According to the Energy Information Administration, residential electricity rates have increased nationally by around 15 percent in the last ten years. With this steady increase in the cost of residential electricity, many consumers are wondering, “is making the switch to solar worth it?” The answer to that question depends on several factors, including your property, your local energy rate, what your system will cost to install, and if you qualify for any potential cost savings.
Determine your property’s sunlight exposure.
Assuming you own your home or business, you’ll want to do a quick audit of your home or business’s potential for capturing the sun. You might assume that living in a cooler northern climate (such as Minnesota or Wisconsin) may disqualify you from being well suited for solar, but that is not necessarily the case. In reality, cooler, sunny days in many northern states are optimal for solar energy production.
A more crucial factor for most property owners is the orientation of their home or business to the sun and the amount of unimpeded sunlight that hits their roof daily. To get a reasonable estimate on your property’s potential for solar energy production, you can use the free SolarReviews calculator, which provides a calculated output based on your specific property’s sun exposure.
Identify your average monthly electricity cost.
Knowing your average monthly electric consumption and the associated monthly average costs is crucial to determining if solar is worth the investment. Because rates vary from state to state and often your consumption has seasonal peaks and valleys, you’ll want to make sure that you’re taking a monthly average for an entire year. The higher your average monthly bill, the greater chance that making the switch to solar can benefit you,
Understand the size and cost of your system.
The average residential solar installation is roughly a 5kW system. The average cost to install a system is estimated to be $3 and $5 per watt, making a typical system of this size cost between $15,000 to $25,000 before any tax credits or rebates. However, each property owner has different energy needs based on their consumption and different production potential. If you know your current energy usage, you can calculate how large a system you’ll need to cover your electricity costs. But to determine your specific solar system size, you’ll first need to talk with a certified and experienced solar installer. They’ll be able to help you identify how many panels you’ll need and what your potential system’s production might look like once completed.
Identity credits and incentives.
The federal government recently renewed the Federal Investment Tax Credit (ITC) to both home and business owners who install a qualifying solar system. The federal tax credit offers a 26 percent federal tax credit on the installation costs for systems placed in service by Dec. 31, 2022. That amount falls to 22 percent in 2023 and drops to 10 percent for businesses in 2024 while expiring completely for residential projects.
In addition to the federal tax credit, many state and local governments and some utility companies offer incentives for qualifying solar installations. Additionally, most states offer net metering, allowing a property owner to sell any excess power they produce back to their local utility company and use that as a credit on their electric bill.
To learn more about whether solar panels are a worthwhile investment for you and your property, contact an All Energy Solar representative.
