Purchasing solar panels for your home is a valuable investment. We are all familiar with the costs, but what about the benefits? Here are three financial benefits to consider as you determine if a solar investment is right for you.
1. Generate your own energy, save money on your energy bill
The energy that you generate from solar panels means you will purchase less energy from your local utility. Each kilowatt hour generated is money that you save. A 6 kilowatt solar array will generate around 7,674 kilowatt hours (kWh) per year. At a standard cost of electricity (around 11 cents), that’s around $844 per year in money saved. And with energy costs continuing to rise, the value of your savings will increase over time.
2. 30% Federal Tax Credit
The federal government provides tax incentives for the purchase of solar and other renewable energy assets. Upon installation of a solar array on your home, you will be eligible for the federal Residential Energy Tax Credit which is equal to 30% of the cost of systems installed by December 31, 2019. If you install a 6 kilowatt system through Solarize Cincy (estimated price $15,000), then you are eligible for a tax credit of $4,500.
3. SRECs, a state based credit system
Most states provide some additional credit for solar investments. In Ohio, public utilities must purchase a small percentage of solar for each kW of energy they sell to customers. Solar Renewable Energy Credits (SRECs) represent one mega-watt hour of electricity (1,000 kWh). For each mega-watt hour (MWh) that your system creates, you can sell the renewable attribute of the energy on the market. Due to changes adopted by Ohio earlier this year, the value of SRECs has declined. However, the current market will pay around $10 per SREC. As in the above example, a 6 kilowatt system could generate 7 SRECs or $70 per year.
How much do Solar Panels REALLY cost?
Here is the example above in more detail:
- We purchase a 6 kilowatt solar PV system ($15,000)
- Of that cost, we spend less on energy because we created our own ($844 in the first year or $27,765 over 25 years)
- Plus, we received the federal Residential Energy Tax Credit ($4,500)
- Finally, we sold our solar renewable energy credits (SRECs) ($70 per year or $1,630 over the projected life of the system)
So, in the above example, the system we purchased generates $27,765 in utility bill savings, $4,500 from federal tax credits, and $1,630 from SRECs. That’s $33,895 in benefits which puts $18,895 back into your pocket.
Here are some more examples of how much you might save by installing Solar:
1. Pricing reflects a basic installation using a standard panel. Complex installations may require additional charges.
2. Based on an $0.11 per kWh base rate with a 2.99% annual escalation in the cost of electricity (US EIA projection).
3. Based on a SREC value of $10 per mWh over 25 years.