There’s a question on the minds of many homeowners: Are solar panels worth it? Undoubtedly, you’ve seen solar panels slowly starting to pop up on rooftops in your community. Recently, I’ve started to give a lot of thought to whether or not we should add solar panels to our home in Michigan.
If you’ve ever found yourself wondering something similar, let me walk you through my thought process. Together we can weigh the pros and cons, while considering the time, money, and even energy (forgive the pun!) required.
Are Solar Panels Worth It?: Solar Panel Pros
Solar panels can seem like a serious commitment to homeowners. With most panels (semi)permanently fixed to your housetop, they’re a much more long-term commitment than paint colors and holiday decor. They can be costly, too. So why are more and more homeowners adding them? There are some major benefits to residential solar.
Increased Affordability
When residential solar panels first came onto the scene, the cost seemed sky-high. Thanks to a federal residential solar cost tax credit, solar panels became much more affordable.
According to the current tax credit, you are entitled to a tax credit for a percent of the cost of your solar system. From 2022-2032, your tax credit is 30% of the cost. This current tax credit rate lasts through 2032 so you have plenty of time to make up your mind. However, you want your panels installed by 2032. After that, the credit is set to decrease.
Decreased Energy Costs
One of the most obvious reasons to install solar panels is the energy cost savings they can afford homeowners.
Your savings depends on a variety of factors. These factors include:
- How much energy you use each month
- The amount of solar panels installed
- The power your solar system can create
While you might not see a cost savings from day one, you should feel optimistic about the future savings. Recently, one report revealed that electricity costs outpaced inflation over the last 12 months with electricity increasing by 3.6% and overall inflation at 3.2%.
By saving more money on energy costs, you can allocate money to other parts of your budget or add to a sinking fund!
More Self Reliance
In recent years, many people have found themselves wondering if they’re maybe just a little too reliant on others. There’s a push to grow your own food and make your own household items. Creating your own energy is no exception.
Still, solar panels aren’t just for homesteaders and people who are looking to live off the grid. You can stay in your sweet suburban abode, I promise! If you’ve ever found yourself frustrated during a neighborhood power outage, solar panels can help! When your solar panels are paired with battery storage, you can keep your lights on no matter what’s happening in your neighborhood.
Increased Favorability with Buyers
When solar panels first came onto the scene, people weren’t sure how future buyers would feel about them. Even if panels become increasingly affordable to install, you might still think twice, especially if you aren’t sure how long you will live in your home.
However, recent research shows that many prospective homebuyers look very favorably on panels. In a 2015 Berkeley Lab study, appraisers across multiple states found that buyers are willing to pay a premium for solar panels. In fact, buyers viewed the panels as upgrades, similarly to how you might upgrade a bathroom or kitchen.
Are Solar Panels Worth It?: Solar Panel Cons
Once one family decides solar panels are worth it, you are likely to see other houses add them as well. But why doesn’t everyone have solar panels? For some people, solar panels aren’t worth it–at least not yet anyway. Let’s take a look at some of the drawbacks of solar panels.
High Startup Costs
The cost of solar panel installation has indeed dropped in recent years. Still, for some families, the cost feels too high. With averages ranging from $15,000 to $35,000 depending on your state and other factors, that’s a lot of money to part with. EnergySage can help you get a better understanding of what it might cost you. They are a free service that helps to provide specific quotes for your area with no unwanted phone calls.
Of course, the federal tax credit can take some of the sting out of solar. But you have to remember that it’s simply a tax credit. Homeowners either cover the cost upfront or take out a loan. Then, the credit is deducted from the income tax you owe the year the solar system is installed.
Sunlight Dependent
Solar energy depends on sunlight. That means that your location can impact how much energy your panels generate. If you live in a place with poor weather and low sunlight, solar panels might not make as much sense. For example, since I live in the suburbs of southeastern Michigan, having 290 cloudy days per year definitely impacts our decision.
Of course, battery storage can help offset cloudy days. But that is another cost to consider since solar battery systems cost extra.
