Are solar panels worth it in 2022?

While solar energy is an awesome thing and can be a great investment, going solar is not the right choice for everyone. Here’s an honest guide to help you make a smart decision.

Illustration of people calculating the financial cost of solar panels.
Vecteezy

Thinking about solar panels for your home? It’s a major investment: even in states that offer multiple incentives, you’ll still be paying multiple thousands of dollars.

Fortunately, the price of solar continues to drop, and in 2022 the cost of renewable energy - especially wind and solar - has fallen to the point where it’s cheaper than fossil fuels in many locations. But how about for the homeowner?

Home solar panels can be worth it, but it depends on a few key factors: whether your home is suitable for solar, what your financial opportunity cost for purchasing solar is, what type of financing you’re prepared to use, and how personally important the environmental benefits are to you. If these factors work out positively, solar for your home can definitely be worth the investment.

Here at The Solar Nerd, we’re committed to giving you honest answers. This article will guide you through each of these considerations and help you make a decision that’s right for you.

Take care of energy efficiency first

Before you consider making an investment in home solar, you should take care of energy efficiency first. This is because a lot of energy efficiency fixes are cheap or even free. If you take these steps first, you may be surprised by how much you can reduce your energy bill for little cost. The things that should be at the top of your list include:

  • Replacing incandescent bulbs with LEDs
  • Get a smart thermostat
  • Look up rebates from your utility
  • Insulating and sealing forced air ductwork
  • Sealing air leaks into an unconditioned attic, unconditioned basement, or crawl space
  • Sealing air leaks along the basement sill plate
  • Adding insulation into an unconditioned attic
  • Blowing insulation into wall cavities

More extensive energy retrofits can also pay themselves back over time, but there are also some retrofits or appliance upgrades that can either take a very long time to pay back, or even never pay themselves back. This includes replacement windows, which are expensive and will often never pay for themselves in energy savings.

Home ownership?

You can’t stick solar panels on a home you don’t own, but if you’re a renter who is interested in going solar, you still have options. The first thing you can do is try to convince your landlord that going solar is a smart decision.

As a renter, you’re either going to pay the utilities yourself, or your landlord will include it in the monthly rent. In either case, adding solar panels will lower the monthly cost of your rent, making the property more appealing and competitive versus other homes on the rental market. Given that one of the largest costs for a landlord is the risk of having their property sit unrented when tenants change, any advantage your landlord can gain over competing properties will add to their bottom line.

Plus, adding solar panels can increase the equity in their property.

If you can’t convince your landlord to add solar panels, you’re not out of luck. You can search your area for a community solar project, which lets you power your home with renewable energy without any modifications to your home. Read our article to learn more about how community solar works.

Do you have net metering?

One of the things that determine whether solar panels are worth it is whether net metering is available in your state. This is a policy that is set at the state level, and is frequently under attack by utility companies because distributed solar has a tendency to eat into utility companies’ profits.

If you haven’t already, you should read our guide on net metering. It includes an up-to-date state-by-state guide of whether net metering or net billing is offered, or if no statewide interconnection standard exists.

If net metering is available from your utility, that’s good news, because net metering means it will take fewer years for your system to repay itself.

Cheap electricity?

Home solar will pay for itself quicker in states where the cost of electricity is high. But if you live somewhere like the Northeast, which has low-cost hydroelectricity, solar is less attractive because your savings will be smaller.

You can find out the cost of solar by using our solar cost calculator.

The price of solar in 2022

First of all, you’ve probably heard that solar cells have been steadily getting cheaper, but most people don’t realize that the price has been consistently dropping for decades. In 1977, the cost of a photovoltaic cell was $76.67 per watt. Today, it costs less than $0.50 per watt, or more than 100 times cheaper.

The falling cost of residential solar. (NREL)The falling cost of residential solar. (NREL)

This incredible cost reduction is the main reason why solar has now become mainstream - the cost of solar has reached the tipping point where it’s comparable or even cheaper than fossil fuels. Add in the environmental benefits and the satisification for the homeowner of generating your own electricity, and you can see why there are now almost 2 million solar homes in the United States.

But the cost of silicon cells is only one component of the price of a home solar photovoltaic system, and it’s not even the largest component. That would be soft costs, which includes things like labor, overhead, and permitting costs.

To learn more, you can read our article about the cost of solar in 2022.

Is your home suitable for solar?

Not every house is a good candidate for solar. First of all, let’s eliminate one common misconception about solar power, which is that it’s only good in sunny southern latitudes. In fact, it’s possible for solar to be a good investment in northern states and even unexpected places like Alaska, where solar can compete with expensive off-grid fossil fuel generation.

