HomeownerHelpful Info: Home Improvement

Solar Panel Installation

Solar Panel Installation Educational Content

Solar power systems can save you 20 to 100 percent on your electricity costs. That figure depends on a few factors. You’ll need to account for things like the amount of sunlight you get, the size of your solar panel system, and local electricity rates. Solar panel systems don’t need much maintenance, and most have warranties of 10 to 25 years. Be sure the system you purchase will pay back your initial investment before the warranty expires.

Net Metering (NM). At any point, your solar panel system can produce more or less energy than you need. When it produces less, the system pulls power from the municipal grid to make up the difference. This is the electricity you pay for. During a surplus, your solar panel system makes more energy than you need. That extra electricity feeds back into the municipal power grid. You are then credited for the surplus. Net Metering is another term for that utility buy-back. It’s a billing arrangement that credits you for the full retail value of the extra electricity your system generates. Most states have authorized NM or similar programs.

Solar Renewable Energy Credits (SRECs). To meet state and federal regulations, energy producers that use fossil fuels have to meet a clean energy quota. In some states, the energy companies achieve this quota by giving SRECs to solar panel system owners. These SRECs are then claimed by the energy company. You usually earn one SREC per 1,000 kilowatt hours your system produces. Keep in mind that you only benefit from SRECs if you own your system. If you lease your solar panel system, you won’t be eligible for SRECs. Check for SRECs in your state and do some research to understand the options. Your solar panel system representative should also have helpful information.

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. The 30 percent ITC is in place until 2032. Many states also offer property tax exemptions and/or waive sales and use taxes. The website for the Database of State Incentives for Renewables and Efficiency lists incentives by state.

Your system’s size will depend on how much energy you want to generate. Many people start out with a smaller system and increase the size modularly over time. Electric utility tier rates directly affect how quickly you will recoup your investment. A smaller system that satisfies part of your energy needs may be more cost effective if it avoids higher-tier rates.