Energy prices are climbing, and homeowners across the country are feeling the squeeze as they try to figure out how to cover rapidly rising costs. While spiking energy prices are due to several factors, one thing seems clear: energy affordability is an issue of increasing concern to many Americans.
Enter solar panels. According to the Solar Energy Industries Association, solar power has grown at a rate of 50% annually since 2011. Like rising energy costs, the popularity of solar can only be understood by accounting for several factors (not all of which will be covered here). There are some key things homeowners should know when thinking about installing solar panels or purchasing a property with solar panels.
Enter solar panels. According to the Solar Energy Industries Association, solar power has grown at a rate of 50% annually since 2011. Like rising energy costs, the popularity of solar can only be understood by accounting for several factors (not all of which will be covered here). There are some key things homeowners should know when thinking about installing solar panels or purchasing a property with solar panels.
1. How does solar work?
Solar panels contain cells full of electrons. When sunlight hits the panels, it galvanizes think, shocks, or excites the electrons within the cells, which creates a flow of electricity that is sent to the solar inverter. The solar inverter is kind of like the “brain” of the solar energy system it is the key to making the whole system work as it should. The inverter takes the electricity generated from the panels and converts it into usable electricity for your home.
2. Tax credits
The Federal Solar Tax Credit can be claimed on federal income taxes for a percentage of the cost of solar panels installed on a home with the percentage ranging from 22%-30%, depending on when the system was installed. These credits could significantly increase the affordability of a solar system, making it a great option for those interested in adding solar panels to their home.
3. Roof space and house orientation
This is one of the first things to consider if you want solar panels installed on your home. Most companies aim to install panels on a south- or west-facing portion of your roof to ensure maximum sunlight exposure.
Further, you must decide how many panels to install. Here’s the good news: As solar technology has developed, it has become far more efficient, meaning fewer panels are needed now than a decade ago. Having said that, since each home’s energy needs will vary, the number of panels will ultimately depend on the energy output of your home.
4. What about batteries?
In the early days of solar, batteries were used somewhat infrequently. They were seen as an additional, unnecessary cost. However, that appears to be changing as more residential home solar users are installing battery systems.
The benefits of a battery system are (primarily) twofold: First, it allows the homeowner to avoid relying on an external power company during “peak hours”. When your solar system does not have battery backup, you rely on the power company at night when there’s no sunlight. Power companies have capitalized on this, and increase rates during “peak hours”, thus making it more expensive for homeowners to buy energy when they need it. A battery system lets you avoid this, as the solar generated during the day is stored in your batteries and can be used at night. Second, if there’s a power outage due to a storm or other incident, a solar system with batteries will continue running.
So, while batteries increase the overall cost of solar, it tends to pay off in the long run.
5. Is solar worth it?
Like the age-old adage: “Money makes the world go ’round,” the cost and ROI of solar is still the deciding factor for most people considering solar panels. Calculating just how much money you might save by installing solar is not an easy task. Generally, systems run anywhere from $15,000–$25,000, which includes labor and installation. The savings that a homeowner sees will depend on three things:
- How much they pay in utilities without solar
- Incentives offered by local power companies
- How much money is put down upfront
All-in-all, it’s safe to assume that solar will save homeowners money over the long haul, but the amount can vary significantly. Still, a growing number of people are going solar for ethical and/or environmental reasons. Experts seem to agree that solar energy will continue to grow steadily, so long as investment in solar infrastructure continues to be a priority.
Solar and Your Home’s Value
Does installing solar panels increase the value of a home? To answer that, you must consider several factors. For some buyers, solar panels are aesthetically undesirable. In that sense, they might marginally reduce the buyer pool.
Other more objective factors include things like geographic location, system output and age, system warranty, local solar incentive programs, and system replacement value. For example, if a prospective buyer looks at a home with solar panels that were installed less than five years ago, and have a standard 25-year warranty, that home’s market value will be higher than a similar home with 15-year-old solar panels. So, bearing in mind these factors, most experts still agree that solar panels increase the market value of a home. In fact, one recent analysis found that solar panels increase the market value of a home by 4.1%.
That increase, of course, needs to be balanced by the overall cost of the solar panel system, which is why it’s a good idea to talk with your Realtor® if you are considering how solar panels might affect the value of your home.
