Given the major gains solar technology has realized in both efficiency and affordability over the past decade, it’s easy to understand why a growing number of property owners are exploring solar as a viable option for powering their homes. Solar panels use photovoltaic cells to harness energy from the sun and convert it to electricity. Also called PV panels, a system of these constructions is referred to as a solar array. While most home owners choose to have solar panels attached to their rooftops, free-standing panels can also be placed on a residential property.
Not only do solar panels generate a clean, renewable source of energy, but they can also provide substantial financial benefits, from major reductions in monthly utility bills to significant long-term savings. These potential benefits are especially relevant in California, where the climate is generally suitable and electricity rates are among the highest in the country.
Despite solar power’s many advantages, a solar panel system won’t make practical sense for all homeowners, given the price of installation and certain limited circumstances under which a home can produce solar energy. If you’re ready to investigate whether solar could be a valuable investment for you, a good place to start is by considering how the following selling points and drawbacks may apply to your home and financial situation:
On the Plus Side: Advantages of Solar
Installing solar panels can greatly reduce or in some cases virtually eliminate your monthly electric bill.
Utility companies bill customers for every kilowatt-hour (kWh) of electricity used. Importantly, the rate that you pay per kWh will vary greatly depending on where you live. According to 2021 data from the U.S. Energy Information Administration (EIA), households in California pay more on average for electricity than any other contiguous U.S. state except Massachusetts. For many of us, this equates to bills from our provider that can easily run upwards of several hundred dollars per month.
If you make the switch to solar, you’ll still be billed by your utility (unless you’re off the grid), but your bill may drop to as low as $20, or in some cases, even lower. However, most people will still remain connected to the grid for some of their electrical needs. Solar panels don’t produce electricity at night, and are less effective on overcast days. The electricity that solar panels produce can be stored in batteries for use at night. However, batteries for solar are expensive (often more than $5,000), cumbersome and take up a lot of space.
In states such as California, solar owners are able to take advantage of a billing practice known as “net metering” in order to offset charges from their utility provider. Under this program, the surplus energy your home produces can be transferred to the grid. You then receive credits from your provider, which are used toward any charges you incur during those times when your household uses more power than your solar panels produce. Essentially, net metering allows you to store your extra energy for use later, when you need it. It’s important to note that net metering laws are controversial, and therefore apt to change, so be sure to stay up on the topic if this is a major draw for you when it comes to solar. For instance, in California, proposed changes by the California Public Utilities Commission (CPUC) could mean that those who install solar panels after January 22, 2022 will receive less compensation for their solar energy than those who install solar panels and receive authorization to operate before this time. Find more about this topic here.
Solar can potentially provide outstanding long-term savings.
Your payback period from a solar system will depend on key factors including the cost of your installation, electricity rates where you live, the value of rebates and financial incentives available in your area, and how much sunlight your panels will receive (i.e., how much energy your panels can produce). How you finance your system will also come into play.
Helping to reduce the costs of solar panel installation is a tax credit available under the Federal Investment Tax Credit. This law allows homeowners to take a one-time federal tax deduction of 26 percent of the cost of their solar installation. But as the renewable energy marketplace EnergySage clarifies, to benefit from this law, you must have enough taxable income and you must buy your system outright (with cash or a solar loan). Local and state governments may also offer incentives that can further reduce the cost of your system (e.g., net metering policies and rebates).
According to The Solar Nerd, a home that’s suitable for solar power could pay for itself in as few as five or six years, and will provide free electricity for another 20 years after this time. EnergySage also points out that although you’ll net the most savings with a cash purchase, you may be able to save tens of thousands of dollars with a zero-down payment loan. On the other hand, your savings will be considerably less with a solar lease or power purchase agreement (PPA).
To get a quick sense of how much you might potentially save over the long haul by installing solar panels, try the EnergySage Calculator. You can also get a full picture of your long-term savings by consulting “How to Calculate Rooftop Solar Panels Payback Period — A Detailed Guide” from Greentumble.
Solar panels can be used to provide power during a blackout – but you’ll need to buy a battery system.
If you add batteries to your solar energy system, you’ll have a measure of independence from the grid that can help sustain you during a power outage. Without a battery-backed system, your home would go dark during a blackout. However, most solar owners have been disinclined to purchase batteries largely due to their high costs. For people with homes located in places where net metering policies provide incentive to store energy on the grid, this is especially the case. But as The Solar Nerd points out, the more frequent occurrences of planned blackouts in California to avoid destructive wildfires could begin to make buying and storing a battery system more beneficial for some solar owners.
Solar provides protection against the rising price of electricity.
We’ve been hearing a lot of concern about inflation these days, and the threat it poses can be especially problematic when you live on a fixed income. With rates for electricity increasing every year, a solar energy system is an effective way to hedge against rising prices. And making a low, predictable payment for your energy needs each month can be especially helpful during your retirement years.
