By definition Solar Power is energy from the sun that is converted into thermal or electrical energy. It may be used to power your home, business, devices, EVs, and RVs. But what does this technology mean in our world today?
After years of product innovations solar has become one of the cleanest and most abundant energy sources available. The United States alone has some of the richest solar resources in the world readily available.
Furthermore, installation costs have come down, making this a potentially great time to consider adding solar panels to your home or business property.
Here are a few of the key benefits to consider:
- Reduce Monthly Energy Bills
- Earn Tax Credits and Rebates
- Help the Environment
- Improve the Value of your Home
From a pure financial perspective, solar panels are a low-risk investment with significant long-term returns.
Reduce Monthly Energy Bills
In the United States, the average annual energy expenditure per household is $3,891, including transportation and residential energy. Homeowners with EVs, heated swimming pools, or extensive square footage will pay considerably more.
With the use of solar power, energy bills could be reduced as soon as the panels are installed. Depending on the quality of the product, a solar panel has a 25-35 year lifespan, which means your savings will last for decades.
There is a hefty up-front cost to contend with and the type of financing employed would ultimately dictate your break-even period. Nonetheless, whether solar panels are purchased, financed, leased, or rented, your month to month cash flow savings are instant.
Break Even Period
Use this instant estimate tool provided by SunMetrix to estimate your energy savings, up-front costs, and financing options for a more precise overview.
Assuming a 5 to 10 year break-even period, solar panels could be worthwhile. Any longer break-even period would deserve a more comprehensive financial analysis.
Reduce Income Tax Bills
Depending on your zip code, there may be significant rebates and incentives available for solar panels. For example:
- Federal Tax Credit equal to 30% of total equipment and installation costs.
- Solar Renewable Energy Credits
- Generated throughout the year, may be sold back to the grid
- State and Local Government Rebates
California Incentives
- Most residents are eligible to receive the Federal Solar Investment Tax Credit (ITC) which covers up to 30% of the cost of installing a solar panel system.
- Solar Energy System Property Tax Exclusion : people who install solar- or wind-powered devices to produce energy for their residence or place of business are entitled to an exemption for the amount of value the device contributes to their property.
- This means anyone who installs these devices are exempt from paying property taxes equivalent to the property value increase as a result of adding the system until 2025.
- Net Metering Programs : these programs are a billing mechanism where utility companies provide credits to homeowners for the extra electricity their solar panels generate and add to the electricity grid.
- DAC-SASH : This program offers up to $3 per watt to eligible homeowners in qualified territories, specifically for single-family homes.
*Consult with your tax professional for more information.
Improve Your Property Value
Installing solar panels for your home or business not only reduces utility bills, the panels could lead to a meaningful increase in your property value. While impossible to truly pinpoint, in a recent study by EcoWatch, solar installations showed to increase a home’s resale value by up to $5,911 for each kilowatt of solar panels installed. Real-estate company Zillow reported homes with solar panels sold for approximately 4.1% more than comparable homes without solar panels. Given today’s elevated property values, an extra 4% increase in property value could be significant.
| Home Solar System Size | Amount Solar Panels Increase Home Value * | Cost to Install Solar Panels (After Tax Credit) ** |
| 4 kW | $23,644 | $7,874 |
| 6 kW | $35,466 | $11,810 |
| 8 kW | $47,288 | $21,280 |
| 10 kW | $59,110 | $19,684 |
**Figures based on solar average costs in the U.S.
Reduce your Carbon Footprint
Last and certainly no least, solar energy is clean, renewable, and reasonably good for the environment relative to conventional sources. Furthermore, you don’t have to live in a sun-drenched state in order to reap the benefits of solar power; solar panels work in the rain, in cloudy weather, and in snow, though peak performance is more easily achieved with unobstructed sun. Given a number of providers and financing options available, this could be a wonderful time to invest in solar. A key to ask before pulling the trigger is to assess whether or not you will own your property long enough to enjoy the cash flow savings beyond the break even period.
In short, if you’re in a strong financial position and have a property with adequate access to the sun, installing solar panels could improve your financial health and the health of the environment.
The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.
This content not reviewed by FINRA