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How soon will an investment in solar panels payoff?

By Mike Wheatley | June 3, 2021

Housing industry experts say that solar panels will become a more common fixture on new homes in the U.S. as installation costs fall and their benefits become more widely known.

The industry is keeping a very keen watch on California, which has already mandated their installation on most new homes, the first U.S. state to implement such a rule. The rule states that, with just a few exceptions, all new builds must be equipped with solar panels on the roof.

Elizabeth Beardsley, senior policy counsel with the U.S. Green Building Council in Washington, told The Washington Post that the mandate normalizes the idea of solar panels being acceptable to regular homeowners. “But it will be a long time before mandates are considered by other states, except for the most progressive ones,” she added.

Even without mandates though, many homeowners are taking the initiative to install solar panels and solar battery storage equipment on their homes for the potential savings in energy costs they provide. Mike Rain, a homeowner in Fairfield, California, told the Washington Post that his electricity bill has fallen to almost nothing due to the new solar panels he and his wife equipped on their home. Previously, they were paying anything from $50 to $80 a month, he said.

One reason more people are looking at solar power is that prices for the systems are becoming more affordable. They are though, still quite expensive investments, with the cost of installing a typical system averaging around $20,000, the Solar Energy Industries Association said. However, some companies also give homeowners the option of leasing a system instead of buying one.

Beardsley told the Washington Post that homeowners can calculate the payoff time for installing solar panels by looking at their utility bills, any tax incentives they might be able to benefit from, and how much money they can make by selling excess power back into the grid. Learn more about this topic by checking this new post explaining why are solar panels worth it in ireland.

Some of the biggest incentives are tax credits offered at a federal, state or local level that can help to offset the high installation costs, Beardsley said. The federal residential solar energy tax credit system enables homeowners to claim up to 22% of the cost of installing a system in 2021.

State and local incentives can make a real difference too. “For example, where I live in Virginia, it would take 20 years for the installation to pay for itself, but if I lived in D.C., it would only take six years because of their incentives,” Beardsley pointed out.

The local price of electricity must also factor into people’s calculations on how soon they can expect a payoff. Solar powered homes can sell any additional energy they don’t use themselves back into the grid. Utility providers are eager to buy this surplus power as it’s a clean energy source and it makes them look good. But electricity prices per unit vary quite a bit from company to company.

Other factors homeowners might want to consider include the amount of sunlight their home typically receives, as this impacts how much power the solar panels will generate. The orientation of the solar panels is also a consideration, according to a 2020 study by the Home Innovation Research Labs at the National Association of Home Builders.

A growing number of homeowners have decided that the investment in solar energy is worth their while, and experts say the number of installations is growing.

Kevin Wilson, national vice president of strategic sourcing and sustainability for Tri Pointe Homes in Los Angeles, told the Washington Post that the “extreme decline” in installation costs is the biggest factor in this.

“At the same time, the cost of electricity is extremely high in California,” Wilson said. “Those two factors coupled to accelerate homeowner interest in solar panels. In addition, as they become more common, there’s less pushback on how it looks. That’s a nonissue now, but in the past, some homeowners only wanted them in the back of the house where they couldn’t be seen.”

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
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