Is it worth it to have solar panels in a house explain?

Author: yong

Dec. 06, 2023

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Tags: Lights & Lighting

The national average for solar panels costs about $16,000. However, some solar panel systems can run more than $35,000. The exact price a homeowner will pay depends on a number of variables, including geographic location, home size and solar installer rates.

It’s important to remember that the investment for a solar system covers more than just the panel costs. Homeowners also need to consider additional charges such as additional equipment, like solar batteries that store energy during winters with little sun, as well as upkeep and regular maintenance costs, which can help extend the life of your solar panels, thus increasing your savings.

On the bright side, solar panel costs have decreased by more than 50% in the last 10 years, according to the Solar Energy Industries Association (SEIA). The typical solar energy system is priced around $25,000, although the actual cost fluctuates depending on a system’s size, regional rates, and the solar installer you choose. The best way to find an accurate price is to speak with a local installer.

Solar Financing Options

Your final cost will also hinge on the solar financing route you take. For homeowners who don’t have the capital to invest in a solar system outright, there are other financing options to consider. However, some of them come with drawbacks.

Finance Yourself

Homeowners opting for an upfront payment (aka cash) for their solar system can expect a higher return on investment. They will bypass interest charges and are eligible for solar rebates and incentives such as the 30% solar tax credit for photovoltaic solar panel installation.

Solar Loans

Solar loans can be a good option if you want to own your system, as they still make you eligible for incentives, but you won’t have to pay for everything upfront. These loans work similarly to loans like you’d see for cars or other home improvements, so you’ll need to compare solar loan providers, rates and other factors. However, it’s important to note that the accruing interest of 4% to 7% over time can dramatically increase your total costs.

Solar Leases and PPAs

These options provide homeowners the opportunity to lease systems instead of owning them outright. A solar lease is an agreement between the homeowner and the solar provider that allows them to install solar panels on their house at minimal to zero costs for a fixed monthly payment. A solar PPA enables homeowners to purchase power from a solar company or a third party at a fixed rate. Although solar leases and PPAs are less expensive upfront, homeowners are ineligible for rebates and incentives, which can help them save 30% on installation costs.

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Consumers have different financial options to select from when deciding to go solar. In general, a purchased solar system can be installed at a lower total cost than system installed using a solar loan, lease, or power purchase agreement (PPA).

If you prefer to buy your solar energy system, solar loans can lower the up-front costs of the system. In most cases, monthly loan payments are smaller than a typical energy bill, which will help you save money from the start. Solar loans function the same way as home improvement loans, and some jurisdictions will offer subsidized solar energy loans with below-market interest rates, making solar even more affordable. New homeowners can add solar as part of their mortgage with loans available through the Federal Housing Administration and Fannie Mae, which allow borrowers to include financing for home improvements in the home’s purchase price. Buying a solar energy system makes you eligible for the Solar Investment Tax Credit, or ITC. In December 2020, Congress passed an extension of the ITC, which provides a 26% tax credit for systems installed in 2020-2022, and 22% for systems installed in 2023. The tax credit expires starting in 2024 unless Congress renews it. Learn more about the ITC.

Solar leases and PPAs allow consumers to host solar energy systems that are owned by solar companies and purchase back the electricity generated. Consumers enter into agreements that allow them to have lower electricity bills without monthly loan payments. In many cases, that means putting no money down to go solar. Solar leases entail fixed monthly payments that are calculated using the estimated amount of electricity the system will produce. With a solar PPA, consumers agree to purchase the power generated by the system at a set price per kilowatt-hour of electricity produced. With both of these options, though, you are not entitled to tax benefits since you don’t own the solar energy system.

Navigating the landscape of solar financing can be difficult. The Clean Energy States Alliance released a guide to help homeowners understand their options, explaining the advantages and disadvantages of each. Download the guide.

Is it worth it to have solar panels in a house explain?

Homeowner's Guide to Going Solar

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