Solar Panel Pros and Cons

Solar panels have recently fallen to historically low prices, and that’s gotten a lot of people excited about their potential—and many companies eager to sell homeowners on residential solar. While we at Modernize agree that solar energy is revolutionizing how homes use and generate electricity, we also understand that purchasing a solar energy system is a huge commitment, with many factors that can potentially affect your utility bills—and your wallet—for years to come. With so much information floating around, it can be hard to get a measured take. That’s why we decided to compile this list of the pros and cons of going solar, to help you decide if solar energy is really the right thing for you.

Solar Panels Cottage

Pro: Solar Energy Can Significantly Reduce Monthly Energy Expenses

Probably the most incentivizing reason to switch to solar power is for the savings it will net you on your utility bill. The per-kilowatt cost of residential electricity has risen every year for the past decade—the Energy Information Association, which studies U.S. energy consumption, found that average costs rose about twenty percent in the span of ten years.

That trend isn’t likely to fall off any time soon. With utilities still largely relying on traditional, fossil-fuel energy sources, the price of electricity will only increase as coal grows more scarce. Depending upon the size of your energy system and your location, solar panels may virtually eliminate your monthly energy bill, especially if you live in a state with a generous net metering policy. Net metering laws, which require utilities to credit solar homeowners for any excess energy they return to the grid, definitely vary from state to state, but in states where extra kilowatt hours are credited to homeowners at or above the retail rate, and where utility customers are allowed to roll credits over to their next bills indefinitely, solar energy systems can be pretty lucrative.

Con: It May Take Years for You to Make Up Your Initial Investment

Although solar can lower your monthly utility expenditures, paying the upfront costs of equipment and installation is no walk in the park. The average homeowner used around 10,900 kilowatt hours in 2014—to generate that much electricity, most households would require a system that ranged between seven to ten kilowatts, and the larger the system your home requires, the more money you’ll spend on equipment. Since solar is a new industry, and prices vary from place to place, it’s difficult to quote average costs with any reliability; however, most households can expect to spend around $20,000 to $40,000 on the system alone.

If, like the average American, you pay around $115 a month for electricity, it could take up to 29 years for your utility savings to catch up to those upfront system costs, assuming you are able to generate enough energy every month to completely cover your energy use.

And those are just equipment costs. You’ll also have to pay the so-called “soft costs” of solar—labor expenses, permitting fees, and sales taxes that are all part of the true cost of solar installation. The Department of Energy estimates that soft costs currently represent around 64 percent of the total price tag of solar—meaning when all is said and done, your installed system could be thousands of dollars above the price of the equipment alone.

Luckily many states offer sales tax breaks and incentives for going solar.

Pro: There Are More Incentives Than Ever To Make Solar More Affordable

While it’s true that solar energy systems are a significant investment, most homeowners won’t have to swallow the full cost of equipment and installation by themselves. Government tax credits and utility rebates can provide some hefty savings for homeowners purchasing new systems which can lower your overall costs enormously.

At the end of 2015, the federal government extended the Residential Renewable Energy Tax Credit, an incentive many homeowners use to justify their purchase of solar energy systems. This credit will cover 30 percent of your equipment and labor costs, which is deducted from your total tax liability, or amount you owe to the government on your taxes. If the credit is more than your total tax liability, then the leftover credit can be rolled over to your taxes for the next year. The credit cannot be cashed out like a tax return.

Above and beyond the federal government’s incentive, many states offer their own programs to encourage homeowners to invest in solar. These programs vary immensely from place to place, but generally they fall into the following types:

Solar rebates: These are offered as a flat amount or a percentage off your total equipment and installation costs—or, a variable incentive based on your system’s expected output.
Production-based credits: These are offered as a credit or cash incentive, and are usually distributed through your energy provider.
Sales tax exemptions: In some states, like Florida, homeowners are not required to pay any sales tax on solar equipment, which can represent a savings of thousands of dollars.
Property tax exemptions: Solar power can increase your home’s property taxes, but some states, like Arizona, have an exemption for these added taxes.

If you live in a state that’s relatively pro-solar, your energy provider may have followed suit, and offer their own independent rebate or loan programs to encourage their customers to install solar on their rooftops. For instance, Austin Energy in Austin, Texas, offers residents a per-watt capacity-based incentive that returns them up to $1.00 per watt, depending on the system’s total capacity. Find information about your city or state on our local solar guide page.

