As a homeowner, installing solar panels on your property is a great way to save money on your energy costs over multiple decades. Due to the precipitous 70% drop in the cost of solar power equipment since 2010, more than 10 million homes across America are now powered by solar photovoltaic panels on homes, businesses and from large-scale solar projects .
If you are considering solar energy, you may have wondered: is it best to go solar now or wait until prices drop further?
It is a fair question, given how much prices have dropped historically. Simply looking at the rate of cost declines in recent years, one could expect photovoltaic (PV) modules to be much cheaper in a few short years.
For example, let’s assume that you wait three years to purchase a PV system and that solar power costs decline by two percent per year , bringing the cost of a standard $15,000 system down to $14,100. For each year that you waited, you would save $300 on solar power installation costs.
Here are 4 reasons why you should switch to solar in 2021
The benefits of incremental decreases in price by waiting have to be weighed against the opportunity cost of delaying action.
Here are four reasons why:
- Waiting to install solar means waiting to save money on your energy bill, which will continue to rise over time.
- Prices for photovoltaic panels for homes are still low, but this may change in the near future with impending tariffs on imported panels.
- Favorable government incentives for solar energy are decreasing or being phased out entirely in the coming years in several U.S. markets.
- Solar power is a proven way to boost the value of your home and sell it faster, if you choose to.
Let’s examine each point in further detail.
Waiting means missing out on thousands of dollars in potential savings
Waiting to install solar panels means waiting to save on your energy bill, and continuing to pay more for that energy as prices rise.
- Over the last decade, electricity prices have increased about 2.2% per year in the U.S. .
- In 2016, the average American household’s energy bill was $112.59 per month, or about $1,350 annually .
- If you were to install a solar photovoltaic system that generated enough power to offset this bill entirely, you would be saving $1,350 in year one. With a 2.2% increase each year, your savings in year two grow to $1,380 and would reach $1,500 in annual savings in less than 5 years.
Remember, the total cost savings from waiting three years to go solar came out to $900, so this figure would be eclipsed in year one by getting solar panels for your house now. Savings would more than triple by year three and would only continue to grow with time, as you are avoiding paying for the rising cost of energy. And that is a good reason to get solar panels for your home right now.
Solar panel prices are at an all-time low
After decades of annual cost reductions as a result of government incentives and expanding manufacturing globally, solar modules and panels are now cheaper than they have ever been.
For example, in 1977 solar cells cost $76.67 per watt , while in late 2017 solar cells were down to $0.22 per watt .
However, this trend of relentlessly dropping prices for PV panels and modules may not continue unabated.
For the first time in years, the solar industry faces the prospect of rising costs.
With prices currently at rock-bottom levels and the specter of increased module costs looming on the horizon, this is just one more reason to go solar now rather than wait any longer.
Government incentives will be reduced as popularity of residential solar power grows
Multiple government incentives for solar power at the Federal and State level are set to decline or be phased out entirely in the coming years. By delaying action, you may end up paying significantly more for solar as a result of missing out on these programs.
The Federal Investment Tax Credit (ITC) has played a vital role in spurring the growth and expansion of the American solar industry , offering a 30% dollar for dollar reduction in taxes for both residential and commercial solar projects until 2019 and still stands at 26% in 2021.
The ITC has been valuable not only for reducing the total cost of a solar project, but also for helping to catalyze financial and businesses model innovations that have increased access to solar. In part by utilizing the ITC, companies like Solarcity and Sunrun began offering third-party financing to customers, which allows the homeowner to have panels installed on their roof for $0/down.
The homeowner does not actually own the panels, and simply agrees to a 20-year contract to buy solar electricity at a lower rate than it previously was .
Due to legislation passed in 2015, the ITC will begin declining each year after 2019 and will be phased out entirely for residential solar power after 2022.
Many state-level solar rebate programs are also declining or ending soon, including in top solar markets like California , Massachusetts  and New York . One promising area to still earn money from solar is in the market for Solar Renewable Energy Certificates (or SRECs).
SREC Incentives Earn You Money Now, But Won’t Be Around Forever
An SREC is a unit of renewable energy generated by a home or business, that is then sold to the local utility. The utility is mandated by state law to be power the electrical grid with a certain share of renewable energy.
A handful of states allow homeowners to sell SRECs to their utility, including:
- New Jersey
- District of Columbia
- North Carolina
Additionally, residents of Michigan, Indiana, Kentucky and West Virginia can sell their SRECs in Ohio’s RPS market .
However, Massachusetts and Illinois are gradually lowering how much homeowners are compensated for generating solar electricity .
Eventually, all of the SREC programs will be phased out once state renewable energy goals are reached. Waiting longer to install photovoltaic solar panels means potentially missing out on these programs, which can dramatically lower the cost of a project.
Installing a solar PV system is proven to increase the value of your home
Putting a solar array on the roof of your home is an important decision, which involves looking 20 or more years into the future, or about how long the panels will be in place for. Many contracts are also created on a 20-year timeline.
Committing to an agreement along this time scale can be a source of uncertainty for many people interested in going solar, as they are unsure if they will stay in their current home for this whole time.
Fortunately, whether you intend to stay in your home or sell in the future, adding solar power system will significantly increase the property value and help sell your home faster. Furthermore, it is becoming increasingly easier to sell your solar powered home and to transfer your lease to the new owner.
Here are some numbers, based upon studies from U.S. Government’s Department of Energy:
According to a Lawrence Berkeley Laboratory study, each kilowatt of solar generation adds nearly one percent to the total value of a home. Considering that the average residential solar system ranges between 3–6 kilowatts of production, having panels on your roof could add tens of thousands of dollars to the home’s sale price.
While solar homes in California sell for even higher, the trend of higher sale prices for solar homes holds true across a diversity of U.S. states, electricity markets and housing types.
Additionally, a National Renewable Energy Laboratory study found that solar homes also sold up to 20 percent faster than a regular home . This means less time waiting for a buyer and receiving payment for your home, and the sooner that you can move into your new residence.
Lastly, it is now easier than ever to sell your solar home and transfer your loan, lease or power purchase agreement to the new owner. Solar companies have specialized teams to administer these transfers of ownership and to switch service between the new and old owners .
When selling your solar home, consider finding a real estate agent who is familiar with advantages of solar power and can articulate the financial benefits to prospective buyers. You can share how much do solar panels save on your electricity bills with the realtor, and inform them of the expected remaining life cycle of the panels.
In summary, purchasing solar panels for your home sooner rather than later is in your best interest as a homeowner.
You can begin saving on electricity immediately and secure flat energy costs, rather than paying for ever increasing rates. You would also be entering the market at its lowest price point, before PV panels go up in cost.
Acting soon means taking advantage of limited time government incentives while they are still available, and adding tens of thousands of dollars to the value of your home, whether you intend to keep the property or sell it in the future.
All in all, the benefits of acting soon far outweigh the modest cost decreases in hardware over time, which will likely be negated by extended increases from tariffs. By acting now, you can reap the rewards from decades of effort to reduce the cost of residential solar photovoltaic systems and you can utilize favorable government programs while they still exist, benefiting your family’s bottom line and fortifying the value of your most valuable asset: your home.