Solar energy production has skyrocketed in recent years in the United States. With more than 49 megawatts of installed solar capacity, there are now enough solar panels to power 9.5 million homes, according to the Solar Energy Industries Association.
Are you interested in getting on the solar bandwagon? Ultimately, determining if it is financially savvy to go solar depends on numerous factors, including the cost of electricity in your area, the price and output of the solar system, and available solar energy incentives.
Is 2018 a good year for you to go solar? Here are some tips on making an informed decision.
Understand Your Local Net Metering Laws
Net metering laws require power companies to bank excess credits for solar electricity fed to the utility grid for later use by the homeowner. For example, let’s say your solar panels generated 10 kWh of excess electricity for the grid during a sunny day and then you consumed 10 kWh of electricity at night. Under net metering laws, you would neither owe money nor be reimbursed for this power, given that you provided as much power as you later consumed.
In 2015, 43 states had net metering laws. Now, only 38 states do. In some areas, solar homeowners are not rewarded at a retail rate for the excess power they supply. Find out what the laws are in your state to better understand the return on investment of your solar system. In some areas where net metering laws are changing, existing solar system owners are grandfathered in under the old system. If the new rules haven’t taken effect yet, you still might be able to get compensated under the old, higher rate.
Consider Solar Equipment Warranties
Solar product warranties vary among manufacturers, and they are an important consideration before installing a solar system. Equipment warranties can protect you, making solar a safer long-term investment. Ask your solar installer or conduct independent research to determine product warranties, as they can vary widely by manufacturer and product. Recently, some manufacturers have been setting themselves apart by offering exceptional warranties.
Solar panel warranties, in particular, are an important consideration, as they are typically the most expensive equipment in your solar system. Over time, even the best solar panels produce less energy due to product degradation. Although all solar panels are less effective at generating electricity over time, the degradation rate varies by the panel. Performance guarantees help ensure that solar electric panels are producing at a certain percentage of their original generation capacity after a given number of years.
Currently, many manufacturers guarantee 90 percent production for 10 years and 80 percent for 25 years. Some panel manufacturers set themselves apart by offering stronger warranties. SunPower, for example, leads the industry by offering a 92 percent performance guarantee for 25 years.
Most solar panel manufacturers also protect against defects. Many solar panels have a 10-year equipment warranty on the integrity of the panel. Now, SunEdison, Solaria and SunPower solar panels have a 25-year equipment warranty.
Shop around when installing a solar system to find the best price, warranties and solar equipment quality. UnderstandSolar is an excellent free service that links solar shoppers with top-rated solar installers in their area for personalized solar estimates, and EnergySage allows you to make apple-to-apple comparisons.
Take Advantage of the Federal Tax Credit and Solar Incentives
There is a federal tax credit in effect that reduces the total net cost of a solar system by 30 percent! A tax credit is a dollar-for-dollar reduction in federal income taxes owed, so it is more valuable to the taxpayer than a tax write-off.
If you install a $10,000 solar system, you can qualify for a $3,000 tax credit. This solar incentive will start scaling down in 2020. Keep in mind that some states or municipalities offer incentives for using solar.
Start with Energy-Efficiency Improvements
Although this is not a new development in 2018, it is important to consider whenever someone is going solar. Before sizing your solar system, look for ways to cut your home electricity use. Refrigerators, lighting, electric water heaters and air-conditioners are common electricity hogs. In many cases, it is worthwhile to replace old appliances with high-efficiency models.
Also, explore if you have any vampire loads that suck power even when appliances or electronics are turned off. Home entertainment and office equipment often continuously drain power. Smart power strips are a great solution to stop energy vampires in their tracks.
Consider Solar Loans
As the solar energy industry matures, there are now more solar loan products available than ever before. Solar loans make the most financial sense when the amount you pay on the loan is less than your monthly utility savings. This means that the loan allows you to save money on your solar system from day 1. Make sure to take the loan fees and interest into consideration. A home equity line of credit is another option, and the interest is likely tax-deductible.
Ultimately, the decision to go solar is multifaceted. Many homeowners choose solar because they want to do their part to help stop climate change or to wean themselves off of fossil fuels. Now that the cost of solar has dropped so much, many install solar systems merely for the cost savings. In much of the U.S., 2018 is a good year to go solar.