If you are considering a solar photovoltaic system for your home, one of your top questions is probably how much is it going to cost? You’ll need to look at several factors before that question can be answered, including how many panels you’ll need, what kind of panels will be used, whether or not you’ll have battery storage, and how you’ll pay for the system (cash or financing).
When you do finally work with a solar consultant to get that magic number, it will probably come out to something in the $30,000 or $40,000 range if you own the average home in Florida. If you are spending $200-$300 a month on electricity, you might get a bit of sticker shock, but the truth is you’re not seeing the whole picture for what it is.
Here’s the math on why it’s a good idea to replace your electric bill with a solar system
- You may be paying $40,000 for the system today, but if you DON’T buy it, you’ll be paying a lot more to the utility company for the same amount of energy. How? Let’s take a look at the numbers. Your solar system is guaranteed for 25 years. Your $200/month electric bill paid over the same 25 years is $60,000. Already, that’s a savings of $20,000. Factor in rate increases and you’re looking at closer to $100K…for the same amount of energy you could have secured for $40,000 by going solar today.
- Your $40K system probably won’t cost you $40K. That’s because of federal incentives. All systems installed in 2021 are eligible for a 22% tax credit on the total value of the system. Claiming that tax credit brings the cost down to $31,200, making your savings even bigger. Learn more about that here.
- Let’s fast forward 20 years. Now your system is paid off. You are paying exactly $0 for the energy you are producing while all your neighbors who didn’t go solar are still paying their electric bill every month. You have no energy bill and no solar loan payment! Doesn’t that feel good? Let’s go five years further into the future. Now the warranty on your solar panels has expired, but does that mean they stop working? Does your car stop working when its warranty runs out? No. Generally, solar photovoltaic systems lose a small percentage of their efficiency year after year, but are guaranteed to retain the majority of their performance for 40 years. You’ll still be making loads of energy year after year, decade after decade… for free.
- But what if I move? Even if this isn’t your last home, putting a solar system on it is still a good idea. A solar system adds value to your home. Even if you only stay in your home for two, five or ten years before you sell it, you can still pull out 70%-90% of the value of your system when you sell. That’s a return of 70 to 90 cents on the dollar. Learn more about that here.
- But, it’s a big purchase, and we get that. Except, when you really think about it, you aren’t adding a new expense, you are replacing an expense you already have. You are already paying $200 a month for electricity, and that bill is going to go away. If you replace that $200/month with a $150/month solar loan payment, you are saving $50 a month. Overall, you are reducing your expenditures, not increasing them. And paying $150/month for a season is far superior than paying $200/month for a bill that will never go away. Ever. In fact, it’s actually going to go up because of…
- Rate increases. Rate increases are the real devil in the details. Rate increases are the reason why, if you don’t go solar, you’ll be kicking yourself in three years and again in five years. By the ten year mark you may be crying real tears because in the last ten years the rates have actually doubled for many homeowners in Florida, and there are no indications it’s going to be any different in the future.
So… if the question Why should I pay $40K to get rid of a $200/month electric bill? is on your mind, you may want to go ahead and file it in the same place you’d file similar questions like, Why should I get into a 30-year mortgage when I can just rent? and Why should I stock up on items I use every day while they are on sale?
The answer to all of these questions is the same: because it makes good financial sense.