Not Compatible with All Homes
The direction your home faces could impact the effectiveness of solar panels. Does your roof face east or west? You aren’t going to be the best candidate for solar energy. Instead, if you have a south-facing roof, your solar panels will actually be in the direct path of the sun for most of the day.
Additionally, the material of your roof can determine whether or not solar panels are a good fit. Clay tiles, slate, or wood often don’t work well with solar systems. As a result, the position of your home and the material of the roof might keep you from being a solar panel candidate.
Semi Permanent Design
Some people shy away from them because they aren’t sure how long they will stay in their homes. Solar panels are semi-permanent. So it’s not something that you can pack up onto a moving truck. Instead, the panels stay with the house. Many homebuyers now see solar panels as a plus. But not everyone feels that way.
Solar panels make more sense if you plan to stay in your home long-term. That way, you know that you’ll be in your house long enough to take advantage of the cost savings. Even if you do plan to move, you can still install them. But you want to think of solar panels as an upgrade to your current home, not something that comes with them.
Are Solar Panels Worth It For Me?
As you start to research solar panels, there is one company that makes it easier to get accurate information. EnergySage can help you access accurate local quotes for solar panels in your area for free. By working with an Energy Advisor, you can make sure that you have accurate information specific to your home. Plus, you don’t have to enter a phone number. So there’s no need to dodge any follow-up calls.
Take a look at some of the helpful results I received from EnergySage:
After working with EnergySage, I thought through my specific situation in three aspects:
- Our overall financial situation
- Specific quotes from EnergySage
- Other uses for our money
Come with me as I explore all three aspects in more depth.
Based on My Financial Situation
My family is financially secure. It wasn’t easy and it didn’t happen overnight–but we feel proud to have made it! We are debt-free with a fully funded emergency fund and ample retirement savings. In fact, I was able to make the leap into entrepreneurship and buy a new car because of our solid financial footing.
As a result, we could come up with the money that solar panels require. Before you make any decisions about solar panels, you want to be clear on your own financial situation. Someone who doesn’t have an emergency fund or who has high-interest debt probably needs to strengthen their financial situation first.
Once we realized we could move forward with finding funds for solar panels, we had to decide what the financial payback would be.
Based on Quotes
When I worked with EnergySage, I realized that there is an estimated 7-12-year “payback” time. Not seeing any financial gains for a decade definitely cooled my interest in solar panels. It isn’t just that we can see better payback using our money differently. It’s the fact that we aren’t sure where life will take us in the next 10 years.
Currently, we are parents to two elementary-aged kids. In 10 years, though, our family dynamic will be different. Will we still live in our current home? Will we travel more often? Since we don’t necessarily know what the future holds, it’s hard to make a decision today for a payback that is that far down the road.
Plus, it raises all sorts of other questions if we do sell our home. Just because we are interested in solar panels doesn’t mean everyone will be!
Based on What Else I Could Do With That Money
Are solar panels worth it? To answer this question, I work through the same process that I do with any other purchase. When wondering is X worth it? I always consider what else I could be doing with that money.
So what would I do with an extra $10,000 or $20,000 or more? These are some of the things we are currently most excited to consider spending money on:
- Building an early retirement bridge account
- Investing for generational wealth for my kids
- Investing in my small business
- Saving up for a new-to-us car
- Upgrading our home's interior and exterior
Thinking about other ways we could spend the money certainly gave me pause. That doesn’t mean that we won’t ever install solar panels. It just means that they aren’t at the top of our priority spending list.
Final Thoughts on Are Solar Panels Worth It?
For me, solar panels probably aren’t worth it at this point in our lives. We currently have a long list of ways that we’d like to spend our money that will give us more time freedom and enjoyment today.
However, we aren’t ruling solar panels out entirely. The idea of doing something that could benefit the environment and our community is appealing. If the price continues to come down and the payback time shortens, we will explore our options.
Are you interested in solar panels? I’d encourage you to find out if it’s worth it for you with EnergySage or consider community solar farms as well.
Are solar panels worth it to you? Did your EnergySage results surprise you?
Please let us know in the comments below.
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