Solar power systems can be a valuable investment with benefits that extend beyond the resale value of your home. Not all homeowners will benefit from solar power, so you need to do some research to consider whether the upfront costs are worth it.
The Financial Calculations of Solar Power Systems
To determine if it makes financial sense to install solar power for your home, calculate:
- The cost of a solar power system
Get an estimate of how much energy it will be likely to produce.
- Estimate what you would pay for that same amount of energy to your electricity provider.
- Determine how many years it will take for your upfront investment to pay for itself in saved energy costs.
- Will the system pay for itself in five years or less?
If the number of years in #4 above is five years or less and you have the upfront capital, it is probably a good investment. If the “break-even” point is longer than five years – or if you need to take out a loan to purchase the system – you will need to think through this decision carefully.
There are large variations in each of the factors involved, including location, roof size and material, energy usage, cost of electricity, and incentives such as rebates and tax credits.
Tools to Help Decide
Fortunately, there are tools that can help you to make your decision. The website, Greenlancer estimates the cost and the probable incentives offered by your state when purchasing a solar power system in all states. In MA, the average price for a 6kW system starts at $16,440 and the cost after applicable tax credits is $11,508 (Check eligibility.)
Solar Reviews offers an online calculator that will provide you with representative costs and savings for a solar power system in your area by asking questions about your location, roof type, number of floors in your home, your monthly electricity cost, the condition of your roof, and more. They will also arrange for you to get estimates from contractors in your area.
Reducing Energy Costs
You’ll want to know how much solar power will reduce your energy costs, and more importantly, will you produce enough electricity through solar power to sell back to your electricity provider? As mentioned above, calculate your current cost of electricity vs the amount you’ll save and add to that savings the amount you will be selling back. That amount builds month to month, year to year to offset your upfront costs to reach a break-even point, ideally within five years.
Real Estate Value
Ben Hoen is a research scientist at the Lawrence Berkeley National Laboratory in California. He studies the cost, benefit, and market analysis of solar systems and he believes that homeowners who sell their homes within five years of installing a system are almost getting 100 percent of their investment back. (This is not the case, however, for homeowners who lease their systems.)
If solar panels become significantly cheaper by the time you list your home, you might not break even on the purchase and installation costs. However, you will have enjoyed years of cheaper energy costs, which may offset that factor.
Long Term Investment of Solar Power Systems
According to the Solar Energy Industries Association, more than 500,000 new residential solar panel systems were installed in 2021. SEIA states that despite greater uncertainty in the economy and solar industry, solar panels are almost certain to pay off in the long run. Panels purchased from a reputable solar installer and optimized for the greatest energy production will save more money over time.
Equipment necessary for solar power installation includes an inverter. An inverter turns the direct current produced by the panels into an alternating current used by household appliances. You need metering equipment to see how much power is produced. Other needs include various housing components, cables, and wiring gear. Lastly, there is the cost of installation labor. Some homeowners also consider battery storage. This may not be necessary if you are planning to sell excess energy back to the grid.
The panels need to be cleaned regularly and inverters and batteries (if installed) need replacement after several years of use.
Incentives for Solar Power
Your state may offer financial incentives for investing in solar power. It is wise to check what is available and whether you are eligible. See our blog article on incentives in Massachusetts.
Golden Group Roofing is here to help.
Golden Group Roofing will be happy to answer your questions about solar power. We can help you calculate whether solar power is the right investment for your home. Call Golden Group Roofing at 508-873-1884 or schedule a one-hour solar consultation with one of our roofing experts.