Are Solar Panels Worth It In 2023?

are solar panels worth it

Due to the continually rising cost of electricity, solar installation has become quite common in recent times. Solar panels generate renewable energy by converting sunlight into solar power used to power homes and even industries.

It can be used as the primary source of energy or supplement, depending on the weather conditions. Even though generating electricity on your own sounds great, are solar panels worth it?

Many homeowners have turned to solar energy to power their homes and utilities, aiming to cut back on their energy bills. Even so, determining whether solar panels make financial sense depends on several factors.

As stated by the Center for Sustainable Energy, solar panel system installation costs anywhere between $15,000 and $25,000. So, are solar panels worth it?

Below are some factors that you should consider to determine if a residential solar investment is worth it.

  • Electricity rates in your area
  • Residential solar panel system installation costs
  • Installation financing methods
  • Sunlight availability in your area
  • Government policies and incentives
  • Maintenance cost
  • The average length of time a residential solar panel will last
  • Do solar panels safeguard the environment?

Electricity Bill Rates

electric bill rates

More often than not, traditional electricity bills continue to rise year after year, which means an increase in your utility bill. Home solar panels use renewable energy to generate power, thus cutting back on your electric bill.

The higher your energy consumption, the more you stand to gain from these cutbacks on your electricity utility power bill when you install a solar panel.

Average Solar Savings

On average, you can save $17,696 over 25 years by switching to solar. This figure is derived from the average cost of installing home solar panels in most states, which is $16,177 compared to the electricity utility cost of $33,813 in the same span.

Therefore, solar energy is likely to bring down your energy bill by half, making it a worthwhile investment.

Remember, the amount of solar energy a panel generates is highly dependent on the weather conditions in your area. More sunlight translates to a considerably higher volume of generated solar energy, leading to low electricity kilowatts use, thus saving much more money.

If you live in areas such as Texas and the West Coast, you will save a lot more money on your electricity bill than people living in colder states.

Solar Panel Installation And Related Costs

solar panel installation costs

Much of the costs associated with home solar panels are incurred during purchase and installation. While solar panels may seem worthwhile in the long run, the short-term installation expenses may be overwhelming.

Generally, the cost of solar equipment installation is calculated based on the energy requirement of your home. The more energy you consume, the higher the installation cost, and vice versa. It is essential to calculate your electricity consumption rate before purchasing a solar panel to ensure it meets your energy requirements.

The average cost of installing a residential solar panel ranges between $3-$5 per watt. Remember, if you consume many kilowatts at your premises, the initial cost of installing a solar panel that meets your energy needs will be higher. Even so, when you calculate the amount of money you will save on your electricity bill, solar panels will save you a lot more. 

Installation Financing Methods

As seen above, a solar panel can be quite expensive, especially for those with high energy requirements. Those with adequate cash on hand usually purchase these panels outright, mainly using cash or some form of credit. However, people who struggle financially may require a financial plan to buy a solar panel and have it installed.

Depending on your energy requirements, electricity utility bills, and the weather conditions in your locality, you might consider a solar panel as an excellent investment if it cuts back your utility bill. To purchase one, it might call for you to use a refinancing plan to buy a solar panel.

The Power Purchasing Agreement

power purchase agreement

When you purchase a solar panel using a Power Purchase Agreement (PPA) or a solar lease, does this flexible plan deliver value for your solar project and an excellent overall investment return?

Primarily, you forego some rights to claim any incentives or credits when you use financing methods to purchase a solar system because the installer usually claims these rights because they own the networks.

These financing schemes also add interest to the solar purchase that digs into your energy utility savings over time.

Therefore, it’s correct to say that solar panels are relatively more appealing to those buying and installing the gadgets outright than those purchasing the solar panel via financing plans and a specific payback period.

Sunlight Availability In Your Area

Based on the fact that solar panels convert sunlight into renewable energy that’s used to power homes, it means you require a lot of the sun to power your solar panels. The more sunlight there is in a day, the more electrical energy you generate and save.

It is worth pointing out that not all areas receive suitable sunlight or even enough sunlight hours in a day to power the panel. In these colder regions, the use of solar panels may not be feasible. In drier areas such as California and Arizona, solar panel use to replace electricity is possible.

Besides, your home’s roof size and inclination towards the sun and the amount of shade also determine your solar system’s output. For maximum solar panel output, you need to have a larger roof size, minimal shade, and more inclination toward the sun. That way, a solar panel is more beneficial because its output is maximized.

Government Policies And Incentives

Continually changing Federal Government policies have a profound impact on the prices of commodities. Solar panels happen to be one of such items affected by recent government policy changes.

