By Jen Helms
Living Green Magazine
Many people say that they would love to install solar but speak of it as a far off lofty dream instead of a real possibility. Having solar energy power your home is much more realistic and has a much higher payoff than you might think, with the right forethought and planning of course.
Solar energy is getting a lot of attention right now. Solar companies are being invested in heavily. SolarCity just went public in December 2012 and Sungevity just raised $125 million in January 2013 through both equity and new project financing.
As a result of these investments, solar companies are expanding their reach to find new residential customers and I wouldn’t be surprised if you have been approached by a solar salesperson recently. If you jumped on getting photovoltaic panels installed today, it would likely be a great decision, but it would likely be a far better decision for you to increase your home’s energy efficiency first.
By decreasing the electricity demands of your home, you will be able to install a smaller photovoltaic system to meet your home’s electricity needs, decreasing the upfront cost. There are many different ways to slash your home’s electricity demands that require a minimal investment. This includes using smart strips to cut phantom loads, installing insulation, and switching to CFL or LED lights.
So let’s say you own a three bedroom home and have a $200 electric bill per month. You would likely be looking to install a 4 kW solar system which retails for $30,000 through Solar City, one of the biggest providers. Now what if you could drop your electricity needs down to $100 per month?
The path to that outcome will be different ways depending on your personal situation but this can be possible to do for an investment of about $2,000. Now you are down to only needing a 2 kW solar system which may retail for about $15,400, conservatively based off of the median price of $7.70/W for systems smaller than 2 kW. (Solar systems become slightly more expensive per watt of electricity because installation costs do not go down proportionally to size in the way that the actual photovoltaic panels do.)
Additionally, solar power tax credits and government incentives help you save. The tax credit being offered by the federal government is an incredible 30% and is not set to expire until 2016. There are also ample state and local incentives in place to encourage residents to install solar. With the federal tax credit, you are now down to the solar system costing you $10,900, or $12,900 if you include the investments you made in efficiency upgrades. This is a drop in upfront cost of almost 60% from the original $30,000 estimate.
Now this may still be too much money for you to be able to pay for upfront. Another option is solar leasing which is a far better option than people realize. When people hear “lease” they often think of the dismal financial benefits of many leasing options where you end up paying significantly more in interest with the only benefit of not having to pay anything upfront.
Solar leasing is an entirely different phenomena because your electricity bills go down so much that you not only pay nothing up front, but you end up saving money every single month. This is because your solar lease payment and your new low electric bill end up being less than your old electric bill. After speaking with a solar lead generator for a top company, I think that many people must think this is too good to be true because I honestly cannot believe how hard he has to work to convince people to do something that costs nothing and saves them money immediately.
While this is mostly a look at the upfront investment required, I think it is important to highlight that solar really pays off when you go to sell your home. According to a study by the Lawrence Berkeley National Laboratory, homes with solar are able to sell for a premium of about $5.50 per watt which on a 2 kW system would mean you could expect to sell your home for an additional $11,000 by having solar installed, very near the required investment calculated above.
When this increase in home value is added into the mix, solar truly becomes an essential investment, not only for the environment, but for your personal finances too.
Jen Helms is the co-founder of EcoNinja, currently in beta. EcoNinja’s mission is to help people go green by providing tools to find the best actions to conserve resources.