Anatomy of Solar Savings: What You’ll Save Now, Soon, and Later
As your solar home improvement project begins to lift off the ground and you’re mired in the details, you’re probably thinking about the solar savings in your future. And while you likely have an idea of what those savings look like, the many ways you’ll be saving might actually surprise you. In fact, there might be some aspects you hadn’t considered. And that’s okay. The term solar savings is thrown around quite loosely so it’s important to have a good—and grounded—notion of what is meant by the phrase. From immediate and short term savings to longer-term savings in the months and years ahead, here is a clear breakdown of what you’ve just earned yourself and your family.
Immediate Solar Savings
The cost of solar installation has dropped more than 70 percent since 2010, according to data from Solar Energy Industries Association. In response, therefore, contractors have stepped up their game to compete in an increasingly saturated arena. Generally speaking, that means you will be quoted lower than in years past and can negotiate further.
Negotiate with your contractor
Aside from a lower price, you can also save right now by getting more immediate benefits out of the contractor’s team. Here’s what to consider negotiating for in that regard:
- Push for details about solar energy and your utility bill. It’s in your contractor’s interest to increase your solar energy output and maximize your home’s value in the process. The initial, ongoing, and continued success of their installation is paramount to their near and future prospects.
- Ask your solar contractor to handle the bureaucracy. Be sure to ask precisely what forms, permits, and other filings are required and who is expected to handle them during your home improvement project. It’s okay to expect the contractor to handle the bulk of the work.
- Get clarity on the warranty, and negotiate for more. Warranties will impact your quoted cost. Most installers offer manufacturer’s warranties that protect you from faulty equipment. Some might offer additional guarantees for the installation, as well, covering potential damage to your house.
Take advantage of seasonal and promotional discounts
Construction slows in the winter, but contractors still have a business to operate. To entice homeowners, many contractors will offer discounts and specials to attract business during the colder months. In our recent interviews, 47 percent of homeowners told Modernize they had taken advantage of timely promotions or savings offers to offset the costs of solar panel installations.
Short-Term Solar Savings
Existing financial incentives come in many shapes and sizes. Some of them will get you a cut off the cost of the installation and result in immediate solar savings. More commonly, tax incentives and other programs will provide incremental savings.
Chief among the incentives is the Residential Renewable Energy Tax Credit, which applies to up to 30 percent of your installation (that’s hard and soft costs combined). 2019 is the last year to get the most of this incentive since it’s going to be decreasing in 2020. That makes 2019 the best year for government rebates, incentives, and exemptions—don’t wait. Regardless, here’s what that decrease looks like:
- 30% for systems placed in service by Dec. 31, 2019
- 26% for systems placed in service after Dec. 31, 2019 and before Jan. 1, 2021
- 22% for systems placed in service after Dec. 31, 2020 and before Jan. 1, 2022
Long-Term Solar Savings
In a March 2021 Modernize survey, 40 percent of homeowners said they are actively pursuing home improvement projects to save money on their utility and electric bills. The biggest portion of savings you can expect from your solar panel system will be in the long term. And those solar savings will come in many different forms.
Lower Utility Bills
There is no one-size-fits-all to describe or break down an electric bill with solar panels—it depends on many factors. The best way to get as close an estimate as possible is through the reliable, local, and expert contractor installing solar panels for your home. You can also get a state-by-state overview of savings below:
Specifics aside, you can get a general idea of what those savings look like over many years:
“A year and a half ago, Melanie and John Maiorca’s electric bill topped $200 every month. Last month, they paid [the local utility company] a whopping $11,” Newsday reported about one couple’s journey. And while that amount was uncommon (even newsworthy, in fact), average savings were sizable. The Maiorcas told Newsday their post-solar-panels electricity bill is “$80 less a month.”
Higher Home Value
According to research from the National Renewable Energy Laboratory, solar panels can add an average of $18,324 to the value of a medium-sized home. In addition, they found that homes with solar panels sell about 20 percent faster, on average. The best way to get a personalized valuation on that potential increase is with the advice of a local and experienced contractor. Here are some factors that help determine that increased value:
- Your home’s location. Installations in active solar markets typically yield higher returns than those in less developed markets.
- The size of your solar installation. Property value increases are directly proportional to the capacity (and quality) of solar panels installed.
- Owning versus leasing your solar panel system. Choosing to own the solar panels you install on your home, versus leasing them, is the best option to increase the value of your home. It also means a higher upfront cost.
A solar panel home improvement project is an investment that can save your money in the immediate, short, and long term. If you’re interested in reaping the financial and environmental benefits of a solar-powered home, our tools can help you get started.