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Are solar panels for your home worth it?

Solar panels for home use are certainly more affordable than ever due to improved technology, but are the benefits worth the cost? The answer depends on a lot of factors and how it plays out may surprise you.

For instance, while it's no surprise that geographical location plays a big role, what may throw you for an electrical loop is that it is generally 3 times as beneficial to put up solar panels on a roof in New York than it is in sunny Arizona. If you look at the graphic over to the right that seems very counterintuitive.

How can this be? Energy costs and sweet incentives. Utility bills are a lot higher in New York so that even with less sun it's still more worth it in New York than Arizona. The benefits in Arizona are still decent it's just that the benefit of a solar panel system is greater in New York.

people happy with solar panels

Solar Panel Efficiency

One thing that is perhaps misunderstood is that while the most efficient solar panels work best in full sunlight, even on cloudy days, sun energy is still getting through, just not at full capacity. On a normal cloudy day without a severe storm going on, the panels still produce electricity at about 50% efficiency.

It's worth sharing an important tidbit of information with you here and then we'll get into more states (including yours) and where they fall on the cost versus benefit scale. Then we will look at other personal factors that are incident to your specific house, rooftop, and situation, which may tip the scale one way or the other.

That tidbit of information I’ll share is a big key that makes solar panel systems for homes more affordable. It is this: Most utility companies have several levels or tiers of usage. What a person pays depends on how much they use and what tier they rise up to in monthly usage. Just like with tax brackets, utility usage tiers increase in cost per unit of electricity used with each incremental tier.

What happens when you install solar panels is that your usage from the utility company goes down enough that the upper tiers are removed from your bill and so you only pay at the cheapest tier. And also if the panels generate more electricity than they use during the day, then they build up credits that can be used at night — kind of like marriage.

So if you do use any electricity beyond your credits, you’re only paying the cheapest tier. This will probably be the case in your area but you’ll want to ask the solar sales rep if that is so. This makes a solar array more efficient than it would seem at first glance.

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Top Solar Friendly States

Now on to the states and how they rank from being the most beneficial place for solar panel systems, downward to moderately beneficial and to the bottom where it appears not worth it at all. After this we will look at what other things factor in.

The states rank as following from most beneficial to least beneficial: The states in navy blue font (1-16) have a high chance of reaping solar panel benefits, states in the aqua font (17-30) have a moderate chance; and those in reddish brown font (31-51) have a lower to poor chance of reaping a benefit.
  1. Hawaii
  2. District of Columbia
  3. New York
  4. Connecticut
  5. Colorado
  6. Massachusetts
  7. New Mexico
  8. California
  9. South Carolina
  10. Delaware
  11. New Jersey
  12. Iowa
  13. Minnesota
  14. Louisiana
  15. North Carolina
  16. Florida
  17. Maryland
  18. New Hampshire
  19. Michigan
  20. Missouri
  21. Arizona
  22. Vermont
  23. Texas
  24. Rhode Island
  25. Nevada
  26. Montana
  27. Alabama
  28. Maine
  29. Kansas
  30. Tennessee
  31. Virginia
  32. Wyoming
  33. Wisconsin
  34. Kentucky
  35. Pennsylvania
  36. Oregon
  37. Ohio
  38. Illinois
  39. Georgia
  40. West Virginia
  41. Utah
  42. Alaska
  43. Washington
  44. Oklahoma
  45. Nebraska
  46. South Dakota
  47. Idaho
  48. Arkansas
  49. Indiana
  50. North Dakota
  51. Mississippi
California solar

So we know that the benefit of solar panels for a home go up in areas where utility rates are high. But it also depends on how much you personally spend on your electric bill. A person in a lower benefit state (the brown area of the list above) like Oregon who nevertheless has an electricity bill over three hundred each month, may benefit far better than a $50 a month electricity bill payer in Hawaii — the top affordable solar power state. In fact, whichever state you live in it's probably not too advantageous (at least from a financial investment point of view) to get solar panels unless you current monthly electric bill is over $150 per month.

Another utility bill factor is “time of use.” For example in California, they now have the time of use factored in for businesses. There are not only tiers based on how much energy you use but also on when you use it. They have peak periods, off peak and partial peak. Peak period for businesses is from the middle of the day till 6:00 PM. But some areas in the country are going to time of use even for residential houses, which may have different peak periods like breakfast time and dinner time (maybe they should have Super bowl time). So if you are in an area that applies time of use as a factor, you may be able to save if you can use your solar panels for energy during peak times.

