Using solar energy can save you thousands of dollars. But how do you make sure you’re keeping track of all your savings? We’ll show you how to tally it all up!
1. Take advantage of all rebates and incentives. Many states offer rebates or incentives to encourage people to install a solar energy system. The federal government offers the Solar Investment Tax Credit (ITC), which provides you a tax credit for 30 percent of the cost of your solar energy system. If you live in a state with great incentives, you could save upwards of 50 percent of the costs of going solar by combining both state and federal programs.
For example, New York has one of the most generous incentive programs in the country. If you took full advantage of the incentives in New York, you would receive about a 60% discount on of the cost of buying a solar energy system.
Needless to say, fully utilizing all rebates and incentives can significantly lower your upfront costs, and make a big difference in your final return on investment.
2. Count what you didn’t have to pay your utility company. Think of all the utility bills you have to pay in one year. Now think of all the utility bills you’d pay in 20 years! When you go solar, you’ll be avoiding at least 20 years of bills from your electricity utility.
The most recent data from the United States Energy Information Administration shows that the average monthly electric bill for an American household was around $111 in 2014. Assuming your energy consumption is near this national average, a switch to solar would save you approximately $1,333 in the first year alone.
3. Consider the uphill climb of energy rates. Just multiplying one year’s worth of electric bills by 20 years doesn’t capture the entirety of your savings. You also have to account for the fact that the price of electricity increases almost every year.
According to the United States Energy Information Administration, the average price of power increased 3.1 percent from 2013 to 2014. This means that if your bill is $111 now, in five years it will be up to $126 per month. Twenty years from now, your monthly power bill will have risen to over $185.
This means that in 20 years, you would have paid over $35,000 to your utility company. That’s all money that you could have saved if you’d gone solar.
4. Make money with solar renewable energy certificates. In some states, you have the ability to sell credits for producing clean power. Solar Renewable Energy Certificates, or SRECS, are credits you receive each year for producing clean energy. SRECS can be sold to your utility company, and depending on their market rate, you can make several hundred dollars per year. The SREC market in New Jersey is one of the most profitable markets in the country. The Massachusetts SREC market also provides a great return for investors.
5. Consider the entire lifetime of the solar energy system you buy or lease. When you’re calculating how much you save by using solar energy, you need to think about your costs and savings over the lifetime of your solar energy system. When you buy a solar energy system, almost all of your costs come from the installation of the system. When you lease your solar energy system, your costs are spread out over your use of the system in the form of monthly payments. In either scenario, you will save the most with solar by trying to minimize your costs (upfront or monthly).
6. Compare your savings for a leased system. When you lease your solar energy system, you save money by paying a much lower rate for power than you would normally pay to the utility company. This is because the payments you’ll make to the system’s owner should be lower than the increasing payment amounts you’d anticipate paying your utility.
However, make sure to ask the solar leasing company that owns your solar energy system what data they’re using to inform the calculation about how much your electricity payments are forecasted to increase each year.
Solar is still a growing industry and it can be confusing to navigate. Make sure you have all the information you need when trying to choose a solar installer and deciding how to best finance your system. There are some great resources for understanding the industry and picking the installer that’s right for you. Check out the U.S. Department of Energy, the U.S. Energy Information Administration, and EnergySage for help.
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