Solar energy continues to increase in popularity in the U.S. market, with PV installations for both residential and nonresidential users growing exponentially in recent years.
Solar may not be an ideal fit for everyone, however, and it is important to consider the advantages and disadvantages before committing to a solar energy system for your home.
Here are some of the primary pros and cons associated with residential solar energy systems:
• Reduces your electricity costs: The average U.S. household spends about $1,400 a year on electricity. A solar energy system can save you tens of thousands of dollars in electricity costs over the lifetime of the panels.
• Increases the resale value of your home: A 2015 study by researchers at UC-Berkeley found that homebuyers on average were willing to pay $4,000 more per kilowatt of solar capacity when buying a solar-equipped house. This means that a standard 6-kWh solar energy system can add $24,000 to your home’s resale value.
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• Sell excess power back to the electrical grid: Grid-connected solar energy users can sell excess solar-generated power back to their utility through a process called net metering.
• Solar incentives can reduce your cost burden: There are a number of federal and state solar incentive programs that can shave tens of thousands of dollars off of the initial upfront cost of a solar install.
• Flexible financing tools: Solar-specific financing tools, like solar loans, allow you to realize returns on your solar investment while avoiding significant upfront costs.
• Reduces your carbon footprint: The average U.S. household uses about 11,000 kWh of electricity annually, which is equivalent to the carbon dioxide emissions from 9,000 pounds of burned coal. Producing this power through renewable sources like solar can dramatically reduce your household’s carbon footprint, and help reduce the country’s reliance on fossil fuels.
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Cons and Considerations
• Solar energy systems can be costly: Solar energy systems can be cost prohibitive for homeowners who don’t qualify for federal and state solar incentives or who lack access to solar financing options. It is important to weigh the upfront costs against the long-term energy savings potential when evaluating your solar options.
• Solar energy is an intermittent energy source: Solar energy production fluctuates based on time of day and season, so unless you have a solar battery to store your energy and smooth out the fluctuations, your panels will do you little good during off-peak times.
• Rack-mounted panels can be aesthetically unappealing: Traditional rack-mounted solar panels are not very visually appealing, but new-age solar products with a sleek design, like solar shingles and solar tiles, can help to mitigate this issue.
• Little benefit if your electricity costs are already low: If your electricity costs are already low, you won’t benefit much financially by getting a solar energy system.
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• Not a good fit if you plan to move soon: The payback period for most solar energy systems is between 5-10 years. If you know you will move from your home in the near future, then solar panels make little financial sense for you.
Ultimately, whether solar is a good fit for you will vary depending on your particular situation. Like with any major investment, you should do your homework and evaluate all the pros and cons associated with residential solar energy systems. Be sure to check out all of the resources on Solar Tribune to help make the decision-making process easier.
Costs and Savings of Solar
The improving economics of solar panels continue to draw in more and more homeowners to the residential solar marketplace.
Let’s take a look at some of the basic financial considerations to keep in mind when considering a residential solar energy system.
How Much Will I Pay?
The price of installing a solar energy system in the U.S. varies based on location, but here are some baseline assumptions to help get an idea of what the average residential solar energy system will cost you.
Owners of solar energy systems are able to shave off a good bit of the initial upfront expenses thanks to attractive federal and state tax credit programs. For instance, the federal Investment Tax Credit (ITC) allows owners of solar panels to deduct 30% of the install costs from their federal taxes. Visit our solar incentives page to learn more about solar-based tax credits and incentive programs.
After accounting for the ITC, the average upfront cost of a solar panel install can be reduced down to $9,800-$13,300. Additional state tax credits can drive that cost even lower.
There are a number of websites, like Solar-Estimate.org and SolarPowerRocks.com, that offer a more detailed state-by-state snapshot of what a solar energy system is likely to cost you based on where you live. To compare the prices of solar companies us our quote tool, see our guide to the Top 10 Solar Companies in the U.S.
How Much Will I Save?
Regardless of whether you buy or lease your solar panels, you will enjoy serious energy cost savings over the life of the panels that will make your investment more than worth it.
Your annual energy savings from having a solar energy system will vary based on your location, electricity usage, and other factors. Still, the typical payback period for a residential solar system is between 5-10 years.
Using those assumptions, a solar energy system that costs between $9,800 and $13,300 after federal tax credits would pay for itself in under 10 years. From there, your solar panels would essentially be making you money by reducing your future electricity costs. Solar panels can typically last for 25-30 years, so your savings could potentially be significant.
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Assuming annual home electricity costs of $1,400, a 5 kWh solar energy system costing $9,800 would be paid for in 7 years, while a system costing $13,300 would be paid for in 9.5 years.
After payback, a typical 5 kWh system with a useful life of 25 years would result in energy savings ranging from $21,700 to $25,200. The post-payback savings of a system with a 30 year useful life would be even greater, ranging from $28,700 to $32,200.
Solar homeowners can further improve their financial picture by taking advantage of net metering, a process that allows you to sell excess energy back to the grid.
It is worth noting that the above calculations are based on a static assumption of annual household electricity costs being $1,400. In reality, the cost of residential electricity continues to outpace the rate of inflation, with no signs of letting up. Since 2003, the average price per kWh of residential electricity increased by almost 50%.