Prior to installing any solar panels, you will probably want to know how much they will save you on your energy bills. Whilst these panels usually require an up-front cost, and whilst you may acquire finance in order to pay them.
You may also wish to know whether this investment will work in your favor.
If you are wanting to know what contributes to the profitability of these panels then you can find out if going solar is the best option for you by studying the information below.
How Much Do Solar Panels Save?
Solar panels are typically priced per watt which means that their pricing varies constantly depending on the size of a system. During 2019, the average price (per watt) was approximately $3.
It is worth noting that the vast majority of residential panels are rated at 5-10 kWp at their utmost production. The typical price of solar panel installation ranges from $15,000 – $30,000 but due to tax credits and rebates, the majority of householders pay far less.
The savings that your solar panel installation will obtain is dependent on the size of the installation itself, as larger solar panels are inherently able to accumulate more sunlight.
The angle that you install these panels at will also impact their overall efficiency and thus, determine whether they are a worthy investment or not.
If you live in a sunny location, like in California or Arizona, then this is the perfect location to install solar panels as they will collect copious amounts of sunlight and save you money inherently.
Determining Your Home’s Energy Potential
The sunlight that your home accumulates will play a major part in determining the savings that you make from using solar panels.
As mentioned, if your house is in a sunny location, you will receive copious amounts of sunlight during the year which gives them high solar energy output.
However, you should also consider any obstructions that may block these panels as any shaded areas can reduce your overall solar potential.
Additionally, if you have a south-facing home in the Northern hemisphere, then you are far more likely to have a higher solar potential than if your roof is north-facing.
Size Of Your Solar Panels
As mentioned, the size of your solar panel system will undoubtedly impact how much your electricity bill reduces.
Whilst larger solar panel installations will definitely collect copious sunlight, and inherently reduce your bill, they usually require larger investments to install.
Average Price Of Solar Panels
Whilst the price of solar panels has fallen over the last decade, tariffs have increased on imports of solar panels from China and this has inherently caused the mid-term cost of some solar panel systems to increase also.
You should also bear in mind that investing in a larger solar panel system can take a long time for the investment to recoup and become profitable.
Tax Credits For Solar Panels
Tax credits and rebates can often drastically reduce the cost of installing solar panels. This was previously due to the Residential Renewable Energy Federal Tax Credit or ITC.
This credit allowed homeowners to claim 30% back on the cost of installing their solar panel system. The reimbursement rate dropped over the 2020-2021 and expired at the end of 2021.
However, it is worth investigating whether your state has implemented any localized tax credits at this stage.
Electricity Bill: Before And After Installing Solar Panels
A family that wishes to reduce their energy bills may pay, on average, $150 per month for their electricity.
If they plan to stay in their house for a further ten years, and are interested in installing a 7kWp system, then their electricity bills may reduce to approximately $118 per month.
During 2018, the EIA predicted that the price of energy would be rising to an average of 14¢ per kWh by 2028. However, this is dependent on the state that you reside in. In Nevada, for instance, the price of energy has decreased over the last ten years.
External factors, like war, can also affect the cost of energy, and thus, this is something to bear in mind when investing.
On the whole, as electricity prices surge, installing solar panels is definitely worth thinking about with regards to saving money in the long-term.
Given these calculations, if the aforementioned family plans to remain in their home for ten years, then they can expect their energy costs to increase, especially as their children grow up.
If their usage remains around the same, then they would be consuming approximately 15,000 kWh per annum. If prices rise to 14¢ by 2028, then they will be consuming approximately 150,000kWh over the next ten years, which will cost them $19,600.
If they choose to install their 7kWp solar panel system, they will reduce their production of energy to 7,000 kWh, halving their annual energy consumption. If their system costs approximately $21,000 to install, then this will save them more money in the long term.
Will Installing Solar Panels Ever Reduce My Electricity Bill Entirely?
Whilst the vast majority of solar panel systems will reduce your bill drastically, it is unlikely that they will eradicate it entirely. However, if your solar panels are installed under prime conditions, then you could become a net seller of energy.
This credit can be paid straight into your bank or it can be put towards your next electricity bill. You are likely to be charged a minimum fee per month irrespective of this, to account for any energy that isn’t used.
When considering installing solar panels, you should bear in mind that they are a long-term investment and it can take a number of years to begin to break even.
This means that they may not be the ideal choice if you are planning to move house within a few years.
However, if you are planning on staying within your house on a long-term basis, and you do want to install a solar panel system, then you can usually expect to increase the value of your home by approximately 4.1% according to Zillow.
Homeowners can also usually recoup the price of materials and their installation if selling their house.
Irrespective of this, under optimum conditions, a solar panel installation will yield returns that are equivalent to the cost of installation and more. In this sense, they are undoubtedly a worthwhile, if long-term, investment.
To conclude, installing solar panels will reduce your electricity bill. However, they are usually expensive to install, as the tax credits that reduce these costs expired in 2019.
Although they are expensive to install, they are a worthwhile long-term investment as you will raise the price of your household and eventually re-coup and profit from your investment into solar panels.
You will also be a key player with regard to saving the world and protecting the environment. As such, solar panels are undoubtedly a good investment if you want to reduce your electricity bills.