When combined, these kinds of incentives can significantly lower the total cost of solar, shaving off thousands of dollars and making it much more affordable for the average household.

These incentives will run out eventually. Remember when you used to get a tax credit for buying a hybrid car? So acting now is a great way to insure you can take full advantage of rebates and incentives locally and nationally!

Con: Most Incentive Programs Still Require You to Put Some Money Down

Incentive programs can definitely cut your system costs—if you have the money to purchase your system upfront. Unless you’re participating in a loan program, or have opted for a solar lease, you’ll have to buy your system in full before you can claim solar rebates and incentives—and even then, you may have to wait until after you’ve filed your taxes for those rebates to kick in.

blue house solar panels

Pro: Solar Energy Reduces Your Carbon Footprint

It’s 2016, and most of us are starting to think hard about what we can do to help the environment and make our homes more sustainable and green. And solar power makes a massive difference in your household’s fossil fuel consumption.

Remember that 10,900 kilowatt hours, the average American households used in 2014? That has the same greenhouse gas emissions as driving 18,359 miles, according to the EPA.

Every year, we generate the same amount of greenhouse gasses just living in our homes as you would if you drove across the US six and a half times.

The National Renewable Energy Laboratory estimates that most solar power—87 to 97 percent—generates no greenhouse gases at all, so if you chose to install it on your home, you would significantly reduce or even eliminate your home’s contribution to pollution.

That’s important, because greenhouse gases from carbon dioxide, which are generated when coal and oil are burned to create power and heat, are some of the biggest contributors to global warming. Scientists estimate that we must restrain global warming to no more than 2 degrees Celsius in the future in order to avoid catastrophic climate conditions.

When you install solar panels on your home, you are making an important and vital contribution to the environment, and protecting the future of the planet.

solar panels tall roof

Con: Power Generation May Be Unpredictable

While it’s true that solar power will reduce the amount of fossil fuels you use, no matter what, solar energy systems are currently not quite advanced enough to wean households entirely off carbon-based energy.

Because solar energy relies on the availability of the sun, the amount of energy you generate from day-to-day can fluctuate wildly, making it difficult to predict with much precision just what an impact your installation is having, both in terms of the environment, and on your utility bills.

That makes it hard to ballpark how large a system you’ll need if you hope to make up most of your energy consumption. If you purchase a solar energy system, you may find that you are still drawing some energy off the grid, which may come from less eco-friendly sources.

Pro: Solar Power Adds Value to Your Home

One of the lesser known benefits of solar power is that it’s actually been shown to boost property values, particularly in areas where electricity bills are high. Green features are increasingly popular among home buyers; in fact, research shows that homeowners may make up to 97 percent of their initial investment when they install solar panels on a home’s rooftop and then sell. That certainly makes solar panels a solid investment, especially when you consider that many other renovations only have a return rate of 60 or 70 percent. And with millennials entering the housing market, we are seeing a shift in interest towards eco-friendly features in homes.

Con: Panels May Not Be Aesthetically Appealing to All Homeowners

Most homeowners value a good deal over a home’s appearance, but unfortunately, not everyone likes the look of solar panels installed on a home—including homeowners’ associations. In some areas, they may pass restrictions that make solar panels off-limits, although most state and local governments have enacted solar easement laws that prevent these groups from keeping homeowners from installing solar panels. You can also look into installing solar shingles that blend in with your current roof while still powering your home.

Even if your right to install solar panels in your area is protected, that may not prevent neighbors or future buyers from turning their noses up at the site of them—although, with solar poised to grow enormously in the coming years, you can expect panels to become much more commonplace.

solar shingles

Pro: Investing in Solar Power Makes You a Home Innovator

While solar energy may not be right for everyone at the moment, most evidence points to its eventual takeover as the biggest source of US residential power. If you invest in solar early, you’ll not only be making your own individual impact on carbon emissions, you’ll also be helping to bring about an overall change to how we use energy in the home. True environmental progress will only happen when many people join in and decide to change their behavior, so when you install solar on your roof, you’ll be acting as an influence to those neighbors that surround you—a ripple effect that may make waves for years to come.

Find out the capacity of your roof and potential savings with solar with our solar calculator!

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