The cost of solar panels has been dropping at a rate of about 10% year after year since 2010. For many homeowners, the question is no longer whether or not they would benefit from solar power, but when it makes more financial sense to switch to clean energy.
For most homeowners in Michigan, the answer is now. Read on to find out if solar power is worth it in Michigan.
Why Go Solar?
Michigan has a good mix of sunlight and state incentives. The state has higher rates of sun than most states east of the Mississippi, which means more savings for every kWh you don’t have to buy from local utilities. The average home uses about 900 kWh per month, so going solar can save you a lot on your utility bills if you live in Michigan.
If you sign up for a solar power purchase agreement (PPA) with a solar energy company, you’ll lock in your electricity rate for the next 25 years which means that you won’t have to worry about higher rates over time. Plus, any increases will be outpaced by inflation.
Return on Investment for Residential Solar Power in Michigan
According to a new study, the average home in Michigan spends more than $3,000 on electricity every year. Electricity prices have been going up by about 3% each year for the past five years alone. Thus, homeowners can expect their costs to continue going up over time.
The good news is that you don’t need to wait for your monthly electricity bill to become double or triple of what it is now in order for solar power to be worth it.
As far as savings go, you will recoup the initial cost of your solar panels and make further profit within 8 years. After that, all the money you save on electricity bills can be saved or spent elsewhere.
In terms of return on investment, going solar in Michigan is a no-brainer. Because the state also has above-average rates of sunlight, homeowners have an advantage when it comes to using renewable energy. In fact, during certain seasons, they can even produce more power from their rooftop panels than they actually consume.
Incentives, Tax Credits, And Rebates For Michigan Solar Panels
The federal government offers generous tax credits for people who go solar. Businesses and homeowners can take advantage of the 30% federal tax credit on what they spent on their solar installation. The credit is capped at $30,000 per taxpayer, with a lifetime cap of $10,000 every tax year.
The 30% federal tax credit means $3000 in cash back if you spend $10,000 on solar panels. The one exception is if you live in a state with an income tax such as Michigan, where the credit may be subject to income tax.
For individual homeowners, things are looking good for going solar in Michigan – especially after last year’s reduction of federal tax credits.
The state also offers a number of tax credits and rebates for solar panel installation, including:
- A home energy credit worth $1,000 per year over 5 years;
- A personal income tax repeal credit up to $2,500 in 2017 and increasing by $500 every year until it reaches $7,500 in 2022;
- A 50% rebate on installation costs for solar water heating system;
- A 75% rebate on installation costs for energy efficient windows, doors, furnaces, boilers, air conditioners, water heaters, insulation or roofs.
The state also provides additional incentives to high-tech businesses operating in Michigan. Solar farms are exempt from property taxes, and solar farms with a capacity over 5 megawatts are also exempt from the state sales tax.
You should check with your local government to see if you qualify for any other rebates, incentives or tax credits apart from these that are offered by the state. Different cities in Michigan have additional programs designed to encourage renewable energy usage.
Does Going Solar on Your Michigan Home Make Sense?
To get a better idea of whether or not solar power is worth it in Michigan, ask yourself the following:
How will my home’s electricity be delivered after I go solar? If you decide to go with a PPA , your biggest expense will be the installation process. If you want to own and maintain your own solar panels, you can buy them outright. Either way, your long-term cost savings will come from the money you save on electricity bills after installation is complete.
What type of rooftop space do I have? If you have little to no room for solar panels in your yard, they may not be worth installing in Michigan. However, if you have enough space, or if your home is facing south, you can benefit from solar power on a fairly large scale. If you live in the city and don’t have enough space for solar panels, becoming part of community solar garden may be worth looking into.
Do I qualify for any local or federal incentives? If you install solar panels in Michigan, you could receive a federal tax credit on up to 30% of the cost, depending on whether or not your home is already eligible for other incentives. Electricity providers like DTE Energy also offer several incentives on top of state and federal tax credits.
You may be able to take advantage of all these incentives, but if you don’t know how to sift through them or if you find them confusing, ask a solar energy expert for help.
Comparing Michigan Solar Panel Options
How much money you can save, and how long it will take to recoup the initial installation cost depends on your choice of solar panels.
Standard solar panels are often best for homeowners who want a system that’s easy to maintain and works well in most types of weather. They typically come with an efficiency rate of 14% but may have a slightly lower return on investment.
HIP solar panels are designed for shade-free installation and have an efficiency rate of 16%. They typically cost more to install, but they can give you a higher return on your investment.
SunPower has the highest efficiency rating of 22% with some models boasting as much as 24%. In addition to having an edge over other types of panels, SunPower panels are durable enough to last for up to 40 years.
Solar panel technology is changing every year, so ask your solar installer about the latest developments. He or she can help you choose between standard and high-efficiency models while staying within your budget.
Michigan Solar Panel System Installation Cost
A solar panel system typically costs $9,500 to $18,000 and can produce 2 to 7 kilowatt-hours per day. Smaller panels are cheaper and more efficient while larger ones cost more but provide higher rates of return on investment.
If you want a fixed rate for electricity that’s lower than the state average, you may want to consider a solar lease.
Solar panel installation can be complicated, so make sure the installer is experienced and knows all the tax credits you qualify for before he or she begins work.
When it comes to long-term electricity savings, going solar has no competition. If you’re considering a switch to solar power, contact a local installer today.
Conclusion
There are many reasons to consider going solar in Michigan, but your financial situation is the most important. If you can afford solar panels and you have space for them on your property, it’s time to begin comparing quotes from qualified installers.