Every solar company has a variation of the same sales pitch, “did you know going solar can save thousands of dollars?” They make it sound so easy, but the truth is, whether solar is a smart long-term investment for you depends on a few major factors. So before you buy into the hype, we recommend you use this simple guide to cut through the sales jargon and determine if solar panels are actually worth the money.
- Factors like electricity rates, solar panel system cost, and financing method all play into how worth it solar will be for you
- Most property owners can break even on their solar investment in 7 to 8 years
- Start comparing solar quotes on the EnergySage Marketplace to see how much you can save
How to determine if solar is worth it
As you start exploring your solar options, there are a few questions you can ask to help determine whether solar makes sense, including:
1. How much do you pay for electricity?
Your current electricity bill is the largest factor in determining how much you’ll save by installing solar. You pay your utility company for every kilowatt-hour (kWh) of electricity you use, and your rate varies significantly depending on where you live. In some parts of the country, you can pay as little as 8 cents per kWh; in others, you’ll pay 20 cents or more.
When you go solar, you effectively install a mini power plant on your roof to replace the power plant where your utility gets its electricity. That means homeowners with high electricity rates from their utility are the ones who save the most when they switch to home solar power.
If you’re just getting started and aren’t sure how much solar can save you, start out by using an online Solar Calculator. EnergySage’s calculator incorporates local electricity rate data to give you a customized estimate of what you can expect to save, and just how quickly your investment will pay off.
2. How much does the solar panel system cost?
Installation prices will vary significantly depending on the solar company you choose and the equipment you install. While cheap solar panels might feel like the easiest way to save some cash, your total 20-year savings will often be higher if you invest in high-quality equipment. It’s worth taking some time to review all of your equipment options and find the right combination of price and quality for your home. You can use an online solar marketplace like EnergySage to easily compare all of your offers in one place, the same way you’d shop for a flight online.
Don’t forget to research the solar incentives and rebates available where you live: they can reduce your net cost by 50 percent or even more. The federal government offers a 26 percent solar tax credit, and many states and municipalities have additional financial incentives for their residents. Some utilities even offer cash rebates to their customers to encourage them to go solar.
Curious what other solar incentives are available to bring down the initial cost of going solar? Check out our video outlining the most common options you’ll see:
3. How are you financing your solar panel system?
Whether you choose to buy or lease your solar panels will have a major impact on your system’s long-term value. If you have enough to make a purchase in cash, you’ll save more than with any other option – but even with a $0-down solar loan, your savings could still be in the tens of thousands. While solar leases and power purchase agreements (PPAs) require no money down and promise a maintenance-free option, they come with a trade-off: your total savings will typically be just 10 to 30 percent of your utility electricity bill.
How does this play out in the real world? This screenshot from the EnergySage Solar Calculator for an example property in Massachusetts shows the difference in long-term savings between a cash purchase, solar loan, and a solar lease.
Are solar panels worth it if you’re not in the sunny Southwest?
While solar loves sunlight, you might be surprised to learn that you don’t have to live in the sunny Southwest to achieve lots of solar savings. In fact, some of the states with the most installed solar in the country (including New York, New Jersey, and Massachusetts) are in the Northeastern U.S. – more famous for their cold snowy winters than sunny summer days. Why is this? These states often have higher electricity costs and better local incentives than elsewhere in the country.
Three Tips for Solar Shoppers
1. Homeowners who get multiple quotes save 10% or more
As with any big ticket purchase, shopping for a solar panel installation takes a lot of research and consideration, including a thorough review of the companies in your area. A recent report by the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) recommended that consumers compare as many solar options as possible to avoid paying inflated prices offered by the large installers in the solar industry.
To find the smaller contractors that typically offer lower prices, you’ll need to use an installer network like EnergySage. You can receive free quotes from vetted installers local to you when you register your property on our Solar Marketplace – homeowners who get 3 or more quotes can expect to save $5,000 to $10,000 on their solar panel installation.
2. The biggest installers typically don’t offer the best price
The bigger isn’t always better mantra is one of the main reasons we strongly encourage homeowners to consider all of their solar options, not just the brands large enough to pay for the most advertising. A recent report by the U.S. government found that large installers are $2,000 to $5,000 more expensive than small solar companies. If you have offers from some of the big installers in solar, make sure you compare those bids with quotes from local installers to ensure you don’t overpay for solar.
3. Comparing all your equipment options is just as important
National-scale installers don’t just offer higher prices – they also tend to have fewer solar equipment options, which can have a significant impact on your system’s electricity production. By collecting a diverse array of solar bids, you can compare costs and savings based on the different equipment packages available to you.
There are multiple variables to consider when seeking out the best solar panels on the market. While certain panels will have higher efficiency ratings than others, investing in top-of-the-line solar equipment doesn’t always result in higher savings. The only way to find the “sweet spot” for your property is to evaluate quotes with varying equipment and financing offers.
For any homeowner in the early stage of shopping for solar that would just like a ballpark estimate for an installation, try our Solar Calculator that offers upfront cost and long-term savings estimates based on your location and roof type. For those looking to get quotes from local contractors today, check out our quote comparison platform.
This post originally appeared on Mother Earth News.