Converting your home to solar energy can help you save money in the long run. With the right equipment, solar panels are powerful enough to free you from dependency on the grid. They offer a source of renewable energy that is readily available in most places.
Cost of Solar Panel Installation
The average solar panel installation cost is about $16,000, Forbes says, but smaller systems could be as low as $5,000. It is important to remember that you must also buy a battery-charging system to power your home on cloudy days and at night.Most people can recover their initial cost in five to 15 years. If you can take advantage of ongoing incentive payments, it will take less time. Other factors include the quality of the equipment and whether you choose to pay cash or take out a loan for it.
Average Savings on Solar Power
Solar panels typically last up to 25 years, but some will last longer. Eventually, they become less and less efficient and must be replaced. MarketWatch says that if you had an average 6-kilowatt solar system, you could save about $1,432 per year.The money you save depends on how you use the solar panel system and the average cost of electricity in your area. MarketWatch says that the average cost of electricity in the United States is $0.1591 per kWh (kilowatt hour).
How Long It Takes to Break Even
The time it takes to break even on your solar power cost has several variables that must be considered. Every home will have a different time frame to recoup the cost. SolarReviews says it depends on your initial cost, the price of electricity from your utility company, and the amount of sun your solar panels get.Solar systems depend on the latitude. Homes in the south with solar panels develop more power than they would in the more northern cities. It also depends on how you use the system, such as whether you use it for some of your energy needs, most, or all of them.
If, say, your home is in California and you buy a 6-kW solar system to cover all your energy needs, Forbes says it will cost about $11,278 after a 26 percent rebate. Getting power from the grid in California is high, costing $0.2677 per kWh. Because of the high energy costs in the state, you could save more money with solar power than you would in most other states—about $1,943 per year, which would enable you to recover the cost in about six years.
California is currently the leader in solar energy. CNET reports that there is enough solar power generated in the state to power 11.5 million homes. The advantage of having your own solar energy system is that the rising cost of getting power from the grid will not affect your energy bill, but it will also help you lower your carbon footprint.
If you put in a solar installation in states such as Alabama, Georgia, and Hawaii, you could save more than $2,000 per year on average and pay off your solar system within five and a half years. It could happen even though Hawaii’s energy from the grid costs about three times as much ($0.4481 per kWh) as most other states. You can find a chart showing the average cost and break-even time on the Forbes website.
Consider Net Metering to Lower the Cost
Once your solar power system is operational, many electric utility companies will allow you to sell extra electricity back to them. Some companies will give you the rate that they charge their customers, but others will buy it at a discount. California has just instituted some new net metering payment systems and adjusted them to peak times of energy usage.The Tax Credit for a Solar Energy System
When you purchase a home solar system, you can receive a tax credit from the government. The Internal Revenue Service (IRS) says you can get up to 30 percent of the cost back in a tax credit.There are, however, some conditions as to who qualifies for the credit. The solar energy system must be on a house you own and live in, but some second homes can qualify if you live in it part-time and do not rent it out. The credit is only for new equipment.
If the property is used only for business, it is not eligible for the credit. Properties having a part-time business use are eligible for the full tax credit if there is up to a 20 percent business use of the property. A higher business use of the property can get a portion of the credit based on the non-business share of the expenses.
When you apply for the credit, it is necessary to subtract any subsidies you received from public utility companies, rebates, and other incentives. Any money you make from selling energy to the utility company is not counted. The IRS also says that incentives you get from your state to improve the energy efficiency of your home are usually not subtracted from the total cost but may have to be included on your federal income tax forms.
Before You Buy a Solar Energy System
All solar energy equipment is not equal. You will find that the quality of the panels, energy output, the manufacturer, and the installer all have different prices. Do your research upfront and compare prices to save money, but get quality equipment and installers with good references.Consider how much power you need and the number of panels required to match your needs. You can learn more about the cost of installing solar energy systems by talking to professional installers. They can also give advice and answer any questions about your solar energy needs.
The Epoch Times copyright © 2023. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
