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As you drive around your town or city, you’ve probably noticed more and more solar panels appearing on the rooftops. Homeowners are installing them because they believe that solar panels are worth it.
There are 4 clear and easy to understand reasons why solar power systems are worth it:
- The environmental benefit
- The increase in property value
- The health benefit
- The savings in electricity bills
The environmental benefit
The electricity provided through your local electricity grid comes from multiple sources. These include coal or gas-powered electricity generating stations that contribute to pollution. Solar panels do not release CO2 or other toxic emissions. They do not consume valuable water resources. They utilize sunlight, which is a clean and renewable power source. When you utilize solar panels, you’re significantly reducing your carbon footprint.
Should you come to sell your property after installing a solar power system, you won’t lose your investment. An installed solar power system is a clear selling point for homebuyers who don’t want the hassle of installing their own solar power system but love to reap the benefits. Department of Energy research has found home prices rise by an average of $15,000 after a solar power system is installed.
This might sound like a strange benefit, but it’s real. There’s something mentally satisfying about living in a more sustainable way and contributing to cutting down pollution. Homeowners who choose to install solar power systems are happier after doing so knowing that they have reduced their carbon footprint. This improves their mental health and general self-esteem.
The financial savings
A solar power system is an investment in your property that requires a significant financial commitment. Whether or not it is worthwhile financially is easy to establish by comparing the cost of this investment with the saving in electricity bills that follow.
The cost of a solar power system
The total cost of building a solar power system is dependent upon lots of factors. Homes that use more electricity will need a larger system. Properties in less sunny areas will require more panels to harvest enough sunlight energy to provide all the power required every day. If you build your solar power system yourself, you will make significant savings when compared with hiring a contractor.
The average amount of energy used by an American home annually is 10,972 kWh (kilo watt hours). This equates to 30 kWh each day. In an area with an average of 4 hours of useful sunlight, this means you’ll need a system that provides (30/4 =) 7.5 kW every hour. To meet this power demand, you should install an 8 kW system with 27 x 300W (27 x 300W = 8.1 kW) solar panels or a system with more solar panels of a lesser wattage that provides the same output.
If you live in a sunnier area, you can install a less expensive solar power system that requires fewer solar panels. If you live in a less sunny area, you will need to fit a more expensive solar power system that uses more solar panels. Wherever you live, you will still require the same quantity of solar batteries to store the energy you require and the same rating of charge controller and power inverter.
If you require more energy in your household, you will need to build a more expensive system that provides more than 30 kWh per day. If you use less energy, you can build a more inexpensive system than generates less power.
The average cost of an 8 kWh solar power system that produces 30 kWh per day is between $20,000 and $25,000 depending upon where you live, your choice of component brands, and how much of the installation you do by yourself. Keep all the relevant invoices because you may be able to use them to claim money back in your tax return!
Federal and local governments and even power companies sometimes offer financial help to homeowners building solar power systems. The US Department of Energy provides a Federal Tax Credit for any home solar photovoltaic project. In 2021, the tax credit is 22% and in 2020 it is 26%.
This means that if you spend $25,000 in 2021 to build a solar power system, you can get a reduction in your income tax bill of ($25,000 x 22% =) $5,500. Therefore, after your reduced income tax bill, you will only pay ($25,000 – $5,500 =) $19,500.
Many municipalities and state governments offer additional grants and incentives in addition to the Federal Tax Credit, so you may be able to reduce your total set-up cost even further. In some areas, local power corporations will help you with the initial costs. For example, in Texas ONCOR, GVEC, CPS Energy, and Austin Energy all offer incentives to homeowners installing solar power systems.
The benefits of a solar power system
American householders pay a wide range of different prices for their electricity, ranging from as little as $0.08 to as much as $0.20. The average is approximately $0.1331 per kWh.
Given that the average household uses 10,972 kWh each year, they will save ($0.1331 x 10,927 =) $1,434.38 annually by installing a solar power system. A homeowner who pays more per kWh will save considerably more than this while a homeowner who pays less will save less. Similarly, the higher your electricity consumption, the more you stand to benefit from a solar power system.
On top of this saving, in some areas, the excess energy your produce can be fed into your local electricity grid. Your local utility company will then pay you for electricity! You also need to take this into account when weighing the pros and cons of a solar power system.
The financial bottom line
The solar power system for an average home at its most expensive after the Federal Tax Credit will cost $19,500. This is before considering any extra incentive schemes you may benefit from.
Solar power systems are designed to last over 25 years and may last for as long as 50 years with regular maintenance. During this time, you will need to swap out the solar batteries, but this will cost a fraction of the original set up costs.
A solar power system will on average save you $1,434 annually. That means you’ll make back your initial $19,500 investment in (19,500/1,434 = 13.6) 13 years and 7 months. Following this, you will start to effectively make $1,434 a year.
If your system operates for the minimum 25 years, you will make a profit of ([25 -13.6] x 1,434 =) $11,400. If your solar power system lasts for a whole 50 years, you will make a profit of $47,250!
The real bottom line
Of course, a solar power system is a long-term and not a short-term investment. However, the environmental, financial, health, and home-improvement benefits are undeniable. Why haven’t you already invested in solar panels for your home?