The price of solar has dropped by nearly 70% in the past decade. This trend will likely continue in the years to come. However, now may be the prime time to invest in solar panels. With the price of electricity on the rise and the current availability of tax incentives, installing solar panels on your home this year may save you more money than it may have in the past or ever will in the future.
Of course, the initial investment may be a bit expensive but the savings quickly offset the cost. Thus, committing to this clean, renewable energy may be the best choice you can make in 2020.
1. Lower Electric Bills
One of the biggest ways solar energy can save you money is by lowering the cost of your electric bills. When you install them on your home, you rely less on your utility company for energy as solar becomes your primary source of power. Plus, if you store up enough free solar energy in your batteries, this surplus will help light your home without the help of a utility company, even at night.
This will certainly save you money, now. However, you’ll save exponentially more with each passing year as electricity prices are on the rise — as they have been for years. In 2002, the average retail price of electricity in the U.S. was about eight cents per kilowatt. Now, electricity costs more than 13 cents per kilowatt. This trend will undoubtedly continue in the foreseeable future so investing in solar now is certainly worth it.
2. Metering Credits
If you happen to store more solar power than you use throughout the day, you can opt to sell this surplus energy to the grid. You can do this by installing a digital meter on your home which will record the amount of electricity you’re using and sending out to the grid. This can both lower your electricity bills and provide you with a little extra cash flow, especially during the brighter, warmer months of the year.
Already 44 states have mandatory net metering rules while a few have yet to allow net metering. Most of the states that do offer net metering also have a set retail rate for surplus solar energy. This means the electric company will pay you for surplus at the same rate they charge you to use their electricity. Only 10 states have a different policy that will pay you at a lower rate than their retail rate.
3. Lower Gas Bills
Solar can also do more than simply light your home. They can heat your water, too! Solar water heaters come as either active or passive systems depending on where you live and use clean, renewable energy to generate warm water for your shower, sinks and even your laundry machine and dishwasher. Naturally, relying on solar to do this reduces your gas bill by 50% to 80% each month. Plus, solar will protect you from unpredictable fuel shortages and price hikes in the future.
If you’re building a new home or refinancing, the savings are even more attractive. Including the price of a solar water heater in a 30-year mortgage generally adds about $15 to your monthly payment. Tax deductions can lower that payment by $3 to $5. In this case, it’s likely you’ll save more than you’re paying, making a solar water heater immediately profitable.
4. Tax Credits
Speaking of tax deductions, each U.S. state has various tax incentives to further encourage you to adopt solar instead of relying on gas and electricity. For instance, some states and municipalities don’t include the value of solar panels in property value assessments. Thus, even though installation increased property value, your property tax bill won’t increase. Other states also deem solar panels exempt from sales taxes, resulting in additional savings.
The federal government also offers a tax credit allowing you to deduct 26% of the total installation cost from your federal taxes. There’s no cap on value so this credit can save you thousands of dollars. However, it may be smart to install panels sooner than later. The federal tax credit will drop to a 22% deduction next year. And, by 2022, residential installments will no longer qualify for tax credits unless the government decides to extend them.
Save Money, Save the Earth
Once you commit to installing a system, solar truly can save you money over the long term. However, investing in solar does more than put money back in your pocket. Going green also has a positive impact on the Earth. Solar offers a clean alternative to fossil fuels, reducing greenhouse gas emissions and your carbon footprint. Green energy also minimizes mining and drilling which scar the Earth and deplete resources. The sun, however, is infinite and helps the Earth grow and recover from human activities.
Thus, by investing in solar, you truly are investing in the planet’s future and preserving it for the many generations to come.
