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More and more homeowners are making the switch to solar energy for their home. As electricity prices rise and solar panel prices fall, installing a residential solar PV system is becoming a sound economic decision for many homeowners across the country, translating into considerable savings over the 25 year lifetime of the panels.
Installing a solar energy system for your home is a big decision, the value of which is similar to a car, so you want to do your homework and make the best decision for your situation. Here are a few of the mistakes to avoid when switching to solar energy.
1. Having Unreasonable Expectations
While solar panels for your home can be a great investment, it’s important to realize that, depending on where you live, it can be one that takes many years to pay off. But remember, most solar panels have a lifetime of about 25 years, sometimes even longer, so time is on your side when it comes to recouping your money. Having a reasonable expectation of the payback period will help you in your discussions with installers and in deciding how to finance your system, as different financing options will affect the profitability of your investment.
Sunmetrix Discover can help you figure out how much solar energy you can produce with different size systems, how that compares to your electricity consumption, and what that translates into in terms of savings. All of this information, along with the expected payback period, can also be found in our Solar Report for homeowners.
When it comes to unreasonable expectations, another factor that homeowners often overlook is the variability of the sun. The output of your solar system will vary from day to day and from season to season, as it is affected by cloud cover as well as the number of daylight hours. Understanding this variability and knowing what to expect for your location will help you in managing your expectations with regard to the profitability of your system.
Just like with investments on the stock market, day to day variation is normal, but what is important is the long term outlook for your investment – in the case of solar, if you’ve done your homework, it is a decision that can offer consistent returns.
2. Not Researching Your Financing Options
As mentioned, installing solar panels for your home is expensive, on the order of $15,000 to $25,000, depending on the size of your system and where you live (more on incentives in the next section). Most homeowners don’t have that kind of cash lying around for an outright purchase.
When solar PV systems started to become popular, solar leases were developed as a means for people to afford solar panels for their home: With zero-down payment and low monthly payments, it seemed like an obvious choice for many homeowners keen to reap the benefits of solar energy. But there are a number of important drawbacks when it comes to solar leases.
With a lease you don’t own the system and as a result, you miss out on some of the key benefits of having a solar PV system, namely the federal investment tax credit of 30% (along with other local incentives) and your home’s increase in value (in fact a solar lease can undermine the sale of your home, as many would-be buyers do not want to take over a lease).
Today, you have another option, one that is increasingly popular: a solar loan. Solar loans often come with no down-payment, flexible loan terms, and reasonable monthly payments, that allow you the homeowner to enjoy all the benefits of your solar PV system. The Sunmetrix Buy or Lease Calculator allows you to compare your numbers, adjusting the terms of the loan or lease to really see what makes the most financial sense for you.
3. Missing Out on Financial Incentives
A reputable solar installer will be aware of the solar tax credits, solar rebates and other financial incentives available to you where you live, and might even help you with the paperwork, but that doesn’t mean you shouldn’t also know about these programs. Ultimately, you will be the one who pays for your system and benefits from these programs – it’s in your best interest to make sure you don’t overpay.
In your initial research phase, you want to understand what programs are available to you to bring down the cost of your system and you want to know the fine-print (for example, do you have to wait until tax filing time to receive your benefit?). All of this information will help you make the best financing decision and arm you with the information you need when you start speaking with installers.
It will also help you manage your expectations as you navigate the process. You can refer to our regularly updated pages of incentives by state, listing the available programs in your state with links to the details. Some programs are state-wide but others are specific to certain municipalities. If you want to focus on the programs available for your address or zip code, you can refer to our Solar Report. To be sure that you don’t miss out on financial incentives that can make your solar panels more affordable, it pays to do your research.
4. Not Getting More Than One Quote
As with most big purchases, it’s worth your time and effort to get a second (and third) opinion. Not only will you learn more with each site visit from installers, but you will have a chance to interact with the companies and determine which one is best suited to handle your installation.
Installers will evaluate the condition of your roof, consider its orientation, take shade estimates and go over your electricity bills with you. This is an important process that is required for the installers to propose the best design for your system and make a proper estimate of the cost.
In an ideal world, the installers will make estimates for the same size system, using similar equipment, so that you can make direct comparisons. While this is not always possible, you do want to understand how they determine the best system size for you (one that will meet your needs).
Once you have some numbers, you can use Discover to see how they stack up. We can help you find installers in your area, check out their credentials and see their Google and Yelp ratings and reviews.
5. Waiting Too Long
It is a big decision, but waiting until prices come down is not always the best strategy because you could be missing out on savings today, in the form of lower electricity bills and/or financial incentives that are time sensitive. As more and more homeowners chose solar energy for their home, solar rebates and tax credits will be phased out. Electricity prices continue to rise, on average by 3% every year across the U.S. since 2005, known as the escalation rate (in some states this annual increase is more than 5%).
It’s important to realize that solar leases also come with their own escalation rate, whereby monthly payments increase over time, something that generally makes leases less desirable. With an outright purchase or a solar loan, however, your solar PV system can help you reduce your electricity bill and mitigate the risk of rising costs, as you will know exactly what you’re paying for your system with no unpleasant surprises.
Why not Discover today what solar energy can do for you where you live?
Simone Garneau is the co-founder of Sunmetrix, an online consumer education website for residential solar energy. The goal of Sunmetrix is to help homeowners go solar and save money with our Solar Cashback Program. In addition to the 200+ articles about solar energy, Sunmetrix offers homeowners three main resources: a Consumer Report for solar energy, Discover to preview solar energy for your home, and GO, the only solar energy test drive experience. Read all of Simone's MOTHER EARTH NEWS posts here.
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