Two of my core values are frugality and helping the planet. Adding solar to my house is one way I can help the planet by decreasing the amount of energy I consume from nonrenewable resources. But what is the cost of such a move, and when do I break even financially?
Where do I even begin to explore these questions and other blind spots I might have about solar energy?
The following resource can help you determine if your house is a good candidate for solar and what the approximate savings would be for such a change: solar savings estimator.
The process of getting a quote is simple. The two companies I reached out to asked me to send them a copy of my energy bill and some pictures of my Electrical Service (Electrical Panel and Meter). With this information, they obtained my address and were able to view my house and roof to determine its exposure to the sun as well as my annual electric usage. With the pictures, we were able to determine if my Service was To Code and generally figure out how easy a PV System can be interrogated into my existing Service or if additional work might be required. In my case, I wanted to get additional panels to account for the purchase of an EV in two years.
The breakeven period, according to the solar provider, is about 14 years. Over 30 years, we would save $104,962.*
*Assumes a 0.3% annual solar efficiency decrease and an 3.5% annual utility rate increase over 30 years.
In 2022, the Solar Investment Tax Credit (ITC) is 26%. In 2023, it will drop to 22%, and in 2024, it is set to expire. This tax credit—and the fact that it is set to expire in a couple years—is a great incentive to explore solar energy now.
When I first started looking into solar options, I had no idea that it could increase the value of my home for resale. According to the Renewable Energy Focus Journal 2017, 1 watt of solar energy adds $3 to the value of your home.
Financing is available as well, which would affect your breakeven period. As of January 12, 2022, the rates very between 3.24% and 9.84% for up to 240 months.
Other considerations to keep in mind as you look into solar options for your home:
- The length of warranty: There are 25-year warranties available for both workmanship and performance.
- Your roof age, pitch, direction, and type of roofing material (as some types of roofs are more expensive to install on compared to others): Your roof cannot be too old or it will need to be replaced after solar has been installed. To remove an existing PV System and re-install after a new roof is installed can cost $5,000 – $10,000. Also be aware of any obstructions (such as trees) that could block sunlight from your roof, as well as the direction your roof faces. Northward-facing roofs don’t receive enough “good” sunlight to normally pencil out as a good location for module placement. Southward-facing roofs are the best.
Written by: Michael Van Sant, CFP®. CSRIC™
Disclosure: The material is presented solely for information purposes and has been gathered from sources believed to be reliable; however, Merriman cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Merriman does not provide tax, legal, or accounting advice, and nothing contained in these materials should be relied upon as such.