Rooftop Solar Panels are Worth It and this is Why

Sunlight is clean, renewable, and free.

Homeowners when you install solar panels on your roof, you are making the world a better place, saving money on electricity, and increasing your home’s value. What could be better?

I know. That may sound like a grandiose statement but think about it.

You already know that burning fossil fuels is causing global warming and endangering our planet and the people living on it. You probably also know that the majority of electricity generated in the United States is produced by burning fossil fuels (63% in 2017). Hopefully, you agree that switching to clean renewable energy sources like the sun is a good idea and that we need to accomplish it sooner rather than later.

Every time a homeowner installs solar panels on their roof (or anyone installs solar panels on any roof), our society moves that much closer to getting off fossil fuels and that makes the world a better place for you, the people you love, and everyone else.

Unlike fossil fuel companies, the sun shares its energy free to everyone and it will continue to do so for another four or five billion years. To capture the sun’s energy and convert it into electricity you need a solar panel system and that is not free. Fortunately, nowadays, there are numerous options available to you, from paying cash for solar panels to renting your roof and paying a discounted rate for electricity.

In 2017, the California Regional Multiple Listing Service added fields to its system so realtors can enter solar power information for their listings in a consistent manner making it easier for homebuyers to compare homes. You can read more about this in the post You Can Increase Your Home’s Value with Owned Solar Panels.

I am grateful for the people who had the foresight to install rooftop solar panels decades ago. These early adopters created a demand for solar panels and along with early manufacturers and installers, they got the solar industry off the ground and worked through the technical and operational issues that often accompany a new product.

Five years ago, my spouse and I decided to join the rooftop solar revolution made possible by these solar pioneers.

Owning a Rooftop Solar Panel System

On March 8, 2018, the mini wall calendar that hangs by my desk informed me that on this day five years ago our new rooftop solar system generated its first kWh of electricity from the sun.

Since I am a data-loving kind of gal, the five-year mark seemed an ideal time to do a review of our system and electric bills. I thought it would be fun to attempt to answer the question, “Is solar worth it?” from a financial perspective because there seems to be a fixation on “Show me the money.” by the media, solar installers, and potential customers.

Solar Panel Character Grasping 100 Dollar Bills
Photo Credit – iStock/Talaj

At the time, I was working on our 2017 income taxes and thinking that a tax refund would make an excellent down payment for a rooftop solar system (hint, hint). In preparation for this post, I emailed Glen at A.M. Sun Solar (the company that did our installation) to ask him what our system would cost today.

Background

We moved to the Central California Coast from Southern California in 2007. The climate here is cool and sunny with average temperatures ranging from 55° in the winter to 65° in the summer although, in the last couple of years, days over 80° have increased.

Other than opening windows, we do not have air conditioning and our heating system runs on natural gas (ugh, another future project) so our electricity use is not as high as it would be in a hotter climate where more people have window air conditioners or central air conditioning. My spouse and I both work from home so we are home all day using electricity.

Before we installed solar panels, our average annual electricity cost was $1,742.

Purchasing Solar Panels versus Leasing

Our children, your children, and everyone else’s was our main motivation for installing solar panels on our roof. It was a way for us to be for something, to do our part in building a nationwide clean renewable energy network. Free electricity in the future was a bonus.

After deciding to install solar panels, we needed to figure out how we were going to pay for them.

Buying solar panels would require a significant cash outlay upfront; however, we knew that at some point we would recoup the system’s cost and that electricity would be virtually free indefinitely (at the end of the 20-30 year warranty period, solar panels may be less efficient but they do not stop working). On the other hand, a lease would have little or no initial cost and we would immediately be paying less for electricity.

We intend to live in our home for many years to come and we did have some money saved in our rainy day fund so we determined that purchasing a rooftop solar system was the right choice for us. The 30% federal tax incentive for renewable energy projects probably influenced us (a little bit). If we had not had the money, we likely would have pursued a home equity or solar loan.

Solar Panel System Cost and Electric Bills

We selected a locally owned solar installation company so we could support a small business in our community and we purchased equipment made in the United States to support American workers.

Danny from A.M. Sun Solar Beginning Our Rooftop Solar Installation
Danny from A.M. Sun Solar Beginning Our Rooftop Solar Installation in 2013.

Our system started out with 16 solar panels in 2013 and we added 6 more panels in 2014 after receiving a tax refund as a result of claiming the 30% federal tax incentive on our 2013 income tax return. We reported our second purchase on our 2014 income tax return lowering our tax liability.

The net cost of our 22-panel 5.34 kW solar system was $14,767.

Our system ties into PG&E’s electric grid so during the day when our solar panels are generating more electricity than we are using we send the excess to the grid to share with the community and we pull electricity from the grid at night or on exceedingly cloudy days.

We pay PG&E a monthly minimum fee of about $10.00 (it started out at $4.50). If we draw more electricity from the grid over a 12-month period than we send to it, we pay extra money to PG&E. If we send more electricity to the grid than we use, PG&E issues us a credit that we can use to pay our monthly fee until it runs out.

Twice a year (April and October), California residents receive a California Climate Credit on their electric bill funded by fees paid by power plants and other large industries that emit greenhouse gases. In 2018, the credit is $39.42 times two.

