Judging whether solar panels are worth it, really all comes down to 2 factors: your home’s location and your energy consumption.
In an ideal scenario, you could expect your solar system’s payback period to be between 7.4 – 13 years. After that, you’ll be saving money monthly and reducing your home’s overall carbon footprint.
This article aims to break down this complex question, by highlighting total costs and ROI expectations based on the location of your home.
After reading, you’ll have a better understanding of whether solar panels are potentially worth it for you or not and how long you can expect to wait before seeing a return on your investment.
Are Solar Panels Worth it in 2022?
Environmental Aspect: By generating electricity with solar panels you’ll rely less, if at all on fossil fuels. Greenhouse gases which are produced by burning fossil fuels contribute significantly towards climate change. By installing a 6.6kw solar system you’ll save about 243 tons of Co2.
Utility Savings: Installing a solar system big enough to completely offset your energy requirements can be quite a substantial investment. However, over time you will indeed see a sizeable return on that investment.
House Value: According to recent research done by real estate company Zillow, homes with solar panels sell for 4.1% more. For the median-valued home, that translates to an additional $9,274 per sale.
But figuring out whether solar panels are really worth it for you all comes down to ROI, and this is determined by where you live and how much solar irradiance your area receives.
Below we will share a formula with you.
The formula takes into consideration your area’s peak sun hours and your home’s electricity consumption, with this information you can work out what size solar system you will need.
Once you know what size solar system you need, you can figure out what the potential costs will be.
To use this formula you need to know the following information:
- Your home’s monthly electricity consumption in kWh.
- Your areas monthly peak sun hours.
For the kWh consumption simply go ahead and look at your electricity bill, you will find your consumption there.
For the peak sun hours you can use the following links to find out your areas peak sun hours:
If you do not see your country above, you can head over to the website Global Solar Atlas.
We created a short video below to show you how to retrieve your area’s peak sun hours from Global Solar Atlas:
Now that we have the above information, we can figure out whether solar pans are worth it or not.
Let’s apply the above formula in an example:
Our home is located in Texas and consumes 1015 kWh a month. Using the Climatebiz peak sun hour resource we can see that our area receives 4.8 peak sun hours a day.
To get the monthly amount we simply multiply that amount by 30 days: 144.
Now we can apply our formula:
1015 ÷ 144 = 7 kW
7 x 1000 = 7000 watts
So roughly speaking, our home in Texas will require a 7 kW solar system in order to offset its electricity consumption.
You can go furthwr with the formula and divide the 7000 watts by your proposed solar panel power rating, this will give syou the amount of panels your home will require.
For example, if you were to install a 400 watt solar panels, your home in Texas would need 17,5 panels.
This information is only relevant hopwever if you are looking to calculate the total area your solar system will use.
With the above information you can work out more or less, how much your solar system will cost.
According to the NREL you are likely to pay $2.71 per watt for residential PV systems.
Therefore, $2.71 x 7000 watts = $18,970.
Now, if you live in the United States, you can still take advantage of the Solar Tax Incentive, which means you can knock 26% of the above price.
This leaves you with a solar panel system costing $14,037.
To date electricity in Texas costs around $0.12 per kWh. Our monthly consumption is 1015 kWh therefore we are spending around $121 a month.
With our installed solar system though, we would offset those costs, thereby saving $121 every month.
Using this information we could work out that it would take 9.66 years to see a ROI.
As solar panels last up to 30 years, our household would save around $29,533 in total. However, theís amount doesnt take into account inflation. Therefore, it is highly probable we would save much more than this amount.
Are solar panels worth it? Based on the above scenario, yes they are!
State-By-State Solar Savings Chart
(Please note: Federal tax credit is applied to the below chart)
|STATE||AVERAGE PRICE (6 KW SOLAR SYSTEM)||AVERAGE ELECTRICITY RATE PER STATE ($/KWH)||20-YEAR SAVINGS|
According to the above information, if you live in Massachusetts or California, installing solar panels is a no-brainer, the savings would be quite substantial.
In fact, in 2020, California became the first US state to require all new homes to install a solar panel set up onto their roofs.
Do You Still Pay Electricity Bills With Solar Panels?
Yes, any electricity not generated by your solar panels will come up in your monthly utility bill.