Solar power can boost your home’s value.
Although the data varies across different markets, a report from Zillow finds that adding solar panels to a home can potentially increase its value by an average of 4.1 %. For a typical single-family home in California valued at $708,936, that equates to over $29,000. However, it’s worth noting that there is always the chance that a prospective buyer won’t like the aesthetics of rooftop solar panels. But in general, you’ll add to the resale value of your home by installing a solar array.
Very little maintenance is needed.
You won’t have to put much money or effort into upkeep for your solar panel system. In general, a system should last about 25 years without any upkeep, except perhaps to clean it once in a while.
Solar is cleaner and greener than traditional energy sources.
When fossil fuels and other non-renewable energy sources are burned, they release carbon dioxide and other contaminants that pollute the environment and contribute to the greenhouse effect. On the other hand, the power generated by solar panels is free of harmful emissions, which helps to reduce the global carbon footprint. Solar energy also uses less water, land and other resources. Although some toxic materials and chemicals are used in the manufacturing of a solar panel system, the overall environmental impact of solar power is less damaging than the mining and burning of fossil fuels.
On the downside — why you may want to reconsider solar
Solar is a considerable investment.
While prices for solar panels have continually declined in recent years, you’ll still need to pay a substantial sum for the materials and installation. Prices will vary based on where you live and factors like the type of materials used, system size, roof suitability and labor costs. SolarReviews states that the average cost of solar in the U.S. is approximately $2.85 per watt as of April 2021, with solar owners paying an average of about $17,100 on a 6-kW solar panel system before the federal tax credit is applied. More generally, Forbes cites the average cost for buying and installing solar panels as a range of $10,000 to $35,000, with a median of about $15,000.
Not all homes and climates are suitable for solar panels.
it’s critical that your home receive enough sunlight to generate an adequate amount of electricity to make solar a worthwhile investment. If you want to have rooftop panels installed, your roof itself is a primary consideration. Unfortunately, even a home in a sunny climate may have a roof oriented in a less-than-ideal direction for harnessing energy from the sun, or may receive too much shading from tall trees. If you’re investing in a free-standing system, you’ll also need to have a large enough space available on your property to accommodate it. In the United States, south-facing roofs are best for producing electricity with solar panels, followed next by west-facing roofs and then those that are east-facing.
As Forbes puts it, “If you have a north-facing roof, you may want to reconsider.” You’ll likely pay more money for a more complex system that works despite a lack of direct sun exposure, and your solar panels may produce less energy, and therefore be less cost-effective. In addition, if your roof needs work, you’re better off getting the repairs done first, before you have your system installed. Otherwise, you’ll likely need to shell out thousands to have your panels removed and reinstalled.
Solar panels are not very portable, and they can make selling your home trickier.
Between labor costs for removal and reinstallation along with transportation, you’ll pay a steep price if you want to take your solar panels with you when you relocate. Furthermore, you’ll need to take care of roof repairs resulting from the removal of your system (if you have rooftop solar panels). In any case, the fact that solar panels enhance the resale value of your home can make it more cost-effective to just leave them where they are for the next owner. On the other hand, if you obtained your solar panels through a lease or power purchase agreement (PPA), selling your home can be more complicated, because the new owner will need to take over the contract.
It’s not always easy to find a good installer.
Finally, you may need to do a fair amount of research to ensure that you hire a solar installer that is skilled, trustworthy and fairly-priced. As in any industry, charlatans are out there, so make sure to vet companies thoroughly. It’s important to compare equipment options and warranties, check reviews and get multiple quotes. As EnergySage points out, comparison shopping tends to result in greater transparency among providers as well as increased competition for your business, helping to get you higher quality work at a more reasonable price.
In the final analysis, solar is a relatively eco-friendly solution for powering your home that can save you significant money under the right circumstances. What’s more, solar panels are now more affordable than ever, between prices that have experienced a continual downward trend, incentives, and favorable laws in states like California. In addition, a solar panel system can provide protections against rising electricity rates, and even enable you to maintain power during a public utility outage (if you have a battery-backed system). At the same time, solar installation is not without its pitfalls, and may not be worthwhile if you live in an area that offers low electricity rates, or if you own a home that won’t receive sufficient sunlight to operate an effective system. For these reasons, make sure to run the numbers if your primary reason for purchasing solar is financial gain.
Ready to start exploring your options for solar power but need to secure the funds to get started? The Police Credit Union can help with a Home Equity Line of Credit (HELOC) that allows you to capitalize on the hard work you’ve already put into your home. Our HELOC features a fixed introductory rate, credit limits from $10,000-$300,000, a quick approval process and no application fees. Find details and apply here.