From March 2013 through March 2018, we paid PG&E a total of $644.

If you are interested in learning about our solar panel installation experience and how to make your own installation go smoothly, or how solar net energy metering works, I covered these topics in the posts Go Solar with Home Rooftop Photovoltaics – We Did and Rooftop Solar Costs Less than You Think.

Payback Period

A payback period is the length of time it takes an investment to recover its initial cost either in profits or savings. For a homeowner with owned rooftop solar panels, the payback period is however long it takes electricity savings to equal the cost of the system.

If you did not take into account rising electricity rates or any of the many variables that affect electric bills, and assuming that we did not pay another dime to PG&E our payback period would have been: $14,767 system cost divided $1,742 average annual electricity cost before solar = 8 years and 6 months.

After looking at five years of net energy metering bills, 21 PG&E rate schedules, and our system’s energy production data, I realized I would need a supercomputer to calculate accurately what we would have paid for electricity if we did not have solar panels.

Undaunted I decided to take a stab at a payback period anyway. Electricity price increases, a torrential downpour, and additional work-at-home occupants affected our payback period, which at this point, I estimate to be about 7 years so we are already 71% of the way there.

More details about how I estimated our payback timeframe are available by clicking on Rooftop Solar Payback Period Example.

Tax Incentives and Tariffs

Earlier in the post, I mentioned asking Glen from A.M. Sun Solar what a system similar to ours would cost now. His response was $17,586 a reduction of $3,510 (a whopping 16.6%). With the 30% tax incentive of $5,276, the net cost for the system would decrease even more to $12,310.

After December 31, 2019, the tax incentive decreases and then phases out at the end of 2021. Visit the DSIRE (Database of State Incentives for Renewable Energy) website to learn more.

Oh, but wait. Have you seen in the news that the Trump Administration implemented a tariff on solar components in February this year? It starts at 30% for 2018. This could affect the cost of your installation, but even if it does, the tax incentive would probably cover it and then some.

Homes with Rooftop Solar Panels in Austin, TX Neighborhood
Homes with Rooftop Solar Panels in Austin, TX Neighborhood – Photo Credit iStock/Roschetzky

Electricity prices continue to rise (along with greenhouse gases) and solar panel prices have come down even with tariffs so now is a good time for you to seriously consider rooftop solar panels for your home.

Solar Panels Add Value to Your Life

While I was looking at data and doing calculations for the payback period, it occurred to me, that many if not most home improvements do not even have an expectation of a payback period.

For instance, what is the payback period on a $15,000 bathroom remodel or a $50,000 kitchen renovation? At what point do you recover the cost of a $10,000 roof replacement? There is no answer. Even when you sell your home, it is unlikely that you will recoup anywhere near the cost (if you doubt me, google it).

I can hear you saying, “But, I enjoy taking showers in my remodeled bathroom, I love cooking dinner in my renovated kitchen, or I am thankful my new roof is keeping the elements outside where they belong.” What you are really saying is “This adds value to my life.”

Let us return to the question, “Is solar worth it?” You know where I am going with this, right.

Solar panels add value to my life. To me, they are worth it.

Every time I look at the solar panels on our roof or pay my PG&E bill, I feel happy knowing that by generating renewable energy to run our home we are doing something positive that is good for the planet and the people we love. I admit contemplating free electricity in less than two years brings a smile to my face, too.

Perhaps rooftop solar panels could add value to your life.

If you call a solar installer today, you could have a solar panel system installed before the hottest part of the summer. What could be better?

Featured Image at Top: Pair of Hands Catching Sunbeams – Photo Credit iStock/ipopba

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Find it in the Federal Register – Government Transparency

Information is available at your fingertips.

The Federal Register enables you to learn about proposed regulations and participate in the decision-making process of the U.S. federal government. I like that.

The purpose of the Federal Register is to be a source for and a record of the official actions of the executive branch of the U.S. government. Information is compiled into a consistent format that is published and made available to the public, in print and online, each business day (except federal holidays).

The Federal Register contains executive orders and proclamations issued by the president, rules and regulations that federal agencies are proposing, implementing, or repealing, and public notices about hearings, meetings, and federal grant applications.

After browsing a few issues of the Federal Register, I realized that it offers an early warning system of sorts by providing a heads up on what federal agencies are considering doing before they actually do it (and afterward, too.)

This empowers you and me to get involved early in issues that we care about by writing, calling, or emailing our elected officials, attending public meetings, and/or making public comments on specific items (anonymously if preferred).

Now, I subscribe to the Federal Register and receive a daily summary in my email inbox and you can, too.

In this post, you will have an opportunity to learn a little about the history of the Federal Register and then look at an example from the Friday, April 20, 2018 issue, which prompted this post. Here is a hint. What does the Tax Cuts and Jobs Act of 2017 have to do with opening up the Arctic National Wildlife Refuge for oil and natural gas exploration?

A Brief History of the Federal Register

The Federal Register got its start during the Great Depression of the 1930s.

