to finance this investment.
One option to consider is paying for your solar panels with a personal loan. Unsecured personal loans are a popular choice for solar panel financing, but you can also finance a solar system by doing a cash-out refinance, using a home equity loan or a home equity line of credit . Its also possible to lease solar panels, though leasing may not necessarily make financial sense for all homeowners.
Does Removing A Tree Negate The Environmental Benefits Of Solar Energy
Some people believe that removing trees to create solar energy is a bad tradeoff for the environment. They believe it creates a net negative impact. After all, trees remove carbon dioxide from the environment by storing CO2, and we emit CO2 when manufacturing solar panels.
In reality, solar energy production has a net positive benefit on the environment even when you need to remove trees to install your solar panels.
Energy Sage actually did the math on this one. They cited data from the US government showing that one tree stores 0.5 metric tons of CO2 over its lifetime. Manufacturing a 5 kW solar panel system, on the other hand, produces 10 metric tons of CO2. That means when you remove one tree from your property and replace it with one solar panel, your net negative impact on the environment is 10.5 metric tons of CO2 emissions.
In other words, for the removal of one tree to make sense , the net CO2 reduction from that solar panel must exceed 10.5 metric tons.
Now lets look at the positive effects of solar panels. Panels generate 6,000 kWh of electricity per year for 25 years. Over a lifetime, that means a panel generates over 150,000 kWh of free electricity, eliminating 103 metric tons of CO2 that would have been generated from traditional energy sources.
Thanks to Energy Sage for doing the numbers on that one.
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Shadings And Thermal Losses
Another disadvantage of placing solar panels behind a window is that shadings created by frames or bars of the window will also reduce the power output and its power conversion efficiency.
Moreover, you might think to park your car under the Sun and leave your solar panel technology inside to obtain maximum energy yields. However, as heat concentrates inside your car without air conditioning, the solar panel will get hotter due to the generation of electricity and the hot temperature conditions inside the car. This will induce thermal losses and could even damage the solar cells if the heat is too intense. Therefore, it is not the best idea.
Annual Savings When Using The Electricity You Generate
Most households will use about 15-25% of the energy you generate, though this can change quite dramatically based on:
- Whether you work from home.
- How many people are at home during the day.
- Whether you have an electric vehicle.
- Whether you heat your home or hot water using a heat pump or other electrical heating.
- Whether your cooking is done using electricity.
Instead of sending surplus electricity to the grid, a PV diverter switch can power the immersion heater in your hot water tank, storing hot water for you to use later. On its own, excess solar energy is unlikely to meet all of your hot water needs, but it can help reduce your bills.
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Check Out Smaller Installers
These inflated solar prices often come from some of the larger solar installers in the industry so its important to consider all of their solar options, not just the installers large enough to pay for the most advertising. The same 2017 NREL report referenced above found that quotes from large installers were typically 10 percent higher than those from mid- and small-sized installers. If you receive quotes from some of the bigger companies in the industry, just be sure to compare them with quotes from local installers so you dont overpay for solar.
Investigate Your Home’s Energy Efficiency
Before starting the process of powering your home with solar energy, homeowners should investigate their energy use and consider potential efficiency upgrades. Homeowners should be well aware of their total electricity usage, and consider low-cost and easy-to-implement efficiency measures before choosing solar.
Explore the following resources to reduce your electricity use:
- Home energy audits: A home energy audit can help you understand where your home is losing energy and what steps to take to improve the efficiency of your home.
- Appliances and electronics: Use your appliances and electronics more efficiently, or consider investing in highly efficient products.
- Lighting: Switch to energy efficient lighting, such as LED light bulbs.
- Heating and cooling: If you use electricity to heat and cool your home, your heating and cooling needs will significantly affect the amount of solar energy you need. Weatherizing your home and heating and cooling efficiently will reduce the amount of electricity you need to produce with solar.