In 2018, a four-year tax tariff imposed on imported solar panels and cells substantially increased the amount of taxes paid. This taxation plan that began at 30% reduces yearly by 5% and contributes to a 16 cent per watt increase to the average consumer.

The policy mentioned above has a reducing effect over time, and so does the federal tax for solar panel installation. It means that investing in solar panel installation might be feasible at the moment, onwards to 2022, while the policy is still in place.

It can be hard to project what outcome to expect after the program is over, which leaves a limited time window to take advantage of the system in place.

Federal Tax Credits

Conversely, the government avails solar incentives to individuals who purchase and install solar panels since solar energy is a form of alternate energy. Solar tax credits, like federal tax credits, allow taxpayers to claim a 26% installation cost for solar panels installed before 31st December 2020.

The amount is deductible on your federal taxes, allowing taxpayers to put money back into their pockets after carrying out a solar panel installation. However, these incentives vary per state and are determined by state policies.

Some local governments may even offer cash incentives or property tax exemptions depending on the policies in place. However, with changing policies, such as the one stated above, these local incentives may not last. It means the time to benefit from solar installation is now.

Maintenance Cost

A standard solar panel system is designed to last for at least 25 years. During that period, the devices will require little or no maintenance, provided you clean the panels at least once a year to remove dirt and dust build-up.

If your area receives regular rainfall, cleaning may not be necessary, as the rainwater will clean the panels. However, other parts of the solar panel system, such as the junction boxes, should be checked every few years to ensure they are watertight and sealed.

Apart from this kind of maintenance, no other form of care is required. It means that maintenance costs are minimal, and if you decide to do it yourself, no charges will be incurred at all.

The Lifespan Of Solar Panels

As stated earlier, solar panels are designed to last a minimum of 25 years. Even so, they can easily last up to 30 years, but this will depend to a large extent on the panel’s manufacturer and your maintenance strategies.

While some solar panels degrade over the years, losing up to 20% of the total energy output after 25 years, premium panels such as SunPower’s can last up to 30 years and still maintain an output of up to 92% of the total energy by the 25th year.

Such solar panels are worth it, more so in the long-run, because they last much longer while still maintaining a large percent of the total energy output. Appropriate maintenance provides a performance boost, helping deliver optimal energy output, with the solar panels able to act as an excellent substitute for electricity.

Do Solar Panels Safeguard The Environment?

solar panels and the enviornment

Solar panels create clean, renewable energy from sunlight, which is beneficial to the environment. Alternative forms of energy reduce the carbon footprint and have a positive environmental impact.

Because renewable energy does not emit carbon dioxide and other hazardous gases into the atmosphere, it effectively reduces the greenhouse gas effect on the globe.

So what are the adverse impacts of Greenhouse gases? Greenhouse gases are emitted when fossil fuel is burned. Because fossil fuels are commonly used globally, these gases leave a significant carbon print. The greenhouse gases cause global warming and other catastrophes, making alternate forms of energy a necessity. 

Solar is one form of alternate energy that converts the sun’s energy into usable energy. It helps reduce the global carbon print safeguarding the environment.

The Environmental Impact Of Switching To Solar

As a primary form of renewable energy, solar energy is relatively inexpensive to produce. An average home in Connecticut consumes 8,288 kilowatt-hours (KWh) of solar per year. It shows that even a single home turning to solar energy has a significant positive impact on the environment.

The total upshot of switching to solar power for the whole state would benefit the ecosystem, equating to planting approximately 150 trees per year. This renewable energy source is a viable option for our current needs.

New York Energy Consumption

Here’s another relevant case in point. In New York, the average electricity consumption rate per home is 7,248KWh. Considering that most of America’s electricity is generated from fossil fuels such as natural gas and coal, New Yorkers leave a massive greenhouse effect on this earth from electricity alone.

If this population were to turn to clean energy, such as solar energy, they would eliminate the need to burn over 5,000 pounds of coal, reducing the greenhouse effect significantly.

Based on the above facts, from an environmental perspective, switching to solar energy is worth it. It reduces air pollutants in the environment. The reduction of air pollutants goes a long way in safeguarding the environment and consequently ensuring that we have a healthy population free from chronic bronchitis, cardiovascular problems, and other respiratory health issues.

Do Solar Panels Increase The Value Of My Home?

solar panels and home value

Does buying a solar panel system add to the value of your home? For those of you considering selling your homes preinstalled with solar panel systems, the good news is that solar panels do increase your home’s value.

