How much can going solar potentially save you?
How much can going solar potentially save you?
Going solar can mean significant savings on your energy costs. This article from Everything Finance outlines how to figure out whether the change is worth it for your home. If you're thinking about making the switch to solar, talk with an authorized Panasonic solar installer today and get all your questions answered.
In typical fashion, we are always looking for new ways to save money on everyday things. So why shouldn’t our utilities be in the mix? Most of the time, there isn’t really much you can do to negotiate when it comes to utilities.
It’s a pretty closed market in that you only have one choice when it comes to electricity, gas and water for your home, which I think is actually pretty ridiculous since they then have a corner on the market and you’re stuck with whatever rate they charge you.
Of course there are some smaller ways you can save on electricity, but going solar may just change the whole game. Since this is something we are seriously considering embarking upon, I wanted to take a look at the potential savings of going solar to see if it’s really worth it.
CALCULATING HOW MUCH YOU SPEND ON ELECTRICITY NOW
When it comes to calculating how much electricity you use, it will be a little bit different for everyone. This can be due to the:
- size of your home
- age of your home
- how many electric appliances
- which types of appliances (Energy Star or not)
- how many people live in your home
I can tell you that the national average of kilowatt hours uses (or kWh) hovers around 877 kWh per month. Which translates to approximately around 10,649 kWh per year. And since the national average cost per kWh of electricity used is $.13, that mean the average annual amount spent on electricity hovers around $1384.37.
Where I live, the average cost per kWh is $.11, making it a bit cheaper than the national average. I can tell you that we have 7 people living in our 1888 sq.ft home and we spent a total of $1461.24 per year for our electricity. While that is a bit above the average amount spent, we also have more than the average amount of people living in one home.
Plus, we have a 30,000 in ground pool that runs 5-6 months out of the year. So, when I add those two facts in, we actually spend less than the average household in a similar situation.
HOW MUCH SOLAR PANELS CAN COST YOU
Once you have figured out how much you are paying per kWh and then annually, it’s time to figure out how much it costs to get solar panels. Most solar systems are 6 kW systems and have a standard average of how much energy they can produce. This range is generally between 7,000–9,000 kWh per system.
This might not sound like quite enough juice to power your whole house (and ALL the electronics) all year long, but it certainly can be. This is because your house will use the power the solar panels generate first. And when your solar panels are out of power (let’s say at nighttime or on cloudy days) then your house will use electricity from the power grid.
But, the power grid will use excess power generated by your solar panels when you don’t need the power also. And by doing so, they are buying power from you when you have excess power. And you are buying power from them when you need it from the power grid.
So what this usually means is that most people with solar panels end up balancing out and having a zero balance with the electric company.
WORTH IT OR NOT?
Therefore, you aren’t paying for power to the electric company anymore. But you are still paying for your solar panels. There are two different ways you can go about getting solar panels. You can either purchase them outright or lease them for 10-12 years.
A lot of people choose the lease route if they don’t have the funds to buy them outright. But, to us, that wouldn’t make financial sense because then we would be paying interest for the lease of the solar panels. And this would be losing us more money.
Ultimately, solar panels can cost anywhere between $15,000–$25,000 to get installed. That is a pretty big range! And a big part of the difference depends on where you live in the country and your roof. In our area, it’s closer to the $15,000 end of the range.
Based on our annual spending now, that means it would take us about 10 1/4 years to recoup how much we spent on the solar panels. I’m not sure if that’s entirely worth it yet.
TAX CREDITS AS A BONUS
But wait! Currently, the federal government is still offering tax credits for solar panel purchases. The government first enacted a solar panel tax credit in 2005 and has been going pretty strong ever since. However, the current solar panel tax credit portion of the clean energy act is set to expire in 2024.
So, what that means is that if we purchase solar panels today, we can get a 26% tax credit on our purchase. In 2023 it goes down to 23%. And then goes to 0 in 2024, unless current legislature changes this before then, of course.
Therefore, if we purchased solar panels this year with a $15,000 price tag, we would be eligible to get a 26% tax break when we file our taxes next year. That would be a $3,900 tax credit, or ultimately reduce the original cost of the solar panels down to $11,100.
So, if we do that, then it would really only take us 7 3/4 years to recoup our money. Which looks a lot better to us since solar panels currently have a 25 year life span. Which means that we would be getting free electricity for 17 1/4 years. That’s pretty sweet!
GOING SOLAR SUMMARY
When it comes to going solar, there are quite a few different things to figure out first. Initially, figuring out how much electricity is currently being used is key. And of course, if you can figure out ways to reduce that usage, it will ultimately help no matter which way you go.
Then you need to determine how much your electricity costs you per kWh in your area. This will help determine how much you spend each year and then help determine whether the costs of the solar panels are worth it for you or not. And don’t forget about the solar tax credits as an added bonus!
When it comes to us, we are still up in the air about it. Because we aren’t sure if the money it would cost us to purchase the solar panels would net us a better rate of return in some other investments instead. So, it’s yet to be determined whether or not we are going to pull the trigger or not.
This article was written by Shanah Bell from Everything Finance and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to [email protected].