With rising energy costs and temperatures, more people are looking into solar energy as a way to save money on their electric bills. But how much money does solar energy save, and is it worth the investment? Let’s take a look.
Will Switching to Solar Energy Save You Money?
The point of having solar panels is to have your home generate its own power. This will then offset your electric bills, if not completely eliminate them. If you generally have a higher electric bill, you’ll likely benefit when switching to solar.
However, if your electric bills are consistently lower, you may not see much need in switching to solar, as the costs could outweigh the benefits.
- Do you find that your electric costs spike in spring and summer?
- Does your home need a lot of energy, thus costing you hundreds, if not thousands, of dollars in electric bills?
By reviewing your current and past electric bills, you can start calculating if solar would save you money in the long run.
Also keep in mind that electricity rates are volatile. As an example, the ice and snow storm in the southern states in 2021 caused many electric bills to triple, if not quadruple, due to electric needs. Of course, no one can expect events like that to take place, but if it worries you, getting solar can ease those fears a bit.
Do You Have Enough Sunshine to Make Solar Panels Worthwhile?
The second step to seeing if solar energy could save you money, is to evaluate your sunlight exposure.
- Some states, like Arizona, California, and Texas will produce more energy, creating more solar power and offering bigger savings potential.
- But other states, like North Dakota or Alaska, may not see as much sun, especially in the winter months. So this would shorten your potential savings.
What are the major factors to think about when considering switching to solar energy?
It’s not just your state that matters.
- Your home’s location and path in the sun,
- how much shade you have,
- and your roof type…
…will also determine your home’s sunlight exposure, and affect the output of your solar system.
See if you’d be able to save on your electric bill by using a calculator that measures your potential savings (It’s a pretty cool tool!).
How much money does solar energy save after the upfront costs? Again, that will vary from home to home and state to state, but let’s take a look at the upfront costs of solar.
Before you do anything, get multiple quotes
Of course, just like with any home renovation or improvement, you’ll want to look at multiple companies in your area and get quotes. This isn’t to say that the cheapest option will be your best bet, but it’s still important to see what everyone offers.
Learn what you truly need
Along with getting multiple quotes, you’ll also need to figure out what your home truly needs. For example, based on your consumption, you may need a bigger system. Or, if your roof is of a certain type, you may need different panels.
When getting quotes, make sure to listen to what you’re getting for the price. And don’t be afraid to ask questions and get clarity on what your home really needs to be self-sustaining.
How much does solar energy cost to install?
Solar installation is not cheap.
And although it can save you money in the long run, it’s certainly an investment to make up front. So you’ll also need to know and prepare for how you will pay for it if you find that it would be beneficial to install.
While paying cash would (most likely) be the best option, the cost of solar systems can get pretty pricey. Solar energy systems can run upwards of $50,000. The average cost for a solar system (with install) is right around $20,000.
The warranty and maintenance costs on solar panels
Because solar is expensive, it’s also important to make sure you get a decent warranty with the system. And, if you live in an area like Arizona, you’ll most likely need to get your panels cleaned professionally, which could cost money as well (unless you get a maintenance plan for free).
Planning for these costs will also make installation more expensive, but could save you a lot of money in the long run.
Learn about the additional costs
Last but not least, you’ll need to calculate in any extra costs from items and add-ons that you may need. As an example, if you live in an area that has frequent storms, you may want to add a battery bank or backup generator to your package.
These add-ons can cost upwards of $10,000, but will keep you from having to be without power, or run up your electric bill. But will the extra costs be worth it for you?
Of course, installing solar isn’t just about the cost. Let’s take a look at the benefits, as well as how much money solar can save you!
Solar energy could increase your home value
Live in a super sunny and warm area? Installing solar can possibly increase your home’s value. If you plan on living in your home forever, an increase in value may not be worth it for you. But if you plan on saving money on bills right away, and then making more money on the sale of your home later, this could be a great selling point.
Solar energy is good for the environment
While not necessarily a financial benefit, solar can help you feel better about your contribution to making the planet better. Every kilowatt-hour of solar that is generated substantially reduces greenhouse gas emissions, and can also reduce water consumption. So, if you want to be more sustainable, solar can certainly help.
Solar energy could save you money in taxes
There are government programs that offer tax incentives, and some states also offer additional tax credits. And, some utility companies also give rebates for installing solar as well. With all of these incentives, you could save thousands.
While there is a federal tax credit, other credits and rebates will depend on your state. Some offer cash back, property tax exemptions, and some will even waive certain installation fees. And every state is different, so don’t be afraid to find out what your state offers.
Benefits of net metering
While this benefit isn’t offered everywhere, you may be able to use it as well. Some utility companies offer net metering, where they will store extra solar energy that your home generates. If you’re able to bank your solar, you can store it for months that you don’t see a lot of sun.
Solar energy saves you money on your utilities each month!
This is one of the major reasons people spring for solar power (aside from the fact that it’s environmentally friendly) — it saves you some of your hard earned cash each month!
How Much Does Solar Energy Save Each Month?
The biggest benefit to installing solar is that you can save hundreds of dollars on your electric bill. This is especially true if you purchase and install a system that gives you complete control of your home. Many people have been able to get their utility bills to $0 a month.
If I were to use that to my benefit, my family would save roughly $200-$250 a month in electric costs (and that’s roughly the average if you live in a higher-cost utility area with a decent amount of sun).
How Much Money Does Solar Energy Save Each Year?
Tally up the above monthly savings on a per year basis and we’d save about $2,500-$3,000 every year on our energy bills!
Add that up over the course of just 10 years, and a solar system would easily pay for itself. And, if your bills are higher than mine, you may be able to save even more!
So, how much money does solar energy save? As you can see, so many factors will come into play. And, how much you save will depend on what you’re offered, where you live, and what benefits you take advantage of.
So what’s the ROI? How long does it take to break even on solar energy?
Let’s say the average cost of setting up a solar energy system is $20,000. And, on average, you’ll save roughly $2,500 per year.
How long does it take to break even?
The breakeven mark — 8 years.
Your up-front investment will take 8 years to pay back. It’s not terrible, but it’s not great either. For most business ventures, investors like to break even on their initial investment within the first three years.
But, if you like the idea of clean energy and doing your part. PLUS, you’re committed to staying in THAT home for the long-term, then it might still be worth it for you to pull the trigger and add a solar energy system to your home.
What do you think? Is a solar energy system worth it for you? Why or why not?
AUTHOR Kimberly Studdard
Kim Studdard is a project manager for online entrepreneurs and small businesses. When she isn't spending time with her daughter and husband, or reading her growing pile of horror books, you'll find her working on her HR degree and working towards FIRE.