As a Midwest state, Indiana gets a decent amount of sunlight throughout the year, making the shift to solar energy worth considering. The latest stats show that the solar panel cost in Indiana is lower than the national average, further motivating the Hoosiers to go green.
If you’re an Indiana resident and going solar appeals to you, stay tuned. In this article, we discuss the overall cost of installing solar panels, the return on investment, and the overall benefits.
Why Go Solar?
Shifting to solar energy comes with many benefits for consumers, the environment, and society. The number one reason people make the shift is financial. Financial benefits include lower energy bills, a great return on investment, higher property value, and an overall reduction in energy costs on the country level.
The second major benefit is protecting the environment. Almost one-third of America’s carbon emissions belong to the electric sector. With more people switching to solar energy resources, the carbon footprint is reduced across the nation.
Finally, the solar industry can only keep growing as long as people invest in it. This means more people become employed as long as people go solar. Also, consumers can use the solar plus storage system to ensure they always have access to electricity, despite power outages or storms.
If you’ve been asking yourself, “Is solar worth it in Indiana?” we’ll provide all the answers below.
The Cost of Going Solar in Indiana
The latest data from October 2021 states that the average cost of solar panel installation in Indiana is $2.49 per watt. Hence, a typical solar system of 6000 watts costs $11,038 with federal tax credits included. This is lower than the country’s average residential solar power price, which is $3.00 per watt.
However, the actual cost varies depending on the system size. Here’s an overview of the average residential solar system cost by size.
- 4kW – $8,025
- 5kW – $9,631
- 6kW – $11,038
- 7kW – $12,738
- 8kW – $14,682
- 9kW – $16,077
- 10kW – $17,664
Note that the prices above are subject to change. Also, the installation costs can vary on:
- Inspection costs
- Permit costs
- Installer profit margins
Here are some other factors that affect the solar system installation costs.
- The Amount of Electric Power Your Home Uses
The number of people in a household directly affects the amount of electricity used. The more electricity you use, the more solar panels you’ll need to cover your energy needs.
Solar panels get cheaper per watt, but the system cost increases with panel additions. On the other hand, the higher the energy usage, the higher the energy bill savings with the solar panels.
- Type of Solar Panels
Two main types of solar panels are monocrystalline and polycrystalline. The former is more efficient but also more expensive, while the latter comes at a more affordable price point but is less efficient.
- Quality of Installation
Many solar companies offer ridiculously low prices. Note that if the installer offers you a price much lower than the average, it most likely means they’re using low-quality materials. You should aim for solar installers that charge just enough to keep them operating in the long-term. After all, you’ll have to work with them for another 25 years.
The main factor that affects the overall cost of going solar are the federal and state incentives.
Federal and State Incentives
The overall cost of your solar panel system hugely depends on the available incentives. The good news is that the Hoosier state legislature keeps making strides toward more robust solar policies for its residents.
After all, the local tax incentives can save you thousands on a solar panel system installation. Here’s an overview of the available programs for Indiana residents.
- Federal Solar Tax Credit. The Investment Tax Credit (ITC) is available for all solar panel system installations and it reduces the overall cost by 26%. The incentive only applies to those who purchase the system outright (cash or solar loans). Starting in 2023, the federal solar tax credit is set to drop 4%, so you better act quickly to get the most out of your investment.
- Renewable Energy Property Tax Exemption. The good news for all solar system buyers is that the value of the solar panels isn’t counted when assessing the property for taxes. This means that you get to enjoy the perks and value of the solar power system without worrying about it adding to your tax load.
- Indiana Sales Tax Exemption. Purchasing a solar energy system in Indiana makes many components exempt from sales tax. Taxes don’t apply to solar modules, inverters, and racking, since they’re directly involved in producing electricity.
- Net Metering. All solar energy systems less than one megawatt in size are eligible for net metering. This program allows you to send excess electricity to your local grid and receive energy bill credits in return. So when there’s a lack of sunshine and your panels don’t produce enough energy, you can use the credits instead of paying for electricity from the utility.
As you can see, there are plenty of federal and state incentives and tax credit programs that help Hoosiers get the most out of their solar system installment. All of which brings us to the next section.
Going Solar in Indiana – Return on Investment
For Indiana, the average payback time is around 10 years. Given that a solar system lasts for up to 25 years, this means you spend more than half of your solar system circle generating free power.
More than anything else, your return on investment depends on how you made the initial purchase. Buying the system outright gives the biggest return compared to getting a loan or a lease. You’re only eligible for federal tax credit programs and other incentives if you get your own system.
For example, if you spend $21,000 on the initial purchase, the tax credit will leave you with a net outlay of around $15,540. Each consecutive year, your energy cost savings will erase the purchase price, and you’ll generate over 200% of the initial investment over the course of 25 years.
Overall, this isn’t the most cost-effective of options compared to some other states. But it’s still a pretty good deal given the limited number of sunny days in Indiana.
How Efficient Are Solar Panels in Indiana?
It’s true that Indiana gets fewer sunny days than Arizona, and the solar panels may not be as effective as those in the Grand Canyon state. Every solar panel system in Indiana, and in most other states for that matter, is different in terms of performance for many site-specific conditions.
- The position of the rooftop. South-facing roofs get more sunlight compared to those facing north.
- Your area of residence. The south of Indiana has more sunny days compared to the north.
- Obstacles in the form of trees or buildings that may block the sunlight from falling on the solar panels.
As you can see, the efficiency of solar panels also depends on some external factors. If your house doesn’t meet the ideal scenario criteria, that doesn’t have to be a deal-breaker. Thanks to net metering, you’ll still be able to use electricity even if it’s been days without sunlight.
Bright Days Ahead for the Hoosier State
From south to north, going solar in Indiana is a great choice, thanks to the federal and state incentives. The favorable net metering laws, property and sales tax exemption, as well as a solid 26% in federal tax credits, make sure you get both short- and long-term value from your investment. And let’s not forget the favor you’d be doing to the environment.