For those asking themselves “should I go solar”, the cost of solar installation continues to fall. According to the Solar Energy Industries Association (SEIA), installing a residential solar energy system costs 70% less than it did in 2010, which is great news for today’s solar shoppers. But the ever-decreasing costs of solar create a conundrum: should I go solar now or wait? For many, daily headlines that declare lower and lower prices can stir them to action. For others though, these same headlines can cause them to wait a few more years in hopes of saving even more money. So who’s right?
Install solar panels at the right time
There are many variables that influence the total financial returns you can expect to see from solar over its lifetime. The most obvious variable is the upfront cost of the solar panel system itself. Thanks to the falling cost of solar in 2020, the average 6-kilowatt residential system now costs roughly $17,760 before tax credits and rebates.
Assuming that these trends continue, you could save a maximum of about $150 on the price of your system by putting off your solar purchase for a year. If you wait two years, that number could go up to around $300. However, remember that every year you delay your solar decision is another year that you miss out on the financial benefits your solar energy system provides (this is called your opportunity cost). In fact, your potential savings in upfront costs could be outweighed by solar’s financial benefits had you acted sooner.
Should I go solar? The opportunity cost of waiting instead
One reason to go solar now: increased electricity prices cut into savings
If you wait to go solar, you’re stuck paying your utility electricity bill every month, which can be an increasingly expensive proposition: electricity prices have risen almost 9% on average in the last 10 years, and depending on where you live, could increase by another two or three percent per year.
The typical U.S. home spends about $1,400 a year on electricity. If you buy a system that meets 100 percent of your electricity needs today, you can eliminate your electricity costs and have an extra $1,400 in your pocket a year from now. The following year, when prices go up, you’ll save as much as $1,500 – and the savings will continue to grow for the 25 to 35 years that your system is operational. For every year that you don’t buy solar, you lose out on all those electricity bill savings.
Financial incentives will be reduced as the popularity of solar grows
While there are significant rebates, tax credits and other incentives in place to encourage homeowners to go solar, incentives programs usually get phased out as solar becomes more popular and costs decrease. The current federal renewable energy tax credit is 30 percent through 2019 – but after that point, it will be phased out for residential systems. Some state and local governments offer similar programs that will be reduced over time. A few examples:
- California used to have rebates up to $15,000. But thanks to the popularity of solar in the Golden State, those rebate programs have been eliminated.
- In New York, the Megawatt Block Incentive Structure gives solar energy system owners a rebate based on the size of their system (in dollars per watt). As more property owners install solar, the value of the rebate is reduced. The highest incentives available through the program are $1/watt, but will eventually be reduced to $0.15/watt as adoption increases.
- Massachusetts had a solar rebate program that initially gave rebates in the $9,000 range. Now, the rebate program has ended and homeowners are only eligible for a tax credit, which is capped at $1,000.
While incentive programs differ from state to state, make sure to explore the incentives that are available where you live so you can determine how putting off your solar purchase will impact the tax credits or rebates you could receive.
SREC programs earn you money, but also won’t be around forever
Some states and utilities have solar renewable energy certificate (SREC) programs and other production-based incentives that pay you for the solar electricity you produce. However, these programs won’t be around forever either. If you live in a state with an SREC program, you could miss out on the opportunity to generate thousands of dollars in extra income from your solar energy system while you wait to go solar.
Financing options make going solar now easy
If you’re interested in going solar now but don’t have the cash on hand for an upfront purchase, there are still plenty of financing options available that make it possible to affordably install solar on your home. Many of them even require $0 cash down, so you won’t have to pay anything out of pocket. While there is always some merit in waiting for costs to fall even further, make sure you’re accounting for your opportunity costs too.
At a minimum, we recommend you start exploring your solar options today. Use EnergySage’s Solar Calculator to get an instant estimate of your solar savings, or register your property to get free, no-obligation quotes from multiple pre-screened installers.