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Are Solar Panels Worth the Investment?

The cost of electricity from traditional sources is rising every year while the cost of solar panels and home solar systems has significantly declined over the last several years.  This can make a home solar installation seem like a no-brainer!  However, the actual expense of solar panels, and if they can save you money, depends on several key factors.  Before you decide, learn how your electricity utility plan, where you live, and how local and government incentives can impact the total cost over time.


Review your Power Company Plan

Solar panels generate power on their own during daylight hours and have the potential to greatly, if not wholly, offset your electric bill every month. The more you pay now with traditional electricity sources, the more you’ll save from switching.  It should be noted, however, that electric usage and rates, generally the main expenditure on your power bill, frequently fluctuate depending on many factors.


As the price of electricity change, so does the amount of your potential savings.  Additionally, if your household energy consumption changes, your savings amounts can vary as well.  Where your home is located also significantly affects electricity rates.


Evaluate your sunlight exposure

If you’re in an area the gets more sun, more electricity can be produced and you’ll have an increased savings potential with solar power.  Your roof’s orientation to the sun, the roof type, and the amount of shade also affect solar panel electric output.  Your area’s solar efficiency can be calculated by using a Solar Estimate Calculator.  Input your postcode, property energy efficiency rating, and details about the area you will be installing panels on your roof.


Initial Cost of Residential Solar Panels

Despite falling prices, solar panels are still relatively expensive.  According to UK Power Ltd, “The standard solar PV costs associated with any installation depend on your system's brand, efficiency and power generation capability. Standard costs include:

  • Equipment and installation costs of between £2,500 and £15,000 depending on the size and quality of your system. (A typical 3.5kWp system, which has the potential to provide you with up to 75% of your electricity needs, costs around £6,500.)
  • A fee of between £60 and £120 for an Energy Performance Certificate, which you need before you can receive payments under the Feed-In Tariff (FIT) scheme.

All these initial costs can be offset against future profits, and financial assistance is available for those who need it.”


Your reduced long-term power expenses can make up for the upfront installation expenses.  The average solar systems are designed to endure 20 years or more of use and don’t require much maintenance while maintaining optimal efficiency.  When calculating total install expenditures, take a look at your power bill and take into consideration how much electricity you usually use, and calculate the proper size solar system that will generate enough electricity for your needs.


Then shop around and compare solar panel installers the same as you might for other expensive items, like a new 4K TV or a late-model automobile.  Solar companies will often lower installation costs by offering rebates and other incentive programs.  Getting quotes from 3 to 5 installers is highly recommended.


Be on the Lookout for Incentives

Credits and incentives vary by postcode, but if you’re in an area with a high solar ranking, you could be eligible for extra property tax exemptions, expedited permits, and possible waived fees. UK Power states, “To encourage the take up of Solar PV, the government will pay you just for generating energy, even if you're using it yourself.  Also, if your Solar PV panels produce more electricity than you need, the excess can be sold back to the national grid through a Feed-In Tariff scheme. Consumers with a typical 3.5kWp Solar PV system could make combined saving and income of £628 per year (based on a solar PV system eligible for a generation tariff of 15.44p/kWh). What's more, a typical Solar PV system will save around 30 tons of CO2 in its lifetime.”  Look up incentives and tax credits that may be available in your area online and speak with a solar contractor for additional advice.


Benefits aren’t guaranteed to last unfortunately and incentives may actually go away, so it may not pay to wait for too long.  As solar PV becomes cheaper and cheaper, county and city governments and utility companies are reducing the incentives available to homeowners.  Benefits could entirely go away at some point in the near future.


If you do decide to upgrade your home with solar panels, keep in mind that you may not actually have to purchase the solar panels, you can lease them too.  Leasing offers a lower upfront cost, but since the solar panels aren’t owned, they will not increase the value of your house, and you could be ineligible for incentives.


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