Why Solar is a Smart Investment
Everyone knows that solar energy is good for the environment. However, with over 2 million homes installing solar panels on their roof in the United States, many homeowners are now discovering that solar is also a smart investment opportunity. In this article, we will outline a few of the concepts, legislation, and statistics that make solar panels a great financial opportunity.
Clean, Renewable Energy Production
By harnessing the power of the sun, solar energy is fueled by an essentially limitless, free source of power. Once you’ve installed your panels and inverter there are essentially no more additional costs to run a solar energy system. In this sense, purchasing solar panels is one of the only ways to truly “buy” your energy, rather than “lease” it from the utility company.
Every time you flip on a light switch (or the air conditioning) in your home, you have to pay the electricity company in order to use the energy supplied via the utility grid. Whenever your solar panels produce energy on your roof, then you can use that electricity, completely free of charge. Today, modern solar panels generally last for over 30 years, which means that they are sure to deliver a long lifetime of electricity generation.
Reduced Electricity Bills
For some customers, one of the most exciting parts of investing in solar panels is receiving the first electric bill after the installation. Depending on the size of your system and electricity usage, a solar panel installation will partially or completely eliminate your electricity bill. Basically, if you are producing more electricity that you are using, then you may never have to pay the utility a dime (aside from grid maintenance fees) for your electricity.
Now that you have eliminated the monthly cost of your electricity, solar energy systems can essentially pay for themselves. The exact “break-even” point, in which the cost of your solar energy system is equal to what you would have ordinarily paid with utility electricity can only be calculated on a case-by-case basis, and is largely determined by the cost of your system.
Good financing rates or total upfront cash payments are the best way to bring the break-even point for solar energy installations down to a reasonable timeline. Of course, once you have paid off your solar panels, all of the electricity they produce is essentially free!
Protection Against Future Rate Increases
Of course, when purchasing electricity from a utility company, homeowners have little to no buying power in terms of the rates that they will pay. Electricity is billed at a per kilowatt hour rate, which is subject to change and rarely decreases. Depending on your location, your local electricity company may even bill you at higher rates than your neighbors depending on what time of day you use your electricity and how much power you use on average each month.
Unfortunately, rate increases are somewhat inevitable for residential electricity. With increased demand nationwide, utilities like Florida Power & Light will raise the rates of electricity, leaving customers with higher monthly bills. Of course, rate increases can be sidestepped by generating your own electricity, right on your roof.
With solar panels sending electricity from your property to the grid, you are no longer subject to paying the higher-tiered electricity rates set aside for high consumption customers or time of use billing. An investment in a solar energy system protects you from future rate increases, as you will have paid a fixed amount for your home’s electricity in the solar installation.
Increased Home Value
It’s true! Adding solar energy to your property increases your home’s value. In a 2019 study done by Zillow.com, the real estate giant found that homes with solar energy sell for 4.1% more than homes without. Even more so, the study found that homes in Orlando, Florida sell for 4.6% more with solar panels.
With a 4.6% increase in sale price in mind, let’s turn that into real numbers. The median home value in Florida is around $240,000. Therefore, on average, adding a solar energy system to your home in Florida may increase the value of your home by over $11,000. It is a great selling point in the event of an unexpected move.
So why does solar energy increase home value? It is actually easy to see if you put yourself in the buyer’s shoes. Whereas most homeowners are concerned that the aesthetics of solar panels will limit the number of possible buyers, total or partial elimination of an electric bill is sure to attract a financially conscious investor.
Act Now for the Federal Solar Power Investment Tax Credit (ITC)
Right now, there has never been a better time to go solar. This is largely in part due to the nationally available solar energy investment tax credit. The ITC, as it is abbreviated, is a federally funded incentive for homeowners to invest in renewable energy systems like solar and wind.
At the end of 2019, the ITC allowed homeowners to deduct up to 30% of the total cost of their solar energy systems. This includes costs for permitting, equipment, labor, and more. In 2021, the ITC was reduced to 26% of total system costs. At this juncture, the ITC is stated to expire at the end of 2021.
Unfortunately, the federal solar energy ITC is no longer available to homeowners starting on January 1st 2022. Instead, it will remain in place as a 10% tax credit for commercial solar applications only. With its life quickly coming to an end, homeowners should look to apply for the ITC as soon as possible. Hesitation will only result in a missed opportunity to reduce the initial investment in your solar energy system.
Ultimately, solar energy is as good for the environment as it is for a homeowner’s financial health. By eliminating a utility bill and locking in your electricity payments at a fixed rate, solar panels help decrease the vulnerability of endlessly paying the power company whatever it asks.
In 2021, increased home value and available tax incentives help make solar energy one of the best investments you can make for your home.
- Why Solar is a Smart Investment
- The Ten Best Ways to Reduce your Energy Bill in Florida
- How to Make Passive Income with Solar Energy
- The Federal Solar Tax Credit: How Does It Work?)
- Do solar panels work during a power outage?)
- Solar panel maintenance)
- Are residential solar panels worth it in 2021?)
- How to reduce your energy bill in Florida (other ways to cut down your utility bill)