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Solar Panels and Your Roof

solar panel roof

So far we’ve dealt with the cost of electricity geographically and personally and the intensity and duration of sunlight geographically, which obviously matter. There is also the issue of your specific house and sunlight. Is your roof exposed to enough sunlight or is it heavily shaded by trees most of the day? Would it be worth it to cut back the trees or leave it as is and forget a solar panel system for your rooftop? It depends on what else you have going for you. If you only pay $50 a month in electricity costs it hardly seems worth it unless you are doing it for the lower carbon footprint or to please your mother-in-law. Conversely, if you pay a lot for electricity but don’t have ideal roof exposure, that may still be worth looking into. You may not know for sure without simply getting a quote.

They also say that the roof should face south or west, but again if yours doesn’t it still depends on the cost of installation and your typical utility bill and the other factors as to whether it still could be worth it.

Solar Panel Installation Cost

But yes, cost of solar panel installation is another factor. In general, costs have come down significantly. Some say it’s only worth it if you get the best solar panels. But even the cheapest solar panels are said to perform fairly well these days with the newer technology designs.

Specifically the type of roof you have can also affect installation cost. Whether you have asphalt shingles or Spanish tiles for example. The latter make it more expensive to install solar panels. The age of the roof also matters.

Some people say, well I already looked into solar panels for my home 3 years ago and it wasn’t worth it. Well, that was three years ago. By now enough factors may have changed that it could be worth another look. Since there are plenty of personal and situational factors the only way you’ll know for sure is to get a quote.

Cost of electricity rises

Solar Panel Rebates and Tax Credit

What other information is relevant to making it worth it or not? Government “bribes” or incentives in the form of tax credits and rebates. These can do a lot to offset the cost of installation. You may get as much as 30% on a tax credit if you buy solar panels. If you lease you may not get the tax credit, but it still helps the solar company because they get the tax credit and then can offer you a zero-down deal.

Rebates for solar panels are usually offered by a particular state in conjunction with a federal program. There are two things going on here. One is, your state may have a program that offers rebates, but they do have limited funding so at times even if a state offers it the program may be currently closed due to the funds running out. It may remain closed until they get more funding. So your state may have a rebate, but it may or may not be currently offered. Such is the case with certain areas of California at the time of writing this in the fall of 2014, with the California Solar Initiative.

Some people refer to the rebates as "renewable energy credits" or green credits, or renewable certificates etc. due to a federal program that requires utility company to derive a certain amount of their electricity from solar panel systems. Different states handle it differently. The northeastern states are particularly sweet when it comes to renewable energy credits to help offset the lower sunshine received.

Some see solar panels for your home as an investment that returns a certain amount per dollar—referred to as ROI (return on investment) . One thing that enhances it as an investment is that a typical investment generates a return that is taxed. With solar power, there is no tax on the return (the money it saves you) so that makes it more affordable if it indeed works out as a good deal for you in the first place.

solar tax credit

What ultimately may make solar energy worth it for more and more people is the convergence of demand and technology decreasing the cost of installation with the ever rising cost of electricity generated through traditional means. The government is putting more and more pressure and added expense on doing it the old way.

As utility rates from electricity produced the old way continue rising, with solar panels on the roof of your home, you lock in lower rates.

Even if you looked at it in the past and found it not worth it, it may now be a different scene. And it isn’t only for the sunshine states now.

Thus, the main worth it factors are:

  • How much you currently pay for your electricity bill — is it over $150?
  • Cost of solar panels and installation
  • Output efficiency based on the type of panels and amount of sunshine hitting the roof
  • Whether sweet incentives in the form of tax credits and rebates or renewable energy credits are yours for the taking
  • How to obtain your solar panel system — whether you can buy them outright, take out a loan, or lease them
  • If you have to beat out your brother in cool technology use and brag about the savings — whether or not it was worth it

In summary, any given factor may not be as favorable for you, but maybe a combination of other ones will make it worth your while. Or not. The only way to know if it will be affordable and worth it for you is to get a quote.

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solar cost
Imagine locking in the price of gasoline for your car back in 2004 when it was at about $1.50 per gallon? Wouldn’t it be nice to still be paying that amount?

That’s what solar panels can do for your electric bill.


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