Let me ask you a question:
Can you afford to go solar today?
…you might say no.
Many homeowners still believe that solar power is out of their reach. They think it’s too expensive and that only people with savings can afford to install solar on their home.
Those homeowners are misinformed!
In fact, when you add all the incentives and savings from lowering your electricity bill, you’ll see that the average homeowner actually comes out on top!
You actually make money when you install solar.
I know, that sounds crazy. I didn’t believe it when I first heard that. But the math works out.
You’ll see at the end of the post.
If you are a homeowner and the last few sentences made you curious, take a few minutes to read through this article. You’ll be glad you did.
I’m going to explain the five top reasons why solar is a great investment for the average homeowner. By the end, you’ll know more than 99% of homeowners about this incredible opportunity.
Then we’ll tally up all the savings an average homeowner can expect with an average system…
And you’ll see exactly how it pays to go solar right now.
1. Short Term Savings
Right off the bat, you can start saving money when you have solar on your roof. Most homeowners choose a $0 Down Loan, so they pay no money up front. Even with the loan payment, homeowners pay less each month overall!
Here is how solar saves you a lot of money in the short term:
Tiered billing means the more energy you use, the more they charge you per kilowatt hour (kWh.) It’s how they measure energy usage.
The average home uses about 900kWh/mo.
If you cross the threshold, your energy bill can jump from $0.16/kWh to $0.33kWh. That’s more than double!
Installing solar can result in a lower monthly bill by replacing higher rate PG&E Tiers with lower fixed electricity rates from your solar system.
2. Long Term Savings:
PG&E raises the cost of energy about 6.0% each year.
In twenty years, you will be paying A LOT more for the same amount of energy.
As you can see in the graph, electricity rates are expected to rise over time..
When you own solar…
Not only do you lock in low energy rates for decades, you also own an asset that produces valuable electricity.
Your solar system will pay itself off in typically 5-7 years.
After that, you are producing free electricity.
Solar produces energy at a fixed cost, while PG&E increases their prices every year. After the system is paid off, it generates electricity for free. That free electricity adds up over time. It can result in over $50,000 of savings over twenty years.
3. Net Energy Metering (NEM)
NEM is an agreement with your energy provider (PG&E). It’s California’s way of assisting solar adoption.
It means that PG&E has to respect that your role as an energy producer. They will “pay” you for any extra energy you produce and contribute to the grid.
You accrue credits when your solar system produces more energy than you consume, typical during the day. You redeem those credits in the evening when your solar system is no longer producing.
What makes this especially appealing is:
Solar homeowners are billed by PG&E on a “time of use” schedule (shown in the above graph).
The afternoon is when your solar system produces the most energy. It is also when electricity is the most in demand, which means PG&E “pays” you more for any energy you export during that time period.
You “sell” electricity at a higher price, then later in the evening you “buy” electricity at a lower price, resulting in even more savings.
It won’t last long though, PG&E and other energy providers are lobbying to change the NEM terms: they want to pay homeowners less for the energy they produce.
The energy producers want to turn homes with solar into a cheap electricity producer and profit off of it.
Safe to say, NEM in its current state won’t last long.
However, if you go solar now you are grandfathered into the current NEM terms for the next 20 years. You can lock this agreement in by purchasing solar before June 1, 2016.
NEM allows your to save even more with the electricity you produce. Just another reason to look into solar immediately; this enticing opportunity won’t last long.
4. Federal Tax Credit
Because of how important it is to transition to clean, renewable energy as a nation, the federal government created the Residential Renewable Energy Tax Credit (FTC).
You receive 30% of your solar project cost as credit towards your tax liability.
That amounts to thousands of dollars depending on how big your system is.
Like the NEM, the FTC is set to expire in the next year on December 30, 2016.
It might get renewed, but it likely won’t be as good as it is now.
Yet another reason to consider going solar in the very near future.
(I want to point out that you only get the Tax Credit when you purchase the system. When you go solar with a Power Purchase Agreement (PPA), what National Solar Companies offers, they keep the tax credit savings.)
The Tax Credit reimburses you 30% of your project cost. This incentive won’t last long. It’s also only available to those that purchase solar. Yet another reason to own rather than rent solar.
5. Home Equity Increase
This is the cherry on top of all the other good reasons to purchase solar PV equipment.
A study conducted by the Lawrence Science Lab found that:
“Solar PV systems on a home consistently increased the value during home sales at an average of $4.00/watt.”
That’s hugely significant. Let me break it down for you.
Our average projects range from $4.50/watt – $5.00/watt. (remember this is BEFORE the Tax Credit is applied)
Your home will increase in value by $4.00/watt.
I’ll do the math for you.
Between 80% and 88% of your project cost is recouped with the equity increase.
That’s pretty awesome.
(Plus your house will sell faster.)
Purchasing solar can increase the value of your home significantly. You can recoup 80%-90% of your project cost through equity increase and that’s before you even apply the tax credit.
Why Ownership is Key
Many of these great benefits are only available when you own your solar system. Not with a Power Purchase Agreement (a PPA), like National Solar Companies sells.
When you choose a PPA, the solar companies will keep the tax credit for themselves…
…you’ll still be saving money but no where near as much.
The most important aspect of PPA’s to understand?
Having a PPA or a “leased” system can make it more difficult to sell your home!
Any purchaser has to a. Qualify with a high FICO b. Be willing to assume a 20-year monthly payment agreement with an escalating cost.
While on the other hand, if you own the solar system outright it can make your home more appealing and increase the price.
Does it Actually Pay to Go Solar?
Let’s do the numbers!
We are going to assume that you own the home and purchase solar (that’s what we recommend).
Remember that solar increases home value at about $4.00/watt.
We sell most systems at $4.50-$5.00 per watt. Let’s average at $4.75/watt. That’s before we add in the tax credit.
Let’s add the tax credit in.
$4.75/watt * 70% = $3.33/watt
$3.33/watt. That’s how much you pay when you factor in the 30% tax credit…
You pay $3.33/watt and your home increases in value by about $4.00/watt…
Let’s apply that to an average 4kW system.
Net Cost: $13,320 with tax credit…
Equity Increase: $16,000
It pays to go solar…
…If you own the system!
And we haven’t even calculated the short-term bill savings, long-term returns, selling high and buying low with NEM Time of Use.
The positives just keep adding up.
I want to ask you: What is the number #1 thing you learned from this article?
Answer down below in the comments, and I’ll be sure to read and reply to you.
Feel free to ask any questions you might have too!