Solar Panel Installation
Benefits of Solar Power
Investment return. Solar power systems are capable of saving homeowners 20 to 100 percent on electricity costs compared to traditional power systems. In most regions, a solar panel system that generates 100 percent of the home’s electricity will pay for itself in approximately 2 years. In cloudy regions, however, it may take longer for homeowners to see a significant return.
Low maintenance. Solar panel systems require little maintenance; however, it is important to note that most warranties last 10 to 25 years. If you aren’t purchasing a longer-lasting system, be sure it will pay back your initial investment before the warranty expires.
Net Metering (NM). At any time, your solar panel system can produce more or less energy than necessary to power your home. When it produces less, the system pulls power from the grid to make up the difference. This is the electricity you pay for. When a surplus occurs, the extra electricity automatically feeds back into the electrical grid. Net Metering, or utility buy-back, is a billing arrangement that credits homeowners for the full retail value of the extra electricity their system generates. Most states have authorized NM or similar programs. Eligible technology, capacity limits, and energy credit varies from state to state, so it is important to understand your state’s policies before installing.
Solar Renewable Energy Credits (SRECs). State and federal regulations require a clean energy quota from energy utilities, which produce most of their energy from burning fossil fuels. In most states, owners of solar panel systems receive SRECs, which are credits for producing solar energy that can be claimed by their energy utility. Homeowners earn one SREC per 1,000 kilowatt hours their system produces. Note that only the system’s owner can benefit from SRECs; leased systems are not eligible for the program.
Tax credits. The Investment Tax Credit (ITC) is a 30 percent federal income tax credit available to residential and commercial investors in solar energy systems. Projects that have begun construction through 2019 will stay at 30 percent. In 2020, credit will drop to 26 percent; in 2021, it will drop to 22 percent. After 2023, credit will no longer be available to residential investors, and credit for commercial projects will drop to a permanent 10 percent. Many states offer property tax exemptions and/or waive sales and use taxes. The website for the Database of State Incentives for Renewables and Efficiency provides a comprehensive list of incentives by state.
Sizing a System
The size of your system will depend on how much energy you want to generate. It is also possible for homeowners to begin with a smaller system and increase the size modularly over time. Note that electric utility tier rates directly affect how quickly homeowners recoup their investment. A smaller system that satisfies part of your energy needs may be more cost effective if it avoids higher-tier rates.