A recent study showed that homes with solar panel systems fetched more market value than those without solar panels. Zillow’s survey concluded that the market value added by solar panel installation on your home increased by 4.1% on average.

It means that solar panel installation puts money back into your pocket and boosts your home’s value, making it a worthy investment.

The above context goes a long way to show you the advantages of purchasing and installing a solar panel system. However, it is worth noting that the boost in your home’s value by solar panel installation depends on your state and locality.

Solar Power Return Rates Vary By Location

Some states, such as North Carolina, New Jersey, and Pennsylvania, have higher solar home return rates than other states. New Jersey has home premiums for homes with solar panels at 9.9% higher than homes without solar panels.

According to the survey, other states all had a 4.85% average increase in homes with solar panels. It means that the returns on your investment in these states are higher.

It is essential to research the policies and market conditions in your state to determine if solar panel installation will boost your home price. In California, the state government has passed legislation requiring all new homes to install solar panels.

This strategy aims at increasing the value of homes as the property market will gain from the solar panel installation. Besides, it also saves homeowners an average of $19,000 in 30 years and boosts their homes’ value.

How To Get The Best Deals On Solar Panel Purchase And Installation

how to save money on solar panels

Like any other investment, it is crucial to ensure you secure the best deals when buying and installing a solar panel system. It’s good to be armed with the correct information to secure the best solar panel deal. As discussed above, solar panels can be worth it, making them a significant investment.

So, how do you ensure you secure the best discount on solar panel purchases and installation?

  • Research to determine the best cost in your area
  • Purchase from reputable brands
  • Research your installer’s reputation and credibility
  • Explore various financing options

1. Research To Determine The Best Costs In Your Area

It is vital to research and know the costs of buying and installing solar panels in your locality. Visit various websites and stores to learn the expenses you will incur should you decide to install a solar panel system in your home.

Also, some states have websites that contain information on the average costs of solar panel purchase and installation. Visit them to determine state average prices and related financing plans.

2. Purchase From Reputable Brands

 Generally, solar panels are divided into three categories:

  • Tier 1 solar panels
  • Tier 2 solar panels
  • Tier 3 solar panels

Tier 1 solar panels are the best and of the highest quality. They have large modules and are designed and manufactured by established manufacturers. They are linked with large-scale solar production firms. These solar panels are designed and built to pass the required tests and can last over 25 years. However, Tier 1 solar panels tend to be expensive.

Tier 2 and Tier 3 panels are designed and manufactured by smaller and newer companies. These companies can lack considerable credibility. As expected, they are cheaper than Tier 1 solar panels. Tier 2 and Tier 3 solar panels typically do not have a track record, mainly because they have not passed the 25 years lifetime test. 

3. Research Your Installers Credibility And Reputation

To top up your solar panel brand choice, your solar panel system installation company is equally vital. You should ensure you get a solar company with an excellent reputation to ensure your solar panel is installed correctly.

Another factor to consider in a reputable installer is their availability in the event something goes wrong or professional maintenance is required.

4. Explore Various Financing Options

Finally, to ensure you get the best deal out of your solar panel installation, it is essential to choose the right financing option that will save you money. For those who can’t afford to buy a solar panel outright (the best option), having the right financing option is crucial.

A vast majority of solar companies offer to connect you with a financing service. However, it is recommendable to ascertain if you’re eligible for a credit home equity line (HELOC). HELOCs tend to have lower rates, averaging 4.5% to 5.5%.

Other financing options, such as unsecured solar finance, have slightly higher rates averaging 6% to 8%. 

You can also consider PPAs or a solar lease. While they translate to lower savings for you, they’re a suitable financing alternative if loans or outright purchases are not feasible options.

Final Verdict – Are Solar Panels Worth It?

So, are solar panels a good return on investment? As seen above, based on facts and figures, depending on where you live, solar panels can definitely be worth it and save you a significant amount of money.

Purchasing and installing a solar system in your home can be a good investment. Not only does it cut back on your electricity utility bill, but it also allows you to have tax breaks after purchases based on the current government policies and incentives.

As seen above, depending on where you live, solar energy can enable you to trim down more than half of your energy bill in 25 years.

What’s more, the incentives are the highest they’ve ever been and will also put more money back into your pocket when you turn to solar energy. Besides, the boost in your home’s value is significant, with an average of 4.1% increase in homes installed with solar panel systems.

As seen, some states fetch much higher amounts for households with a solar panel system. It goes a long way to prove that solar systems are worth it, especially in 2022 and beyond.

*Illustrations by Freepik Stories