When Franklin D. Roosevelt became the 32nd president of the United States in 1933, he immediately set about trying to fulfill his campaign promise of creating a New Deal for Americans who were suffering from the worst economic crisis in the country’s history. Between his executive orders and legislation from Congress, there was an onslaught of new programs, rules, and regulations resulting in a mountain of documents.

Back then, everything was printed on paper with little consistency in format and there were limited ways to make the information available to the public and other government agencies leaving many people in the dark. For instance, federal agencies found it difficult to keep track of their own documents and companies complained that they could not comply with regulations that they did not know existed.

Two pieces of legislation made substantial inroads into taming the document chaos and making information more accessible.

The National Archives Act of 1934 created a new agency responsible for taking custody of original federal government documents, archiving them, and making them available for public inspection. Later they were put in charge of publishing the Federal Register in conjunction with the Government Printing Office.

The Federal Register Act of 1935 required that certain documents be printed and distributed in a uniform and timely manner in a new publication called the Federal Register. The documents were to include: presidential proclamations and executive orders; documents the president determined to have general applicability and legal effect; documents required to be published by Act of Congress; and documents authorized to be published by regulations.

Federal Register, Volume 1, No. 1, March 14, 1936
Federal Register, Volume 1, No. 1, March 14, 1936

A feature of the law was that no document could be used against any person unless it had been published in the Federal Register first. That also meant that people could not claim ignorance of rules and regulations anymore.

One way for people to keep current was to pay $10.00 a year for a Federal Register by mail subscription.

The first Federal Register rolled off the printing press on March 14, 1936.

This 16-page publication was mostly taken up by regulations from the Treasury Department pertaining to the newly passed Social Security Act. It also included a presidential executive order with extensive directions about enlarging the Cape Romain Migratory Bird Refuge in South Carolina and a cryptic notice from the Department of Agriculture about a public hearing scheduled to address the regulation of milk handling in St. Louis, Missouri.

Since its inception in 1936, the Federal Register system has expanded and evolved.

In 1937, Congress passed an amendment to the Federal Register Act providing for a codification of regulatory documents resulting in the Code of Federal Regulations that exists today. Regulations in the Code are organized into fifty subject areas called Titles, such as Title 7 – Agriculture, Title 21 – Food and Drugs, and Title 40 – Protection of Environment.

The Administrative Procedure Act of 1946 was important because it made the rulemaking process (creating regulations) more transparent to the public. This law requires federal agencies to publish notices and information in the Federal Register about proposed rulemaking and provide an opportunity for the public to comment before the final rules can be put into effect.

The Federal Register system entered the Internet age in 1992 when the Federal Register became available via an electronic bulletin board. Nowadays, the Federal Register and the Code of Federal Regulations have their own websites and everything is available online as well as in print.

These are just a few of the highlights of the history of the Federal Register. If you are interested in more in-depth information, there are links in the resource section below.

Next is a current example of the Federal Register.

Federal Register, Volume 83, No. 77, April 20, 2018

Earlier in the post, I posed the question, “What does the Tax Cuts and Jobs Act of 2017 have to do with opening up the Arctic National Wildlife Refuge for oil and natural gas exploration?” You may already know the answer. If not, read on.

Arctic National Wildlife Refuge Coastal Plain Looking Toward Brooks Range Mountains - Photo Credit USFWS
Arctic National Wildlife Refuge Coastal Plain Looking Toward Brooks Range Mountains in Alaska – Photo Credit USFWS

You are probably familiar with President Trump’s promise to reduce corporate tax rates in hopes that with more money in their pockets companies will create jobs for Americans. Congress pushed through and passed the Tax Cuts and Jobs Act of 2017 on December 22, 2017, so the president could sign it before Christmas.

Buried on page 182 of the 185-page Tax Act is a prime example of pork barrel politics in action, which is when a completely unrelated item is tacked onto a bill because it would not have had enough support in Congress to pass on its own.

This add-on to the Tax Act makes a small but significant amendment to the Alaska National Interests Lands Conservation Act of 1980, which specifically prohibits the production of oil and gas from the Arctic National Wildlife Refuge (ANWR) unless authorized by an Act of Congress.

The Tax Act provided the necessary Act of Congress and directed the Bureau of Land Management (BLM) to open up the 1.6 million acres of the ANWR known as the Coastal Plain for an oil and natural gas leasing program.

By law, the BLM is required to prepare an Environmental Impact Statement (a report) before they can implement a new oil and gas leasing program. They are also required to inform the public of their intention to do so via the Federal Register and to provide an opportunity for public comment.

Thanks to the early warning provided by the Federal Register, this issue is now on my radar screen. I decided to take advantage of the opportunity to get in on the ground floor so to speak by making a public comment on the website where the BLM is accepting comments. Please consider joining me and making your own comment.

BLM ANWR Coastal Plain Oil and Gas Program EIS Notice Public Comment

After reading this post, I hope you have gained an appreciation for the value of the Federal Register and will take a few minutes to create your own account and subscription. The sign-up link is in the upper right-hand corner of the Federal Register website.

Featured Image at Top: Little Kid Wearing a Pith Helmet Lying in the Grass Looking through Binoculars – Photo Credit iStock/Maartje van Caspel

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