For a few years now solar energy has been the buzz word, not just for home owners but for investors looking to find the ‘next big thing’, but even though the globe may in fact be warming, the enthusiasm for the process as well as the stocks has cooled. However now may be the time for home owners to step into the sun and take advantage of the trend as long as you do your homework. We hope to help you navigate through the maze of tax credits, rebates, grids, and the rest of the linguistics to arrive at an educated decision.
Firstly, before this starts reading like a late night infomercial let’s look at all of the advantages of solar power. The first question before we even get to the disadvantages of solar panels is should you own or should you lease? Now we’re not here to break down your 1040s and K1s so it will certainly vary depending on your situation and we’ll let you crunch the fine sand and always recommend do a thorough scenario analysis for yourself, but as a rule much like the home itself, we’ve found it’s better to own than to rent in over 70% of the scenarios. Although they vary from state to state, but the tax advantages and credits can a make a sizable difference in your tax return as well as the overall cost. Some states will eat the majority of the upfront cost in addition to annual tax credits.
That said, major disadvantage to installing solar panels is obviously the cost. These systems can run very high depending on the number of panels you have. The average cost of a system for a 3-bedroom home is $22,000 some outliers as low as 12,000 but some coming in around 34,000.
The second disadvantage is that the sun doesn’t shine 24 hours a day. When the sun goes down or is heavily shaded, solar PV panels stop producing electricity. If we need electricity at that time, we have to get it from some other source. In other words, we couldn’t be 100% powered by solar panels. At the very least, we need batteries to store electricity produced by solar panels for use sometime later and that cost an additional $300 per battery. Before you say that’s not that bad, you’ll need about 8 of them to power your house in the event of a blackout.
Your break-even point will be a few years down the road, 3 to 4 years on average so don’t think you will install the panels in January and be whole in December. With the tax credits and initial rebate, the percentage of your bill that you will save is substantial but it won’t totally eliminate your bill in most cases so the difference will take some time to accumulate to compensate for a five figure spend.
Lastly, solar tax credits and rebates aren’t easy so consult your tax person to make sure you’re getting all of the deductions you can as this is a major portion of reason you do this now rather than wait until later when they may not be there.
All in all, we think the pros out way the cons but it is sole based on your personal situation and usage. Aside from the environmental benefits after the small hill to break even you’ll experience a much lower monthly bill for the duration of your time in the home which could pay benefits for generations.