Want to get rid of your electricity bill completely? There’s a sure-fire way: solar panels.
The decision to buy solar panels takes serious thought and often a large initial investment, but the payoff, in the long run, can be massive. A majority of Americans say they have seriously considered adding solar panels to their house – and, today, there are more choices than ever.
The biggest decision facing consumers today is whether to buy or rent solar panels. More than 70 percent of homeowners opt to rent solar. But renting can come with some drawbacks, including control over the system, losing out on tax credits, and potential hang-ups if you sell your home. Renting still saves money and gives your home a much-cleaner footprint overall. If you want to double your savings, however, consider buying a solar panel system. In the end, doing so reduces your electricity bill by 100 percent. That’s right – no more electric bill at all.
Solar systems are an investment. Most cost around $35,000 upfront; however, that price is reduced to $15,000 – $20,000 after tax credits. That price may be reduced further still by additional federal tax credits being considered by the legislative branch This means most solar systems pay for themselves in five to seven years. Unlike leasing companies, which may provide more panels than you need and put them in unsightly places on your house, buying gives you full control of what goes where and how much money you spend. Leases can scare off home buyers (who are forced to take over the lease if you sell your home before the usual 20-year solar lease expires).
Another reason to buy solar panels is the Solar Renewable Energy Certificates (SRECs) program. This is a national solar incentive that allows homeowners to sell certificates for energy to their utility. A homeowner earns one SREC for every 1000 kilowatt-hours produced by their solar panel system. An SREC can be worth over $300 in certain states, and some owners may earn as much as $1500 annually by selling these certificates. Find out how SRECs work in your state.
Not everyone has the cash to buy the solar system outright; therefore, home equity loans and solar loans are great, low-interest options. Unsecured solar loans are available, and lenders like Fannie Mae offer unique solar system financing. The interest paid on loans is often tax-deductible.
Solar system maintenance is generally not an issue. Most panels have a 25-year warranty, and the inverters (the “brains” of the system that convert the solar energy to AC energy for your house) carry 10- to 25-year warranties. Check with the company that installs the system, as they may offer a warranty on the installation as well. You can also get the most out of your system by making sure you’ve outfitted your home with the latest energy-efficient appliances and smart gadgets, which decrease the home’s power consumption significantly. Once you add solar, don’t forget to contact your insurer. There is usually no additional premium for roof-mounted solar, though ground-mounted solar may require a rider added to your policy.
If buying is not an option, there are numerous companies (including a brand new program from Tesla called Solar Subscription) for renting. Renting has no upfront cost, and the rental company will cover repairs and maintenance. Leasing terms typically last 20 years, sometimes longer, so check the term of the contract carefully, especially if you plan to sell your home in the future (though, there’s good news – homes with solar panels sell 20 percent faster for 4 percent more money). While solar leases can be passed on to the new homeowner, some new owners may balk at taking on a longer lease, plus the solar company can deny new ownership based on credit score, which can complicate the sales process.
Overall, a lease may work out well for you if you are not eligible for the federal tax credit or the SRECs, or you do not qualify for a solar loan. Regardless of which approach you choose, going solar is a good bet to save money and positively affect the environment.