I've been hearing a lot more about solar panels lately. It could be because advertising has really ramped up, or simply because I've been having conversations with clients and other agents to discuss their thoughts on the value of solar panels. Here's the great debate for most people: is it a good idea to install solar panels on my home?
There are several pros and cons to having solar power, but the first thing to do when deciding if installing solar panels is the right decision for you is to calculate the "payback period."
You may be asking yourself, so what exactly is a payback period? This is the amount of time (most likely in years) you will need to pay off your system in full through savings on your electric bill. Most systems cost an average of $20,000, which you can pay for upfront or through financing. You can also receive a 26% tax credit for going solar, netting you $5,200 on that $20,000 system. That means you're only paying $14,800 total for your system.
Now that you have the final cost of your system calculated, divide it by the amount of savings per year on your electric bill to figure out how many years it will take to fully pay off your solar panels.
For example, if you are saving $1,000 per year on your electric bill, it will take you about 15 years to fully pay off your system. ($14,800 ÷ $1,000 = 14.8 years). Most solar panel systems will pay for themselves in about 9-12 years. Because it takes years to pay off solar panels, it's important to ask yourself is this a home I plan on being in for a long time to come? If the answer is no, or I'm not sure, then solar energy may not be the way to go.
Now that we've covered what the payback period is, let's dig into some of the pros and cons of solar power. It's important to note that these are based on purchasing a solar system in the Hampton Roads area of Virginia, though a lot of these translate to other parts of the country.
Pro No. 1 - You're going to save money on your electric bill. Over the course of 20 years, you could save between $10,000-$30,000.
Pro No. 2 - You can get help from the government to pay for it. As mentioned earlier, you can receive a 26% tax credit for having solar panels, which can help pay for the system.
Pro No. 3 - You can have more stable energy bills. Even if you have to pay for some electricity, solar panels can help reduce your energy bill and make it more affordable.
Pro No. 4 - You will have the system for a long time and with little maintenance. Unlike wind turbines, which have moving parts that will deteriorate over time, solar panels have no moving parts, allowing for less maintenance.
Pro No. 5 - You can use net metering. If your system is creating more energy than your home is using, in some instances, you can use net metering to sell it back to the power company and get a check.
Pro No. 6 - You can get tax exemptions on your solar panels. 30 localities in Virginia are allowing a tax exemption for the increased value that the panels might add to your house.
Con No. 1 - The cost > the potential value. This one is more specific to the Hampton Roads area of Virginia where solar energy is not as common as in other parts of the country. Because not many homes have solar panels, getting a potential buyer to pay more for a house with them versus an identical house without them might be difficult. And if you are still financing your system by the time you put your house on the market, that will basically be another mortgage that needs to be dealt with at the time of sale. This could narrow your field of buyers, as you would need to find someone open-minded to the advantages of going solar and are willing to take over the payments.
Con No. 2 - It will not work at night or during storms. Solar panels need sunlight to create energy, so they will not work at night or during storms when the sun is hidden behind clouds.
Con No. 3 - You can't take it with you. Even if the system is paid for in full, it is very difficult to move solar panels from your old home to your new one. Once you buy it, it's attached to the roof of the house. In order to separate it from the house, you now have a roof that has holes in it where the system was attached. Another thing to keep in mind is installing solar panels on an older roof. When the time comes for the roof to be replaced, you will have to remove the panels in order to replace or add new shingles. If you know your roof needs replaced sooner than later, you may want to have that done before installing solar panels.
After taking all of the pros and cons into consideration, even with the number of pros outweighing the cons, installing solar panels in Hampton Roads doesn't really make sense, unless you know for a fact you will be in your home for the next 20 years. It is going to take time for you to see the value being added to your home, especially if you're financing the system.