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How Can You Estimate Your Solar Payback Period
The initial costs of solar panels are often the biggest consideration when going solar, leading many homeowners to question whether solar power is worth it. While most homeowners can expect their investment to pay off in under 10 years, you can get a more specific estimate with a few calculations. If you want to calculate a rough estimate for how long it will take for solar panels to pay for themselves, you can use this formula:
/ = estimated payoff period
Heres an example:
Your new solar system costs $15,000 and you received a tax credit for $3,900 in addition to a $1,500 rebate from your state. In this case, your gross solar system cost is $15,000 with the upfront incentives totalling $5,400. This means that your combined cost is $9,600.
Now, say that your power bill is $100 every month and your solar system produces enough energy to cover your energy needs. Your annual savings is your monthly power bill, multiplied by 12 months, meaning in the first year of having solar, youll save $1,200 on your electricity bills. Some states and utilities also provide incentives that pay you extra for the solar energy your panels generate, like SRECs or the SMART program in Massachusetts: its not uncommon for those incentives to put an additional $600 a year into your pocket beyond your electricity savings, meaning an annual benefit of $1,800.
Trees Arent Leafy All Year Round
Another thing to consider is that trees can change their cover throughout the year. Leaves fall off during the colder months. That means your solar panels might be perfectly effective throughout half of the year, while partially effective throughout the spring and summer when the tree is in full bloom.
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Batteries Can Help You Save Money If Youre On A Time
If you have net billing instead of net metering, or if you are on a time-of-use plan with your electric utility, having a solar battery can help you save money by shifting your use of grid power to times when electricity costs less.
For example, the Tesla Powerwall has a mobile app that lets you set up times of day when you draw power from your battery instead of the grid. This time-based control allows you to use solar power from your battery when rates are high, and then switch over to grid power during off-peak periods when grid power is often much cheaper.
Batteries are also very useful if you have net billing instead of net metering. Under net billing, time-of-use is also very important because you donât get full credit for the electricity that you send back into the grid. But with a battery system, you can avoid this issue by sending your excess electricity to your battery so that you can use it later when the sun isnât shining.
Fact Vs Myth: Can Solar Energy Really Power An Entire House
One of the most frequently asked questions by homeowners in regard to solar power is, can it really power my entire house? The answer to that is actually quite simple yes, solar can indeed power your entire home. But explaining exactly how solar energy can power the entirety of your home is a little more complicated.
According to the United States Solar Technologies Office, the amount of sunlight that strikes the Earths surface in an hour and a half is enough to handle the entire worlds consumption for a full year.
With the sun delivering an awe-inspiring amount of energy to the earth on an almost hourly basis, it stands to reason that solar energy can indeed power an entire house. Lets take a deep dive into how exactly this happens and how you can make estimated solar calculations at home.
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Whats The Best Solar Heater For Your House
Solar thermal panels will capture more of the suns energy as heat, but for most homes in the United States, the best way to heat your house with solar power is to install a heat pump and photovoltaic solar panels. Theres a few reasons for this:
In other words, while a solar thermal collector will capture more solar energy to heat your home, other practical considerations mean that most people are better off using the more popular technology combination of photovoltaic panels and a heat pump.
That said, there are a wide variety of home solar heating systems, ranging from passive solar to active solar using ground or air-source heat pumps. Each of these techologies have benefits that might suit your home, so its worth learning about them.
How To Calculate Solar Panel Costs
So, what would it cost you to get solar panels? Weve already established that the average cost tends to be around $12,000 for a full solar setup, but that number can vary significantly depending on where you live, how many hours of sunlight your home receives in a day, etc.
To help you get a better idea of how much you might expect to spend, lets go over the steps you should take to calculate your potential solar panel costs.
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Frequently Asked Questions: What Else Makes Solar Panels Worth It
Theres a whole lot more to know about solar than just are solar panels worth it. Here are a few other questions people commonly want answers to about the worthiness of solar panels:
How much do solar panels cost?
As of July 2021, solar panels cost about $20,474 for a 10 kilowatt system. That includes the generous 26% federal solar tax credit, but not additional local rebates and incentives you may be able to take advantage of.
How long does it take for solar panels to pay for themselves?
Most property owners who get solar quotes on the EnergySage Marketplace will break even on their solar investment in seven to eight years. After that, youll be generating free electricity and racking up the savings!
Should you wait to buy solar panels?
