Most solar sales pitches extol the virtues of solar power and promise thousands of dollars in savings. While more than 1.2 million homes in the United States have already adopted solar power and are enjoying the benefits, the viability of rooftop solar depends on your house and where you are located. In fact, solar power economics varies from house-to-house even in the same neighborhood.
Now, let us look at all the key factors that determine whether solar panels are worth it for YOU.
Your current electricity prices: The higher your current electricity prices, the more likely you will save money by installing solar panels. Your utility sets your electricity prices and you can find out how much you are paying by looking at your electric bill. Units of electricity are measured in kilowatt hours (kWh) and to measure the price of 1 kWh of electricity, divide your monthly bill by your monthly kWh consumption. If you are paying more than 15 cents/kWh for your electricity, you will very likely save significant money by installing solar panels.
How fast your utility is increasing electricity prices: Electricity prices across the U.S. are typically increasing at 3% to 5% per annum. In some utilities, the price increases are even more. One big advantage of installing solar panels is that you can lock in your electricity rate for the next 20 to 25 years. If you use a loan to purchase solar panels, you will be paying a flat monthly amount till the solar loan is repaid. If you lease solar panels, you are still going to be paying a flat monthly amount for the duration of the lease period. If you end up choosing a PPA, you can lock in your electricity rate for the duration of the PPA contract. No more surprise electric bills or rate hikes
Cost of Solar Panels: The better the deal you’re able to get on your solar system, the more you’ll save by switching to solar power. Solar panels were so expensive when they first started being used in the 1960’s that they were only used in advanced space and military applications. However, by the early 2000’s the prices had fallen to the point that average homeowners could adopt solar, and with recent advances in technology and scale solar panel prices have continued to plummet. In the last five years the cost of going solar has fallen by as much as 80%. This is making homes that were previously unable to adopt solar increasingly able to join the clean energy revolution.
How much sunshine your roof gets: The same solar panel can produce more or less electricity depending upon how much sunshine it gets. Solar panels installed in states like Florida, Texas, and California that get more sun will produce more electricity than solar panels installed in states like Michigan or Minnesota that generally get less sun.
Even if your home is in a state that gets plenty of sunshine, not all parts of your roof are right for solar. South facing roofs typically get the most sunshine given that the United States is north of the equator. East and West facing roofs are also good for producing electricity and, in instances where the consumer is on a Time-of-Use tariff, West facing roofs may offer the best savings potential. North facing roofs are not ideal for solar and should be avoided in most cases.
In addition, it is important to assess how much shading there is on the roof from nearby trees, buildings and obstructions on the roof such as chimneys, vents etc. If your roof is lightly or even moderately shaded, solar panels may still be viable. Solar panels systems with advanced technology such as microinverters and optimizers can mitigate the effect of shading. It is best to avoid heavily shaded roofs unless you are able to address the source of shading (e.g., trimming trees etc.).
Incentives & Rebates: The federal government, along with many state and local governments, are promoting the adoption of solar power by makings solar panels cheaper for consumers. The federal government is offering a tax credit that is equal to 30% of the cost of the solar system. If you pay federal income taxes, this means that your net cost is only 70% of the solar panel system price. Many states such as New York, Massachusetts, New Jersey, among others, are supporting solar power by offering additional rebates and incentives. Even cities and towns are offering incentives to promote solar panels.
You don’t have to be a math wizard to calculate if solar panels are worth it for you. That’s why we built an easy to use Solar Savings Calculator that does the math for you and lets you know if your home is suitable for solar panels and how much you can save from installing solar panels.