While it’s certainly helpful to live in a sunny climate, local factors like the direction your roof faces, and whether you have shade from nearby trees or buildings can be just as important, or more important, than your latitude.

Here’s some key factors that will determine if your house is a good candidate for solar:

  • Your roof has a couple decades of life left in it. Most solar panels come with 25 year warranties, which means they will happily sit there, silently generating clean electricity for your house for more than two decades. There is hardly any maintenance involved. But if your roof has to be repaired or replaced, you’ll pay extra to have them removed and reinstalled. That’s a cost you want to avoid, so don’t install a PV system on a roof that doesn’t have plenty of life left in it.
  • You have a good stretch of roof that faces south or west that gets little or no shade. Having shade on your roof is one of the biggest reasons why solar doesn’t work out for a homeowner. If you have sigificant shading and it isn’t something you can control (by trimming trees, for example), you might have to think of other options like community solar. A south facing roof is best, followed by west, because the sun sets in the west in the evening, which is helpful to offset peak energy loads. In fact, some utility companies incentivize homeowners to face their panels west.
  • You have net metering available to you. Without net metering, it’s harder for your system to financially pay for itself. Read our guide on net metering to learn more.
  • You live in a state or city with solar incentives. Some states, utility companies, and municipalities provide good incentives for home solar. Often, these are large enough to knock a couple years or more off the payback period. The easiest way to find out is to use our solar cost calculator, which will tell you about all the incentives you can take advantage of.

Heating your home with solar

If heating is your main goal, whether it’s space heating or providing hot water either for your hot water tank, a hot tub, or swimming pool, it might make better sense to investigate solar thermal rather than photovoltaics.

The advantage of solar thermal for heating is that, in most climates, it’s more efficient than photovoltaics. A solar thermal collector can harvest as much as 70% of the solar energy it receives, which far exceeds the 23% efficiency of the best photovoltaic panels.

While there is more mechanical complexity with a solar thermal system, the technology is also eligible for the federal tax credit, and the payback period can be just a few years for many homes.

Keeping your lights on during a blackout

If one of your goals for a solar energy system is to keep your lights on when there’s a blackout, be careful. Many people don’t know that when grid power goes down, your solar photovoltaic system will shut down too unless you have a battery system.

Solar photovoltaic systems automatically shut down when there’s a blackout, even if the sun in shining. The only way to keep your house powered in that situation is to include batteries in your system. This will add a significant amount of cost to the system.

That additional cost may make financial sense for some households, but not always. I wrote an article that talks about this in detail.

How to pay for solar

The best way to get a photovoltaic system for your home is to buy it outright, either with cash or a loan. Another popular option is a solar lease or power purchase agreement (PPA), but these types of financing agreements have many pitfalls for consumers. They can make it harder to sell your home, cost you money in the long run, and companies that sell these have been the target of lawsuits for their sales practices.

Most consumers are better off purchasing their home solar systems, even it means taking out a loan. Whether cash or loan is better is really an opportunity cost question: how would you be investing your money if you didn’t spend it on a solar system? To help answer that, we created a simple buy vs loan solar calculator. Just plug in a few inputs, and it’ll give you a quick estimate of whether you should plop down the cash or head to your bank for financing.

That same article also goes into greater detail about the ways to pay for solar, including low income options and special loans for solar homeowners.

The environmental benefits of solar

For many people, saving money isn’t the only reason or even the main reason to go solar. Renewable energy like wind and solar are clearly more environmentally friendly than fossil fuels. This is true even after accounting for the environmental impacts of manufacturing solar panels.

Public support is clear too: according to a recent Gallup poll, 80% of Americans support more emphasis on solar energy.

So, it’s understandable that solar power was popular even before the dramatic price drops of the past decade. If climate change and the environment are important to you, then installing solar on your home is a clear way to make a difference.

Add it all up

We’ve listed three key things to consider before going solar. If it seems that your house is a good candidate for solar, you have a good way to pay for your system, and if the benefits of solar energy fits with your personal values, there’s a good chance that installing solar on your home would be a smart choice.

If you want to learn more, we recommend reading our complete guide to solar for your home, which goes into these topics in great depth. You should also use our calculator which will estimate the financial benefits of a system.

Once you’ve made the decision to go ahead, fill out our form to get quotes from local solar installers. It’s free, and we promise to not spam you.

TAGS:
#Energy Efficiency #Payback #Net Metering

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