Early last year a couple made the decision to put solar panels on the roof of their home. The couple, who has three children, says the move has cut their peak electric bills in the summer from around $400 a month to $210 a month.
As the fallout from nuclear disaster in Japan continues and oil prices remain stuck in the triple digits, the appeal of an energy source that’s reliable, doesn’t leak poison and isn’t whipsawed by day traders becomes more apparent. But with changing financial incentives and a growing number of options, deciding whether or not to “go solar” also involves some serious number crunching.
A few years ago, it was standard to spend $40,000 or more to buy a residential solar system. While buying solar is still expensive, Federal and state tax incentives–along with utility rebates–bring prices down considerably. And now, buying a system outright is not even entirely necessary.
An increasingly popular choice is to lease the panels and related equipment from a solar installation firm. You can go “a la carte” with mini-panels just for heating water. Or, if you don’t want panels or are a renter, a growing number of utilities let you draw some of your electricity from renewable resources such as solar or wind for a modest monthly surcharge.
The bad news is that with more and more customers moving to solar, many utilities have lowered incentive rebates over the last year to avoid running out of money for the programs. That affects both buyers and leasing companies, who pass their higher costs along to their customers. Other, less obvious costs might include removing the panels for a roof repair or clearing trees to provide unobstructed sunlight.
There is also the issue of how solar panels might affect a home’s value. A new study found that many people looking to buy a new home would be happy to buy a house with solar because it lowers their electrical costs. But it’s also true that occasionally neighbors complain about the appearance of panels, so you may want to check around to see if you’ll get any objections.
To see if solar makes financial sense for my house, you can use the free solar estimate tool found on the website or look at the example. The calculator might estimate a system that would supply half of a homeowner’s annual usage costs $35,440. But that number is reduced by a 30% federal tax credit of $10,630, an APS rebate of $10,310 and a state tax credit of $1,000. Total incentives of $21,940 would drop the cost to $13,500 and produce annual savings of $1,190 a year, and it would take 11.4 years for the system to pay for itself.
This might be a great deal for someone looking at their solar options, especially if they plan on living in the same house for years to come and want to see their solar panels actually generating money. Even if you did plan on moving out, a solar system will add value to your home, and could even make it easier to sell. But if the initial layout for solar is too high, even after rebates and tax credits, you could always check out a leasing option for solar.
In this case, a solar energy consultant would come to your home and explain that there is no cost to install the panels and, because it’s a lease, the firm will handle any repairs, insurance and maintenance. If the lease was for 20 years but you were planning to move out before then, the new homeowner would be responsible for the remaining term.
Here are several different financing scenarios for the lease. If you put no money down, the average monthly bill will drop from $213 to $175, with the panels generating 60% of your home’s electricity. If you can come up with an initial payment of $7,825, then the average monthly payments will drop to $100. After taking into account future utility rate increases the payback period, or the time it takes for savings to at least equal the initial payment, would be roughly six years for the latter option.
Thus, the monthly electric bill, along with your home’s carbon footprint, will drop. Over the next 20 years, the solar panels would save the carbon dioxide equivalent of driving a car 724,601 miles.
Lastly, you could check out your utility’s green rate option. For an extra $5 to $7 a month, you can usually get half of your electricity from a renewable resource. If you don’t like the option for some reason, you can drop it after a year.
You can read more about the benefits of solar panels, or take the free solar estimate to see how much a solar system will cost on your property in a customized estimate.
