your property is a great way to save money on your energy costs over multiple decades. Due to the 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 .
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.
By using a solar power calculator such as the one below, you can estimate what a solar rooftop installation would cost at the moment in your location.
Here are 4 reasons why you should switch to solar in 2019
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.
- 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.
- Prices for photovoltaic panels for homes are lower than they have ever been, but this may change in the near future with impending tariffs on imported panels.
Let’s examine each point in further detail.
Waiting means missing out on thousands of dollars in 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 2017, the average American household’s energy bill was $111.67 per month, or about $1,340 annually .
- If you were to install a solar photovoltaic system that generated enough power to offset this bill entirely, you would be saving $1,340 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.
The total cost savings from waiting three years to go solar is about $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.
Government incentives will be reduced as popularity of residential solar power grows
Multiple government incentives for solar 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.
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 in just a few short years.
One promising area to still earn money from solar is Net Energy Metering.
Net metering is a widely available solar incentive that allows a solar homeowner to feed excess solar energy into the electric grid and in turn receive credits to draw utility-generated electricity in times when solar panels do not produce enough.
California has one of the best net metering programs, offering credits at a standard retail rate.
This means that credits obtained for your solar power are equal in value to the amount of electricity you receive from the utility company in return.
When speaking of California, it’s worth to mention a special rebate that is meant to support homeowners who want to add a battery storage to their solar system.
The Self-Generation Incentive Program (SGIP) aims to increase the number of energy self-sufficient households by paying as high as $400 per kilowatt-hour produced by their solar system at the moment (which is enough to cover battery installation costs).
However, even this rebate is set to decline with a growing number of battery storage users. Find out how much a solar installation would cost you right now.
Installing a solar PV system increases 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.
It is good to know that the average payback period of a standard residential solar system is 6 to 8 years in the United States.
Fortunately, whether you intend to stay in your home or sell it 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.
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.
In California, for example, potential buyers are willing to pay $15,000 more for a house with a modest 3 to 4 kilowatt solar system in place. While solar homes in California sell well, 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 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.
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 early in 2019 solar cells cost on average around $3.05 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.
The 2018 decision by the Trump Administration to implement tariffs on imported solar panels will likely raise panel prices by more than three percent in the coming years .
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.
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 increases from tariffs until 2021.
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.
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