Utah is among the seven US states with the highest solar power potential. In fact, the state aims to obtain 20% of its electricity from renewable resources by 2025 due to cost-effectiveness. So yes, solar seems to be well worth it in Utah.
If you’re considering switching to solar in the Beehive State, this short guide explains why it’s a sound decision.
Why Go Solar?
More people turn to renewable energy sources each year. This is due to two main reasons – financial benefits and environmental causes.
The financial benefits of going solar are enormous, including lower electrical bills, excellent return on investment (ROI), and overall higher property values.
Solar energy is also better for the environment. The United States electric sector is a significant contributor to the country’s carbon emissions. Fortunately, more people have recognized the benefits of going solar. The effects of a single residential building using solar panels are similar to planting a hundred trees each year.
Solar energy also provides more jobs for society, so the solar industry can thrive. Plus, many people rely on their solar plus storage system that provides electricity during power outages and storms.
And when it comes to the “Is solar worth it in Utah?” question, we say – absolutely. Here’s why.
Cost of Going Solar in Utah
The overall cost of shifting to solar energy in Utah depends on many factors. But in 2021, the average cost of solar panel installation was between $11,860 and $14,496, with the federal tax credit of 26% included. This is around $2.60 per watt. Note that the mentioned prices are based on a 6.7 kW system.
The average 25-year savings range from $18,003 to $22,004, with an average payback period of 10 to 12.4 years. This is slightly more compared to many other states, but it’s still a good deal bearing in mind that a solar system lasts for 25 years. This means you get free energy for more than half of your solar system circle.
In general, the prices for solar panels are going down. There’s been an 80% drop over the last 10 years. Plus, plenty of incentives make the overall cost lower.
Here are the main factors that can impact the cost of solar panels:
- Size of the solar panel system
- Solar panel installation cost
- Tax credits and incentives
Even though these are the three key factors, several other aspects could affect the overall price as well. For example, the roof’s overall condition, the amount of sunshine the roof receives, or the amount of power used by the household each day.
An important factor is the amount of energy the solar panel system can provide. An average solar installation for households is 5,000 watts, and most solar panels in Utah cost between $3 and $5 per watt. Hence, a typical 5,000-watt system would cost from $15,000 to $25,000.
Here’s a short list of the average cost of solar panel installation by system size:
- 4kW – $11,600
- 5kW – $13,915
- 6kW – $15,942
- 7kW – $18,410
- 8kW – $21,360
- 9kW – $23,184
- 10kW – $25,490
The prices above include the tax credit and refer to the cash purchase. If you opt for a financed purchase, the cost would be somewhat higher.
Also, it’s important to take into account other initiatives and tax credit schemes.
Going Solar in Utah – Federal and State Initiatives
There are three main incentives and tax credit schemes available to Utah residents:
- Federal Solar Tax Credit
- Utah State Tax Credit
- Net metering
Federal Solar Tax Credit
The Federal Solar Tax Credit represents the dollar-for-dollar reduction program in the income tax amount. Utah residents who opt for solar power qualify for the 26% federal tax credit on the solar panel installation cost. For example, if you pay $15,000 for the solar energy system installation, you’d qualify for a $3,900 tax reduction.
Note that the credit amount is set to drop 4% starting in 2023. This means that you should invest in solar before in order to maximize your savings. All tax credits are redeemable until 2023 when they expire unless renewed by Congress.
Other than the federal ITC, there are other incentives depending on the area and utility company.
Utah State Tax Credit
The Beehive state offers a tax credit of 25% of the total installation cost capped at $1,200. But this amount is only valid for installations completed in 2021. Starting in 2022, the tax credit will be limited to $800 and then to $400 in 2023. Unless the state legislature decides to extend the credit, it will be phased out completely.
Net Metering
A common misconception about going solar is that you’re not connected to the grid anymore and don’t pay energy bills. In truth, solar panel users do pay for their energy, but at a much smaller price. For example, you’d pay five cents per kilowatt-hour you spend on solar energy and 21 cents per kilowatt-hour when you entirely depend on the grid, thanks to the net metering laws.
Net metering is an excellent incentive for Utah homeowners. As a solar panel owner, the net metering laws allow you to sell excess energy to your local grid. In turn, the utility in question assigns you dollar credits you can use for energy bills. This also means that if your solar panels produce less electricity than needed during cloudy periods or at nighttime, you can use the credits to pay for the electricity from your utility.
Be aware that only the investor-owned utility, Rock Mountain Power, gives the full retail rate. Other electrical cooperatives provide credits at the wholesale rate.
Achieving the Highest Return on Investment
Rocky Mountain Power is the leading utility company in Utah you’d most likely rely on in net metering. The utility pays owners $0.05969 per kilowatt-hour in the winter, and a little bit less in summer. This cost is less than what you spent to generate that power.
To maximize your ROI, it makes sense to use all the power you generate without exporting it to the grid. A good idea is to size your solar system to produce less than 60% of your usage. And if your system makes more than 60%, you may want to consider installing home batteries. The batteries store excess power from your system so you can use it later.
Leasing vs. Buying a Solar System in Utah
Many homeowners wonder whether they should purchase their own solar system or lease one instead. You should know that you are only eligible for tax credits and rebates if you buy your own system. However, if you’re on a limited budget, you can lease the system for zero money down. This is a more straightforward way to afford an otherwise unaffordable solar energy system for your home.
When you lease a solar panel system, you pay a monthly fee for the entire contract duration, which is typically from 20 to 25 years. Some leasing contracts raise the cost to 5% each year. Investing in your own solar system, on the other hand, would pay for itself in no more than ten years and increase the value of your home should you plan on selling it later on.
Even though purchasing your own system comes with more perks and incentives, it may not work for everyone. Depending on your situation and energy needs, you should go for the solution that works best for you.
Save Money by Going Solar in Utah
So, is solar worth it in Utah? Yes, it is. With the combination of plenty of sunshine as well as federal and state incentives and tax credits, you can make both long-term and short-term savings by going solar. Utah is one of the leading states in terms of solar power, and even though there’s still room for improvement, it comes with plenty of benefits for the consumer.