Even though the cost of solar panels continues to fall, its usually not worth it to wait. The longer you wait to go solar, the more savings youre missing out on. In the long run, its worth it to go solar as soon as possible for most shoppers, instead of hoping for a much cheaper price down the road.
Why should you not get solar panels?
There are some situations, such as already low power demands or a home that has too much shade, where a solar system isnt ideal. In some cases, a home may require extensive renovations to support the weight and needs of a solar energy system.
Are there any drawbacks to solar power?Are solar panels worth it in your area? Should I get solar panels?
Electricity Goes From Inverter To Electric Panel
After this conversion electricity is all ready but it needs to be channelized to be used in the house. For this purpose, the electricity goes to the electric panel of the house, also known as a breaker. Breaker has an electric connection to every place in the house. The electricity which is not needed is either stored or sent to the utility electrical grid.
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Benefits Of Solar Panels
Now you know what they are and how they work, we can tell you why to care.
- Renewable energy source: Solar energy is accessible for as long as we have the sun, which scientists reckon will be at least five billion years. Its truly a renewable energy source, doesnt produce gases, pollute water or create noise. Its a green dream.
- Reduces electricity bills: Since youll be generating some of your energy needs from solar panels, your total electricity bills will drop. You can also make money by selling any unused electricity back to the grid. And you can still switch gas and electricity suppliers when you have solar panels.
- Timing: Household energy usage needs tend to be higher in the afternoon and evenings, when people are at home. This is perfect as solar energy reaches maximum production around those times. Note: solar panels dont work at night.
- Low maintenance: Solar panels dont require much maintenance just cleaning a few times a year. Warranties are usually for 20-25 years and the inverter only needs to be changed after 10 years.
Work With A Qualified Installer
Whether you are thinking of a battery system or an SMA inverter to help you get through the next blackout, there is extra complexity with the installation and electrical work. Be sure to work with a qualified contractor to help you with the installation. You can use The Solar Nerd to help you get quotes from qualified installers to make sure that the work is done right.
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Review Costs For Panels And Installation
The savings that come with solar panels dont come for free, however. It can be pretty costly to install solar panels on the roof of your home. While each individual solar panel likely only costs $150-$300, depending on the wattage, the total costs can add up once there are multiple panels and installation costs involved. The average solar panel system costs around $15,000-$25,000 prior to tax incentives , according to the Center for Sustainable Energy .
Keep in mind that there may be other additional charges coming your way in the future as well. If your solar panels break down over time or become damaged, youll likely have to pay for maintenance and upkeep of your solar energy system as well.
Reduce Your Electricity Use
During daylight hours, youll be generating electricity even on cloudy days, but if youre using more power around your home than your panels are generating, or during the evening when your panels are not generating any electricity, youll be supplementing this by importing electricity from the grid.
Reducing your electricity use can help lower your bills and reduce your carbon footprint. If youre claiming a Smart Export Guarantee tariff, youll receive a payment for every unit of electricity you export. Remember to turn devices off and avoid standby.
See our energy saving quick wins for more tips to reduce your energy use.
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If Your Firm Goes Bust Payments Won’t Transfer Automatically
If you’re on a feed-in tariff , your payments won’t transfer automatically to a new provider if your current supplier goes bust.
This is different from the smart export guarantee if you’re on a FIT, regulator Ofgem will appoint a new supplier for you, but payments won’t start until your contract starts.
The new company will contact you to confirm your tariff information and it must also confirm whether it’s a FIT licensee. If it’s not, you may need to find another FIT supplier to continue to receive payments.
As above, you’re able to choose a different supplier from the one Ofgem appoints for you if you wish, but it shouldn’t really matter, as your FIT rates won’t change.
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You Can Still Switch Energy Supplier
If you have solar panels, don’t think this locks you in to your energy provider so you can’t get cheaper bills you can join the MSE Cheap Energy Club to stick on the cheapest deals .
Your energy provider doesn’t need to be the same as the supplier that pays you for your solar-generated energy, so you’re free to switch.
Also, with a modern SMETS 2 smart meter, two firms can use the same device, so you don’t need to get a new smart meter.
It’s just as simple to switch your supplier for the export tariff, and as rates vary wildly between firms, make sure you’re always getting the best rate possible see what each firm pays.
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