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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Resources

Energy Awareness Month – 10 Energy Saving Tips

You have the power to conserve energy.

This October, fulfill the promise you made to yourself earlier in the year to get serious about saving energy and reducing your carbon footprint.

October is an ideal time to address your energy use for a number of reasons. First, you still have plenty of time to put energy saving ideas into action before cold winter weather arrives in earnest and the holiday season diverts your attention. Second, if you enjoy challenging yourself during national awareness days or months, you are in luck because October is Energy Awareness Month (it should be Energy Action Month). Third, reducing your energy use can also save you money.

I realize that switching to LED light bulbs and putting on a sweater instead of cranking up the heat will not stop Americans from burning fossil fuels. However, if millions of Americans take these and other seemingly small actions, it all adds up and can make a significant impact.

For instance, if each American household tackled their energy vampires for Halloween we could save 100 billion kilowatt hours of electricity and use it to provide the annual power needs of 35 million Americans.1

I believe that taking action, even a tiny action, acts as a strong antidote for inertia. The first action may be difficult but each subsequent action is easier because you gain momentum.

Are you ready to take action to save energy and reduce your carbon footprint? If you are, below are ten tips of varying degrees of difficulty and expense to help you get your creative juices flowing. Most of the tips include links to other posts where you can get more information and find useful resources.

Light with LEDs

If you have not made the switch to LED light bulbs yet, now is the time.

Residential LEDs use 75% less energy and last 25 times longer than incandescent bulbs and they do not contain hazardous mercury as compact fluorescents do.2

The cost of LEDs has dropped dramatically over the past several years and now you can purchase an LED light bulb for around $2.00 maybe less (depending on wattage and type).

If you put LED bulbs in your indoor and outdoor light fixtures this month, you may not need to change a light bulb for a couple of decades and you will immediately reduce your energy use. You can even decorate your Christmas tree with a few strings of colored LEDs.

Snug House

Snug House - Scarf Wrapped Around Miniature HouseKeeping cold air outside and warm air inside during winter months and vice versa during the summer is a good idea, right. What you may not realize is how even small air leaks can wreak havoc with your heating and cooling bills. For example, a 1/8” gap under your front door lets in as much air as if the door had a 2 ¼” hole.3

Fortunately, you can shore up your home’s air defenses with a caulking gun, door sweeps, and weather stripping. You may be able to reduce some air leaks with things you have on hand like rolling up a bath towel to minimize door drafts. I folded up a piece of cardboard and stuck in a crack where the weather stripping on the fixed side of our double front door did not quite reach the threshold.

Read more in Seal Air Leaks to Reduce Home Energy Use and Cost.

Take Advantage of Your Thermostat

A thermostat is a useful device for moderating your home heating and cooling system. Turning back your thermostat 7°-10°F for 8 hours a day could save you 10% on your heating and cooling bills.If you frequently forget to adjust your thermostat when you leave for work, try hanging your keys on a hook next to it.

Learn more about thermostats, recommended temperatures, and thermostat options by reading Use Your Thermostat to Save Energy and Money.

Staying Warm Indoors

On average, home space heating consumes a whopping 42% of the energy Americans use in our homes.5 Hot air rises and cold air sinks so during the winter we are living in the coolest layer of our homes.

You probably take care to dress appropriately for the weather when you go outdoors in the winter so why not carry that theme indoors. Instead of ratcheting up your heater consider wearing clothing made of warmer materials or trying one or more of the tips in 7 Ways to Stay Warm Indoors in the Winter and Be Green.

 Shower Power

Low-flow showerheads are water and energy saving devices. Using less water also means using less energy to heat water. A standard showerhead sprays out at least 2.5 gallons of water per minute even when you are lathering up your body or washing your hair.

Low Flow Handheld ShowerheadWhen you switch to a low-flow showerhead that puts out 1.6 gallons of water per minute you can easily cut your water use by 25% and reduce the energy needed to heat your shower water. If you buy a model with a “trickle” button or a shut-off valve you can reduce your water and energy use even more by restricting the water flow while you are soaping up.

Even non-handy people like me can easily install a low-flow showerhead for under $50.00.

Use Your Dishwasher

Washing dishes by hand is not a water or energy saving activity. A kitchen faucet pumps out 2.5 gallons of water per minute so you may be using more water than you think filling up the sink or a dish tub and then rinsing dishes.

Cramming a bunch of dishes in a dishwasher willy-nilly may result in some items not getting clean so do pay attention to where the spray jets are and learn to load your dishwasher efficiently.

Green and Lazy Laundry

Doing the laundry is a habit that you learn and then repeat thousands of times over your lifetime so you may find energy and water savings hiding in your laundry room.

I did not think much about my own laundry habits until my kids went away to college but if you have children at home you do not have to wait that long. If you are interested in evaluating your laundry habits, you may find the posts Laundry – Laziness is Good and Greening Your Laundry Habits useful.

Extra Credit: Using the sun to dry your clothes on a clothesline is a significant energy saving action, but I admit that I do not do it, at least not yet.

 Tackle Your Energy Vampires

Energy Vampire - Cell Phone ChargerAn energy vampire is a piece of equipment that sucks power even when it is not in use; this is called standby power. For instance, a cell phone charger left in a wall socket or a television both draw power just standing by waiting for you to use them.

Our Halloween activity for 2013 was tackling our energy vampires. It was fun, easy, and inexpensive. A few weeks after we completed our energy vampire project I learned the hard way that cable boxes must be on standby power to receive system updates. Our cable television service was abruptly discontinued without notice because our cable box had been going offline each evening. Now I leave it on.

Energy and Water Efficient Appliances

I am not advocating buying new appliances unless you need to replace a worn out or un-repairable appliance or piece of equipment. However, if you are in the market for a new refrigerator, air conditioner, or television, consider adding energy and water efficiency to your list of must-have features.

Look for the ENERGY STAR and WaterSense labels to identify and compare appliances and equipment. I wrote about my search for a high-efficiency replacement dishwasher in Dishwashers – Top 3 Eco-Friendly Features.

Go Solar

There is no better time than right now to go solar. Solar panel prices are low, tax incentives are available, and the summer rush for solar installers is over. You can increase the value of your home with solar panels while reducing or eliminating your electric bills. If you do not want to buy a rooftop solar system, then consider leasing.

Purchasing solar panels for your home is a sound financial investment and even more importantly, it pushes the ball forward in creating a clean renewable energy future for all our children.

You can learn more about home solar panels and our real life rooftop solar experience by reading Go Solar with Home Rooftop Photovoltaics – We Did, Rooftop Solar Costs Less than You Think, and You Can Increase Your Home’s Value with Owned Solar Panels.

My energy saving action for Energy Awareness Month is washing our laundry with cold water. I know, I know, why did I not make this change years ago? My only defense is that old habits stick with you. The good news is that you and I can change our habits today or any day and make a positive impact.

I hope one or more of the above ideas has struck your interest and helped inspire you to take action to reduce your energy use and carbon footprint. Please share what you are doing to reduce energy use with other readers.

Featured Image at Top: Coal-fired power plant looming over a residential neighborhood in West Virginia – Photo Credit Wigwam Jones

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References

  1. Energy Vampires and Phantom Loads – Standby Power, Green Groundswell
  2. LED Lighting – Energy.gov
  3. Energy Advice for Owners of Historic and Older Homes – U.S. Environmental Protection Agency
  4. Thermostats –U.S. Department of Energy
  5. Use of Energy in the United States Explained: Energy Use in Homes – U.S. Energy Information Administration