Now that spring is here, many homeowners are thinking about taking advantage of the warmer weather and longer days to tackle some home improvement projects. You don’t need to look very far to find a great opportunity to increase the value of your home and save you money in the long run – just look up! Solar energy is growing in popularity because of its many benefits. But homeowners naturally have a number of important questions. I hope to answer some of the most common ones here.
In many cases, the answer is yes, but it all depends on three important considerations, all of which are location dependent. The most obvious one is the amount of sunshine where you live, but this is less important than you might think (and I address this point in more detail below). The other very important factors is assessing the profitability of solar energy are the available financial incentives that bring down the cost and the price of electricity where you live. Obviously, the more you pay for electricity, the more you stand to save with solar energy.
The term grid parity is used to describe when the cost of solar electricity is the same or cheaper than electricity from your utility. A number of states have reached grid parity, such as California and New Jersey to name a couple. They receive quite different amounts of sunshine, but because of the generous incentives and the high cost of electricity, solar energy is a worthwhile investment in these states. In another example, going solar in Connecticut makes much more financial sense then in Florida (the Constitution State beats the Sunshine State hands down, when it comes to the value of solar electricity!)
A solar power calculator, like Sunmetrix Discover, can help you determine the profitability of solar energy where you live, and by adjusting some of the parameters in the Buy or Lease Calculator, you can determine the best way to finance your system. Generally speaking, a purchase (with or without a solar loan) will save you more money than a lease in the long run.
It’s only natural to think about the level of sunshine where you live, when you think of solar energy. But even places that are fairly cloudy year round or further north with short winter days benefit from solar energy. Germany, for example, is a world leader in terms of installed solar capacity, and Berlin, Germany receives just over half as much solar radiation as Los Angeles, California. Yes, it’s true that cloudy places will not produce as much solar electricity, but they can still produce enough to be a profitable investment, if the other two factors I mentioned (available incentives and cost of electricity) are favorable for solar energy.
Most residential solar photovoltaic systems are grid-tied. In other words, you keep your connection to your local utility. This is important for two reasons: 1) you can receive extra electricity when your panels are not producing enough, such as at night and 2) you can sell your excess electricity back to the utility for credits when you are producing too much. This is called net-metering.
Recently, there has been quite a bit of news about changes to net-metering in certain states, such as Nevada. Instead of being compensated for excess electricity at the retail rate (what you would have paid for the electricity if you needed it), Nevada is only compensating solar generators at the wholesale rate (what the utility pays to buy electricity from power plants), which is considerably lower. This can significantly lower the profitability of your solar system if you’re regularly sending excess electricity back to the grid for credits. As a result, we will see batteries for excess solar electricity grow in popularity in areas that do not credit solar electricity at the retail rate (Australia is a great example of this trend).
However, most states still have net-metering policies that credit homeowners for their excess electricity at the retail rate. Even if you’re not producing electricity at night, you will benefit from the credits you accumulate producing excess electricity during the day, and/or benefit from lower electricity rates at night where time-of-use electricity rates are in place.
This is a common question. One of the first things a solar installation company should do, when preparing a quote for you, is to visit your house and look at your roof. In addition to looking at the shade levels and orientation of your roof, they will be assessing the condition of your roof. If it is relatively old or in need of repairs, you will want to address this before proceeding with a solar system installation. After all, those solar panels can be ticking for 20-25 years, and the last thing you want to do is remove them after a few years for a roof repair.
But what about a brand new roof? It is important to look at the fine-print of your roof warranty (because most roof warranties are null and void if you do anything that interferes with the integrity of the roof), but you should also protect yourself by choosing a solar company that offers their own warranty. Talk to the installer and get them to explain the risks and their warranty, and read consumer reviews to find the most highly-rated installers in your area. Nearly one million homeowners have gone solar in the U.S., according to the Solar Energy Industries Association (SEIA). With some initial homework, you can find a solar company you feel comfortable with, and join those homeowners who are enjoying the benefits of producing their own clean, green electricity.
Like with many high-tech purchases, it’s usually not long after you purchase them that the price comes down. According to SEIA, the price of residential solar has dropped nearly 60 percent since 2006, but this rate of decrease is likely to slow down, as mass production and intense competition in the solar equipment market (i.e. the panels and inverters) made up most of the price drop. Today, it’s actually other so-called “soft costs” that make up most of the cost of installing solar panels. These soft costs include permits, design and customer acquisition to name a few. While many companies are working hard to bring down these soft costs with innovative software tools, the rate of price decreases is not likely to be as dramatic as it has been.
In locations where grid parity has been reached, holding off from going solar means missing out on savings today. This lost opportunity could translate into a considerable chunk of change in the long run. If you’re on the fence about whether to go solar, there are two other important considerations to keep in mind: the electricity escalation rate and the federal investment tax credit of 30%.
Electricity prices have been going up on average across the United States. Since 2005, the average escalation rate (the rate by which electricity prices have gone up each year since 2005) for the U.S. was 3%, with Michigan experiencing the highest average year-over-year increases since 2005, at nearly 5.5%. By comparison, Louisiana experienced the lowest average year-over-year increases since 2005, at 0.3%. While looking at what has happened in the past does not tell us what will happen in the future, it gives us some ideas about the general trend. Solar energy gives you the chance to lock-in cheaper electricity for the next 25 years on average.
The federal investment tax credit (ITC) of 30% for solar panels is another very important reason not to delay by too much. While it was originally set to expire at the end of 2016, it was recently extended through 2019, after which it will be gradually phased out over the following three years. The solar ITC has made the difference in many places, making solar electricity cheaper than electricity from the utility. Make sure you take advantage of this generous incentive by going solar soon. There’s never been a better time to reap the benefits of solar energy.
So there you have it: solar power may sound a bit complicated at first, but with some basic research you can be on your way to generating your own clean power at a very competitive price point. Now, if only tackling your kids’ bedroom closets for spring cleaning was this easy...
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 two main tools: 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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