It's well understood that solar panels can increase the value of a home and cut the electric bill every month. But, with the large up front cost often associated with a residential solar installation, many people are not sure whether solar will make a good investment for them or not. There are a number of ways to measure the value of solar panels. By running the numbers, a homeowner can use the answers they get to decide whether solar will save them money or adequately increase the value of their home. A few facets to consider:
Increase in Value of the Home
In surveys, many home buyers say that sustainability is one of the core things that they look at when deciding whether to buy a home. The National Renewable Energy Laboratory says that every dollar of power bill savings a solar installation saves adds $20 to the value of the home.
Results, of course, will vary depending on a number of factors. These can include the size of a home's solar installation, its location and the area where the homeowner lives. Talking to a local real estate agent can help a homeowner learn more about how solar affects home value in their area.
Solar Panel Cost per Watt
Another way to look at an investment in residential solar is to measure the cost per watt. This is a figure that measures the cost of the installation against the cost of electricity in the area, measured by the watt. Consider a 10 kilowatt solar installation. This makes 10,000 watts of solar power. If a person's installation costs $18,000, then the cost is equal to $1.80 per watt. Comparing this to other power costs can help someone decide whether solar is a good investment for them.
Tax Savings for Solar
Many states and cities offer tax credits for the installation of residential solar. At the federal level, a homeowner can get up to 30% of the cost of your solar installation as a tax credit. While the credit is not refundable (meaning, they cannot get a cash refund for it), a taxpayer can carry it forward to other tax years. This means someone can cut their tax bill for years to come based on installing solar in the home.
Measure the Levelized Cost of Energy (LCOE)
Instead of measuring the cost per watt, some people do a more detailed calculation that measures the levelized cost of energy produced by their residential solar panels. This figure takes the cost of a home's solar installation and divides it by the expected life of the solar panels. Most systems have warranties that run for around 20 years from the date of installation. However, systems can easily continue to produce power for years after that. Additionally, people will figure that their panels have an efficiency rate that is around 80%; however, how efficient any specific installation is will depend on factors like shade and the angle of the roof.
The LCOE is written as an amount of money per kilowatt-hour of power. This is the same way that the power cost is expressed on a monthly electric bill, which makes a one to one comparison far more easy than other methods.
Taking into Account the Intangible Value
Some of the ways that solar adds value to the home are not immediately measurable, but still valuable. Solar provides security; solar-powered homes in an area where storms knock out the power will still have electricity even after bad weather. Solar can mean less maintenance than other forms of power. Many people also feel better about their homes when they know that their power source is a sustainable choice. A homeowner who is considering solar power should make a list of these factors to see if they tilt the decision in one way or the other.
How much money solar will save and how much value it will add to the home are highly individual. What is a good value for one family may turn out to be a bad one for another, and vice versa. By running several estimations, a Belle Meade new homeowner who is considering solar power can figure out the best value and make the right decision for now and for their future.