Installing solar panels on your home can definitely cut down on your utility bill. Replacing purchased electricity with energy generated by a solar panel system is a clear path to savings.
So, in general terms and assuming your home is a good candidate for solar panels, we’re confident saying yes. Installing solar panels does save money.
A Closer Look at Solar Energy System Costs and Credits
The savings generated by a solar system aren’t quite as simple as a yes or no answer, however. There are upfront costs to consider, like equipment and installation costs.
There’s also the cost of energy itself to take into account. Energy costs vary from one state and utility company to the next. The US Energy Information Administration maintains a table of average electricity costs for consumers.
The higher the monthly cost of an electric bill, the more potential exists for saving money with solar panels in the long term.
The variability of energy costs is also important to consider. Having the certainty that comes with generating your own electricity with solar panels is important. Solar systems don’t only save money, they can protect you from significant price fluctuations that can make budgeting more difficult.
Solar systems can offer more opportunities for savings beyond the renewable energy they generate, too. The federal Solar Tax Credit provides a 26% credit for a system installed from 2020-2022, the US Department of Energy explains. That credit may be renewed or changed by Congress in the future, as the program is set to expire in 2024.
There is a wide range of state and local initiatives that can save you money as well. North Carolina State University maintains a state-by-state list of the hundreds of active solar energy rebate, credit, and savings programs.
If your utility company offers net metering or you have a solar battery, you could increase your savings. By having a way to store and access generated electricity, you can reduce your consumption of full-cost energy from the grid.
Finally, the value of your home can increase with a solar energy system in place. Your home will have lower utility bills than similar houses in the area without solar panels. You can leverage that fact when setting the price for your home or negotiating with a buyer, should you choose to sell it.
Reaching the Threshold with Solar Energy Costs and Savings
You’ll need to recoup the costs of a solar installer setting up your panels and the equipment itself before you can truly say you’ve saved money with a solar power system.
However, solar panels still provide incremental savings: the reduced cost of your energy bill each month. That’s money back in your pocket 12 times a year that would otherwise go to your energy company. Once total savings exceed total costs, no one can say you haven’t found a deal with a solar power system.
How Much Money Do Solar Panels Save?
We know that solar roof panels do save money. But can that figure be quantified? How much money do you save with solar panels, exactly?
There’s no single answer to this question. Everything from the angle of your roof to the location and directional orientation of your home can affect your savings. What we can do is build an example to demonstrate how to think about costs and savings, and calculate your own.
Solar Panel Savings: An Example
Let’s say your total costs to install and activate the solar system are $12,000. With no other rebates or credits (and plenty are available), you can receive a 26% credit from the federal government if you install in 2022. That’s a savings of $3,120, bringing the upfront cost down to $8,800.
The national average cost for a kilowatt-hour (kWh) is 14.29 cents, according to the EIA. The EIA also places the national average consumption at 893 kWh. That’s roughly $130 dollars a month spent on your energy bill, or $1,560 a year.
If you can generate 75% of your own electricity with solar panels, that leaves you only needing to purchase the remaining quarter from a utility company. Your utility bill would drop to $32.50 a month and you would save $97.50 on each bill — $1,170 in a year.
Those cash savings mean you would reach your break-even point in a little under eight years. Solar systems regularly last for 25 years or more. That means about 17 years of active savings, where you have addressed all upfront costs — about $20,000 in savings!
Start saving money on your electricity bill. Go solar with Sun Source Energy today.