The only way to not pay your electricity bill would be to disconnect entirely from the grid.
However, by doing this you would need to make sure you have enough energy storage to make it through winter, evenings, and overcast days.
The thought of disconnecting from the grid entirely can be quite overwhelming to most people.
The good news is it’s not actually necessary.
When your home reaches grid parity it will be able to supply all your basic energy needs for about the same cost as it would be drawing energy from the grid.
When your home gets to this point, you may want to consider using the grid as a backup system.
If your home produces all of its own electricity but is still connected to the power grid, you would then start receiving a minimum bill from your power company
Minimum energy bills do not charge for electricity consumption.
Instead, they only charge you a fee to be connected to the power grid.
Minimum energy bills are around $11.90 a month.
What Does It Cost To Install A Solar System?
|Solar System Size||Total Installed Cost|
|Cost After the 26% Federal Tax Credit|
|$60||5 kW (x16 330W panels)||$21,870||$16,184|
|$120||10 kW (x32 330W panels)||$31,900||$23,606|
|$180||15 kW (x48 330W panels)||$45,465||$33,644|
Setting up a solar system can be expensive, knowing how to do so is paramount to saving costs.
According to a new analysis done by NREL, large solar installation companies charge 10% more than smaller local companies. That’s the price equivalent of both an inverter and solar racking combined.
Why are large solar companies charging more though?
It’s a complicated question and companies like NREL believe it relates to competitor pricing and consumer education!
However, customer acquisition and overhead costs also play a vital role in price hikes.
A word of advice, do not accept the first quote you get from a solar installation company. Shop around, do your research and compare quotes.
You might be pleasantly surprised by how much you can save by just doing a little research.
10 Benefits That Make Installing Solar Worth It
1. Save on your utility bills
Many homeowners are making the switch to solar in order to save on their utility bills. By smartly installing a solar setup onto your home you can be sure to save loads on your utility bills in the long run.
2. Less impact on the environment
As mentioned at the beginning of this article, installing a solar system can drastically, if not completely irradiate your greenhouse gas emissions, at least in the form of electricity requirements. By installing solar you will also contribute to a cleaner atmosphere, there is no doubt that this is not only good for our health but all those living around us.
3. Low maintenance
Solar panels require relatively low maintenance, mainly for the reason that there are no moving parts. All you’ll need to do to ensure your solar panel’s optimum performance is clean them once every month or so.
4. Easy installation
Installing a solar system is totally doable by yourself, all you need to do is read blogs like this one or watch YouTube videos and you’ll be more or less proficient in no time. For larger more complicated installations, contacting a solar company may be necessary, but on average you can actually do it yourself.
5. Earn money with your solar panels
Homeowners who utilize solar can send excess electricity generated back to the power grid and get compensated for it. This incentive is known as net metering. This concept is especially useful when electricity is high in demand, multiple homeowners are able to help ease the demand via net metering.
6. Increase your homes value
Installing solar is definitely worth it when it comes to increasing the value of your home. In fact, Zillow did a study where they found that homes with solar setups sell for 4.1% more on the market.
7. Enjoy incentives
Depending on where you live, installing a solar system can be reduced by up to 50%. In the United States, for example, the federal government is promoting solar energy as a means of reducing the countries overall carbon footprint. Check out DSIRE for state incentives in the US.
8. Reliable energy source
More than 85% of the energy we use today comes from non-renewable resources such as coal, natural gas, and oil. These resources are expected to become depleted within the year 2060. The sun, however, is expected to last another 5 billion years.
9. The technology is long lasting
Most modern solar panels (especially monocrystalline ones) are capable of lasting between 25 – 30 years. This allows you ample time to recoup your initial investment and not worry about installations again and again.
10. Solar energy is the future
Tesla is currently worth $682 billion, do you think a company worth so much would be investing in an unreliable energy source? The answer is no. According to Money Morning (using data from Bloomberg New Energy Finance) even big oil corporations are going solar. In fact, they made 109 deals with solar firms between 2002 and 2017.
Are solar panels worth it? It’s safe to say that they are, particularly in the long term.
If you still have further questions pertaining to solar energy installation, please feel free to reach out in the comments section below.
If you are interested in learning more about solar energy and solar panels in general, we recommend checking out our solar panel category page.