Should I Get Solar Panels Now in 2024 or Wait?

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 percent 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 [1].

If you are considering solar energy, you may have wondered: is it best to get solar panels now or wait until prices drop further?

It is a fair question, given how much prices of solar equipment have dropped historically from over $12 per watt in 2000 to on average $3.82 per watt in 2021. Simply looking at the rate of cost declines in recent years, one could expect solar photovoltaic (PV) modules to get cheaper in a few short years.

Indeed, the price trend over the past two decades has been decreasing even despite some bumps on the road like 2018 tariffs on imported solar equipment.

For example, let’s assume that you wait three years to purchase a photovoltaic system and that solar power costs decline by two percent per year [2], bringing the cost of a standard $15,000 system down to $14,100 on the third year. For each year that you waited, you would save $300 on solar power installation costs. But have you considered the option of how much solar energy will save you over the lifetime of the installation, starting with the first year?

Here are 4 reasons why you should switch to solar in 2024 rather than later

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:

1. Waiting to install solar panels means waiting to save money on your energy bill, which will continue to rise over time. We have just seen an increase in electricity price throughout the entire year of 2022. Cold weather in February last year, has led to natural gas price spikes and decreased wind energy production. This reflected on increases in price for energy of up to 50 percent in some locations.
2. Prices for photovoltaic solar panels for homes are low now, but this may change in the future.
3. Favorable government incentives for solar energy are decreasing or being phased out entirely in the coming years in several U.S. markets.
4. 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.

Consider:

• In 2022, residential electricity price has increased on average at least by 2.7% when compared to 2021 in the U.S. [3].

• In 2021, the average American household’s energy bill was $121.01 per month, or about $1,452 annually [4].

• If you were to install a solar photovoltaic system that generated enough power to offset this bill entirely, you would be saving $1,452 in year one. With a 2.7% increase each year, your savings in year two grow to $1,490 and would reach $1,528 in annual savings in 3 years.

Remember, the total cost savings on energy price from waiting three years to go solar came out to $900. This figure would be eclipsed in year one by getting solar panels for your house now. Savings would nearly double 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 [5], while in late 2020 solar cells were down to $0.22 per watt [6].

However, this trend of relentlessly dropping prices for solar panels and modules may not continue unabated. The solar industry may face the prospect of rising costs. With prices currently at low levels and the prospect of declining or phasing out incentives, 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 panels as a result of missing out on these programs.

Solar Investment Tax Credit is currently at 30 percent

The Solar Investment Tax Credit (ITC) has played a vital role in spurring the growth and expansion of the American solar industry. As a matter of fact since the implementation of this incentive 16 years ago, the solar industry has grown by astounding 10,000% [8].

The ITC offers a 30 percent dollar for dollar reduction in taxes for both residential and commercial solar projects until 2032 and originally was supposed to phase out. Luckily, the phase-down process has been delayed by the passing of the Inflation Reduction Act in August 2022.

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 energy. In part by utilizing the ITC, companies like Solarcity and Sunrun began offering third-party financing to customers, which allows the homeowner to have solar panels installed on their roof for $0/down.

The homeowner does not actually own the panels. He simply agrees to a 20-year contract to buy solar electricity from the third party, which owns the panels and is responsible for their maintenance, at a lower rate than it previously was [9]. This system is well established in the Unites States.

Missing on such a great incentive would affect the total cost of solar panel installation greatly, it is an important reason why not to delay your decision.

State level solar incentives

The main reason why countries offer incentives on residential transition to solar power is to support local solar industry. As more customer decide to join the renewable energy transition, these programs begin to phase out. Many state-level solar rebate programs are currently declining or ending soon.

In the past years we have seen this trend in top solar markets like California with the extremely successful Solar Initiative Program that distributed $191 million in rebates [10], but also in Massachusetts [11] and New York.

If you are considering the option of getting solar panels for your home, you should verify what state-level programs are available in your area, as they may in combination with ITC make a real difference in the final price.

Rebate programs for solar energy are currently available in 17 states. You can find a list with detailed information in the official Database of State Incentives for Renewables & Efficiency.

One promising area to still earn money from solar energy generation is in the market for Solar Renewable Energy Certificates (or SRECs).

SREC Incentives Earn You Money Now, But Won’t Be Around Forever

A Solar Renewable Energy Certificate (SREC) is a unit of solar renewable energy (1 MWh) generated by a home or business that is then sold to the local utility. This means that they are based on the performance of the solar system. The utility is mandated by state law to power the electrical grid with a certain share of renewable energy, and this way of outsourcing the share is cost-effective for them.

A handful of states allow homeowners to sell SRECs to their utility, including:

• Massachusetts
• Maryland
• New Jersey
• Pennsylvania
• Illinois
• Delaware
• Ohio
• Connecticut
• District of Columbia
• Virginia

 Additionally, residents of Michigan, Indiana, Kentucky and West Virginia are allowed to sell their SRECs in Ohio’s Renewable Portfolio Standard (RPS) market [13].

However, some markets have been oversupplied for the past couple years. This is the situation in Ohio and Pennsylvania, where the SREC price dropped to around $4 and $46, respectively [22].

Eventually, all of the SREC programs will be phased out once state renewable energy goals are reached. Some markets have stopped accepting new applications already and buy solar power just from the customers with contracts from the previous years. Waiting longer to install photovoltaic solar panels means potentially missing out on these programs, which can dramatically lower the cost of a project.

Changes in net metering programs might lower rewards for your solar energy

If you wait longer on getting solar panels, you may not be able to benefit from net metering. Net metering is one of the best solar incentives available to solar system owners in most states. Some states have even passed net metering laws, in other the participation in the program is voluntary. Net metering works on the similar principle as SRECs, only instead of payment in cash for your produced solar energy, you will receive credits from the utility company. 

When sending energy to the grid, the electricity meter runs backwards, giving you credits for extra unused power your panels produce. The advantage you have right now is that a unit (1 kWh) of solar energy produced by your system is considered equal to a unit of electricity from the grid. As a result, your annual electricity bill will decrease according to how many units of solar power you sent back, hence how many credits you earned per year.

As with other incentives, even net metering is about to experience decrease in rewarded credits in the future due to rising number of solar installations. Many states and utility companies have already in 2020 started to work on new successor tariffs in net metering programs that will replace the current ones and most likely will not offer the current advantages [23].

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 to 6 kilowatts of production, having panels on your roof could add tens of thousands of dollars to the home’s sale price. If you have a SRECs contract with the utility company, it only adds up to the final price as well.
• 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 [19]. 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 [20].

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 should share how much do solar panels save on your electricity bills and the annual earnings from SRECs with the realtor, and inform them of the expected remaining life cycle of the panels and their routine maintenance. More information the realtor has, better prepared he will be to discuss the benefits.

Waiting on installing solar panels means missing on savings

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 you are 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.