There is no doubt about the fact that solar energy is extremely green and clean, and is, therefore, something that everybody should consider in order to power their homes. When it comes down to it our world is in dire straits at this point, and it means that we need to be as eco-friendly as humanly possible.
However, with that being said, one of the main reasons why most people consider getting solar power for their homes is not because of the environment, but rather because of the potential savings that it can provide them with.
Of course, producing your own electricity through your own means can indeed help you save money, but with that being said how much money are you actually going to save with solar panels?
There are of course a few different considerations that you need to keep in mind here. One of these considerations is exactly how much energy you use on a yearly basis, as well as how much money you spend on energy costs per day, per month, and per year.
Moreover, you also need to consider exactly how much it is going to cost you to install a solar panel array that will actually meet your energy needs. Another thing that you need to consider is if there are any rebates or tax deductions available for you due to the fact that you have installed a green type of energy production system for your home.
Today, we are here to find out whether or not you actually save money with solar panels, and moreover if you do save money with solar panels, how long it takes for you to get your money back on your initial investment. Therefore, one of the first things that we’re going to figure out is how much it is going to cost you to install those solar panels.
Let’s get right to it and figure out how much money you are going to save by installing a state-of-the-art solar panel array on your home.
How Much do Solar Panels Cost?
OK, so before we can figure out whether or not we will save money on solar panels, as well as how much money you can potentially save, you first need to know how much installing a set of solar panels on your home is going to cost you.
Now, of course, how much money it will cost you to install a solar panel system in your home is going to depend on how large that panel array needs to be, especially in terms of meeting your current power requirements. To make sure that this article is useful for as many people as possible, we are going to go with the average across the board.
So, on the lowest end of the equation, you can expect to spend a minimum of $5000 on a low-end solar panel array. However, if you are going for a top-tier solar panel array then you can expect to spend around $40,000 or even slightly more for a full panel array. To keep things simple, let’s say that a decent solar panel array is going to cost you $25,000.
Federal Tax Credits and Rebates for Solar Systems
If you live in the United States, then one of the things that you need to know about is the federal investment tax credit, also known as the ITC for short.
What this all boils down to is that this is a tax credit that Americans can receive for installing solar panel arrays on their home. At this current time, the federal government is offering all people a 26% investment tax credit on the cost of their home solar panel systems.
This effectively translates to a 26% reduction of the cost of the solar panel system. Therefore, if your solar panel system costs you $25,000 to install, given that 26% tax credit, the actual cost after that rebate is $18,500.
There may also be other monetary rebates available depending on the exact state you reside in, but we don’t want to give you false hope, so we are just going to stick with that 26% federal tax credit for now (although you are likely to get another few thousand dollars knocked off that price if you live in a state that supports green initiatives).
The Cost of Electricity
In order to figure out how long it will take you to get your money back for your solar panels, particularly based on your own energy consumption, we have to do a little bit of calculating. So, although we cannot say exactly how much money you spend on electricity costs per month, the national average in the USA is just under $118 per month, which translates to roughly $1,415 per year.
So, your solar panels, after those tax credits, cost you $18,500, and if your solar panels produce enough power to meet all of your energy needs, it means that you save $1,415 per year on your power bill. Based on this, to fully get your money back (not including maintenance, repairs, or replacement costs), you can assume that it will take just over 13 years for the solar panels to pay for themselves.
Buy Back Rates
The other thing that you should take into account here is that if you happen to produce excess solar energy that you don’t use, this can often be sold back to the grid or the utility companies through a so called buy-back program.
Now, how much money you get per kilowatt-hour depends on which state you live in, with some paying as little as $0.10 per kilowatt-hour, with some paying you much more, and others, such as California for example, not reimbursing people at all for excess solar energy.
Exactly how much money you can make from a buy-back program depends on where you live and how much electricity you produce, how much you use, and how much is left over.
For the most part, people usually don’t produce enough electricity to sell, and if they do, the amount of money you get is quite negligible in terms of the initial cost of the solar panel array. At the most, you can expect this to knock maybe a year from how long it takes for the solar panels to pay for themselves.
As you can see, whether we are talking about monthly energy cost savings or whether or not solar panels pay for themselves, the answer here is that you will undoubtedly end up saving money by installing a good solar panel array on your home.