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Solar Savings: How Solar Power Can Help You Save Money

Did you know that solar jobs in the United States have increased by 167% in the past decade? There are over 250,000 solar workers in America spanning various fields.

The increase in workers is thanks to homeowners and business owners that want to go solar. While solar workers make money on the job, you can save money with solar savings!

How can solar power save you money and how much can you expect to save? Keep reading to find out.

How Does Solar Power Save You Money?

Going solar has many environmental benefits, but property owners can also enjoy solar savings. Solar power comes with low maintenance costs, reduced electricity bills, and tax credits.

Low Maintenance Costs

Solar panel maintenance is very minimal. The only maintenance requirements are cleaning the panels a few times annually and replacing the solar inverter every 5 to 10 years.

A lot of solar panel manufacturers offer warranties for up to 25 years. If something were to go wrong with your system, you wouldn’t face any out-of-pocket costs.

Reduced Electricity Bills

Depending on your property’s energy needs, you can dramatically reduce or eliminate your monthly electricity bills.

If your solar panels generate more electricity than you use, you can sell surplus energy back to the power company in certain areas.

Solar Tax Credits

In 2006, the Solar Investment Tax Credit (ITC) was enacted to offer a rebate to people that want to go solar.

This year, the ITC offers a 26% rebate. In 2023, the rebate will be reduced to only 22%.

If you want to install a solar system for your business property, you’ll be able to deduct 85% of the solar investment in the first year to offset upfront costs.

Eligibility requirements for the residential federal solar tax credit are as follows:

  • Solar system installation occured between January 1, 2017, and December 31, 2034
  • The solar system is located at your residence
  • You own the solar system (you must have purchased it through solar financing or cash)
  • The solar system is new

You can only claim federal credit for the original solar system installation. 

This federal residential tax credit can be claimed on your income taxes. This helps you reduce the amount of upfront costs paid to install a solar system.

Other incentives you qualify for might affect the federal tax credit. We’ll go over those now.

Electricity Utility Rebate

In most cases, rebates provided by the utility company to install a solar system are excluded from income taxes. This law is enacted under solar exemptions.

In this situation, the utility rebate for installing a solar system gets subtracted from your system costs before the tax credit calculation.

Renewable Energy Certificates

If a utility company provides you with cash or an incentive in exchange for renewable energy certificates, the payment is usually considered taxable income.

This is also the case if you are gifted environmental attributes of the electricity your system generated.

These certificates and attributes increase gross income but don’t reduce the amount you receive from the federal solar tax credit.

State Government Rebate

Some states offer their residents rebates when they choose to go solar. A state government rebate often won’t reduce your federal tax credit.

Your federal tax credit is calculated the same whether you received a state government rebate or not.

State Tax Credit

State tax credits also won’t reduce federal tax credits, but there is a downside to this.

If you receive a tax credit, the taxable income you report might be higher than it was before because you have less state income tax to deduct. Your state tax credit will be taxed at the federal level.

How Much Money Can You Save With Solar Panels?

The amount you save with solar depends on different factors. To quantify how much money you save when you install solar panels, you need to determine how much electricity your property consumes within a year.

On average, a residential utility customer uses over 10,000 kWh each year. This comes about to about 800 kWh per month.

The national average rate per kWh is $0.13. Take this and multiply it by 10,000 kWh to see how much the average household can save.

Most properties save over $1,000 a year in energy costs when they install the right-sized solar system.

You can get a savings estimate specific to your numbers using an online solar calculator.

How Many Solar Panels Do You Need?

The average home requires between 20 and 25 solar panels to meet all of the property’s power demands. The exact number of panels you’ll need vary based on these factors:

  • Location
  • Panel efficiency
  • Rate power
  • Personal energy usage patterns

Take the estimate of your home’s usual energy consumption to figure out how many solar panels you need. Along with monthly energy use, you can calculate hourly energy demand based on peak sunshine hours in your area.

Keep the size of your roof and the amount of sunshine in mind when making this consideration.

When you hire a professional solar panel company, they will complete these calculations for you.

When Will You See Solar Savings?

So, how long does it take to see solar savings when you install a solar system on your property? Once the system is completely functional, you are likely to see savings on the following month’s energy bill.

Although you may see savings within the next month, it will take longer to recoup your original investment costs. If your upfront costs to go solar are high, it could take years to get your investment back.

You’ll have to cover the cost of the following:

  • Solar panels
  • Solar inverter
  • Solar batteries
  • Wiring
  • Professional solar installation

A lot of people opt for solar financing, such as taking out a personal loan or getting a home equity line of credit to cover the initial costs.

