Every solar company has a variation of the same sales pitch, “did you know going solar can save thousands of dollars?” They make it sound so easy, but the truth is, whether solar is a smart long-term investment for you depends on a few major factors. So before you buy into the hype, we recommend you use this simple guide to cut through the sales jargon.
How to Determine Whether Solar Is Right for You
As you start exploring your solar options, there are a few questions you can ask to help determine whether solar makes sense, including:
How Much Do You Pay for Electricity?
Your current electricity bill is the largest factor in determining how much you’ll save by installing solar. You pay your utility company for every kilowatt-hour (kWh) of electricity you use, and your rate varies significantly depending on where you live. In some parts of the country, you can pay as little as 8 cents per kWh; in others, you’ll pay 20 cents or more.
When you go solar, you effectively install a mini power plant on your roof to replace the power plant where your utility gets its electricity. That means homeowners with high electricity rates from their utility are the ones who save the most when they switch to home solar power.
If you’re just getting started and aren’t sure how much solar can save you, start out by using an online Solar Calculator. EnergySage’s calculator incorporates local electricity rate data to give you a customized estimate of what you can expect to save, and just how quickly your investment will pay off.
How Much Does the Solar Panel System Cost?
Installation prices will vary significantly depending on the solar company you choose and the equipment you install. While cheap solar panels might feel like the easiest way to save some cash, your total 20-year savings will often be higher if you invest in high-quality equipment. It’s worth taking some time to review all of your equipment options and find the right combination of price and quality for your home. You can use an online solar marketplace like EnergySage to easily compare all of your offers in one place, the same way you’d shop for a flight online.
Don’t forget to research the solar incentives and rebates available where you live: they can reduce your net cost by 50 percent or even more. The federal government offers a 30 percent solar tax credit, and many states and municipalities have additional financial incentives for their residents. Some utilities even offer cash rebates to their customers to encourage them to go solar.
How are You Financing Your Solar Panel System?
Whether you choose to buy or lease your solar panels will have a major impact on your system’s long-term value. If you have enough to make a purchase in cash, you’ll save more than with any other option – but even with a $0-down solar loan, your savings could still be in the tens of thousands. While solar leases and power purchase agreements (PPAs) require no money down and promise a maintenance-free option, they come with a trade-off: your total savings will typically be just 10 to 30 percent of your utility electricity bill.
How does this play out in the real world? This screenshot from the EnergySage Solar Calculator for an example property in Massachusetts shows the difference in long-term savings between a cash purchase, solar loan, and a solar lease.
What if You Don’t Live in the Sunny Southwest?
While solar loves sunlight, you might be surprised to learn that you don’t have to live in the sunny Southwest to achieve lots of solar savings. In fact, some of the states with the most installed solar in the country (including New York, New Jersey, and Massachusetts) are in the Northeastern U.S. – more famous for their cold snowy winters than sunny summer days. Why is this? These states often have higher electricity costs and better local incentives than elsewhere in the country.
Shop Around to Find the Best Deal on Solar
Solar is a big investment that can pay off in a major way. Be sure to inform yourself of all your options before you sign on the dotted line. EnergySage’s Solar Calculator is a great place to start – use it to get a customized estimate of your 20-year solar savings in a matter of seconds.
If you’re ready to take the next step, join the EnergySage Solar Marketplace to get offers from qualified solar companies in your area. Since these installers compete for your business, you will generally save 20 percent or more off your installation costs. EnergySage was built with the support of the U.S. Department of Energy in order to help spread solar adoption across the country, so once ready, give it a try for free!
Vikram Aggarwal is the founder and chief executive of EnergySage, the online solar marketplace. EnergySage simplifies the process of researching and shopping for solar. By offering shoppers more choices and unprecedented levels of transparency, EnergySage allows consumers to select the option that provides the best value for them, quickly and easily. Read all of Vikram’s posts here.
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