Is It Cost-Effective to Add Solar Panels to Your Home?

For many years, homeowners have wanted to transition to sustainable energy, but found the upfront costs were not necessarily offset by the return on investment. Although many feel it's wise to convert to sustainable energy sources to protect the environment, homeowners dealing with sometimes tight budgets need to make cost-effective home improvement decisions.

That's why checking in periodically on the state of solar energy installation costs, utility bill savings and property value helps everyday people make informed decisions. In recent years, the price tag on solar panels and their ability to generate increased electricity incrementally improved. Based on current data, it may be cost-effective to add solar panels.

How Much Does a Solar Energy Installation Cost?

To say the upfront cost of a complete solar energy system is uneven across the country would be something of an understatement. Factors such as material availability labor costs and others differ greatly between regions. A typical solar energy installation can average anywhere from $17,000 to $31,000. The highs and lows of a given area can run between $4,500 and $45,000. Some of those costs may stem from the quality of the system, the number of kilowatts it produces and the life expectancy of the panels. Here is a brief comparison of the types of panels available:

• Monocrystalline Panels: This type of panel can last for upwards of 35 years and generally costs approximately $1-$1.50 to generate a watt. These are generally considered the most energy-efficient.
• Polycrystalline Panels: Costing $0.70-$1 per watt, these panels last up to 27 years. Although their energy efficiency ranks lower than monocrystalline panels, they tend to be space-efficient.
• Thin Film Panels: Averaging $1-$1.50 per watt, they provide increased flexibility. Constructed from layered photovoltaic material, this class of solar panels bends relatively easily and lasts up to 17 years.

The type of panel is of course just one financial factor to consider when trying to determine if adding solar energy is right for your budget.

How to Lower the Cost of Solar Energy

Federal and some state governments have been active in encouraging homeowners to adopt sustainable energy. According to Energy.gov, federal tax credits for systems installed by the end of 2022 are reportedly 26 percent and drop to 22 percent in 2023. Congress may decide to renew the ongoing solar tax incentive later. The good news for people saving money for an installation is that no there is no investment ceiling. That means homeowners can reduce their upfront costs on any size and type of system. Many states also offer tax rebates and incentives for property owners who invest in solar.

One of the financial incentives that sometimes flies under the radar involves property value. Reports indicate that single-family homes with solar energy systems typically generate higher resale values. The price may range from as low as 3.5 percent above median value to 9.9 percent, depending on the location.

When deciding whether solar panels are a good investment, making an informed decision involves upfront costs, system longevity, kilowatt-hours, tax incentives, rebates and improved property value. The decision may seem complicated. However, if the math is in your favor, you get the added value of feeling good about doing your part for a cleaner and greener environment.