Eventually, you will recoup all of your investment and turn a profit by reducing your monthly utility bills.

Once your initial investment is back in your pocket, everything after that becomes a profit, unless you have to pay for repairs or maintenance.

Before installing solar panels, make sure you want to live in your home for a long time. If you sell your house before you recoup the cost of solar panels, you’ll have to pass the remaining amount to the new homeowner.

This has the potential to increase how long it takes to sell your home depending on how popular solar is where you live.

What Affects Cost Savings of Going Solar?

Solar panel savings are mostly affected by the size of the solar system that you need. The larger your solar system is, the more money you will save. Larger solar systems are more likely to eliminate your monthly utility bills.

Over time, your solar system will produce enough energy to power your entire home. You might even have energy to spare. You can sell surplus energy back to your utility for even more cost savings.

Although solar systems bigger in size come with more cost savings, you have to consider the price upfront. With a larger system, you will need more time to pay off and recoup your initial investment.

Solar Panel Installation Cost

After the federal solar tax rebate gets calculated, the average cost of solar panel installation is about $12,000. As stated before, the cost you pay will highly depend on the size of the system.

Smaller solar panel installations can cost as little as $5,000. Larger systems can cost up to $40,000 if they include advanced solar panels.

No matter how much you pay upfront, you’ll eventually be able to recoup the cost of the initial investment.

Many homeowners find solar panels worth it for the savings they reap over time. Solar panels also provide the energy needed for a home without the use of fossil fuels like natural gas, oil, and coal.

Implementing solar energy into your home reduces your carbon footprint and slows the effects of global warming and climate change.

How to Install a Solar System

If you want to reap the solar savings discussed in this guide, it’s important to know what to expect from the installation process.

A solar system installation follows these five steps:

  1. Engineering site visit
  2. Documentation and permits
  3. Equipment ordering
  4. Solar system installation
  5. Approval and interconnection

We’ll go in-depth on each of these steps now.

1. Engineering Site Visit

An engineer and installer will visit your home before and after you sign a solar contract. During the first general visit, the installer will evaluate your property to consider the following:

  • Angle of roof
  • Roof size
  • Shading

The installer checks these items to make sure going solar is right for your home. It’s not the right option for everyone.

During the engineering site visit, an engineer will evaluate the condition of your roof to make sure it is structurally sound. This visit occurs after you sign a solar contract.

They will also look at the electrical panel to make sure you don’t need to upgrade or replace it before installing a solar system.

2. Documentation and Permits

You’ll have a lot of documents and permits to fill out when going solar. Luckily, a solar installation company covers most of this for you.

While the solar installer you hire works on building permits and paperwork, you can begin applying for state and federal solar incentives.

Building permits are specific to where you live so the installer will know the ins and outs of the process if they have been working in the area for a while. They will also be aware of any restrictions or requirements they need to follow.

This step can vary in time and depends on how long it takes the installer to finish and submit your paperwork. Even though you don’t have to fill out paperwork, it’s important to know what goes on behind the scenes.

If you are in a rush to get your system up and running, don’t be afraid to ask the installer where they are in the paperwork process.

3. Equipment Ordering

Before signing your solar contract, you will have chosen your solar panel types and brands. The solar installer will order the equipment you want after completing and submitting the right paperwork.

Once equipment ordering is complete, you will be added to the installer’s queue. The equipment should arrive on the scheduled installation date.

Typically, it takes one or two months for paperwork approval. Paperwork approval is not the only factor that goes into the timeframe. The date of installation will depend on how many projects the installer has in their queue.

4. Solar System Installation

After getting through the above three steps, solar installation day is here!

The bigger your solar system, the longer it will take to install. Smaller solar systems only take a day to install while larger solar systems can take up to three days or more.

If you require a power meter or for net metering, the installer will need a few additional hours to complete this installation.

5. Approval and Interconnection

Most people think solar system installation is the last step of the process. When your system is installed, it must be approved and connected before it can start saving you money.

A town government representative will inspect the system for approval. A utility representative will also complete an inspection before approving and connecting your system.

You’ll wait about two weeks or up to a month for town and utility approval.

Are You Ready for Solar Savings?

Reducing your carbon footprint and saving money in the process is a no-brainer. That’s why many property owners are choosing to go solar.

The solar savings you reap depend on your system size, location, and your personal energy usage.

Use this guide to get a better idea of how much you can save when you install a solar system. For more informative articles like this, keep coming back to our website.

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