While the environmental benefits of investing in solar energy are well-documented, we don’t always talk about the economic benefits as much. That’s starting to change, though, especially since the cost of installing solar panels is more accessible than it’s ever been.
So can switching to solar actually help you save money? Absolutely, and, as it turns out, in more ways than one! Let’s answer just a few of the more frequently asked questions about solar power and savings.
Table of Contents
What are the Average Savings of Switching to Solar?
Solar savings are generally going to depend on a few major factors, including your location, your typical energy usage, and the pricing offered by the solar panel companies in your area. Some additional variants might include the size of the solar panel system you want, whether you opt to buy or rent your system, and local rates for electricity. It’s important to look into all of these different factors so you can get a better idea of how much, specifically, you could save on energy costs by investing in solar power.
Of course, there are metrics available for what’s called “avoided energy costs,” which is helpful information to have on hand, too. The average home’s annual energy consumption in the U.S. is 10,715 kilowatt hours (kWh) each year, or 892 kWh monthly. Multiplying that by the U.S. average rate for electricity – 0.14 per kwH – shows that the average American home’s electricity bill is about $125 per month.
So what does that mean in terms of energy usage and savings? Most American households could ultimately save nearly $1,500 each year on electric bills with a solar panel system that covers their entire energy usage.
Why Does Switching to Solar Help You Save Money?
Solar energy provides you savings primarily due to the avoided energy costs that were mentioned above. But what does that term really mean? It is essentially synonymous with net metering, and is defined by, according to the U.S. Solar Institute, the minimum amount utilities companies have to pay independent energy producers, which has to be equivalent to the costs those utilities avoid by not having to produce that power.
Basically, that means it’s how energy companies compensate people for using renewable energy. They do this because of how greatly it reduces the utilities’ load, which is the part that’s good news for the environment. It’s also, of course, great news for your wallet.
How Can Solar Power Benefit You in the Long Run?
It’s well-established that solar panels can help you save on your energy bills. This is certainly applicable over time: over the course of 20 years, that annual average adds up, saving you and your family tens of thousands of dollars. This can range from the low end of $10,000 to nearly $30,000 – although this will vary depending on where you live.
And this, of course, doesn’t even take into consideration the additional financial benefits that come with solar rebates and local incentives. Solar panel systems can ultimately pay for themselves with these factors added to the equation.
Can You Earn Money Through Solar Panels?
In a sense, you can definitely earn money through your solar panel system! One of the biggest ways this occurs is the value that installing a solar panel system adds to your home. But how many solar panels do you need to achieve this? Surprisingly, the wattage and size of your solar array doesn’t matter that much in this area. Rather, you want to make sure that your solar panel system is matching your typical energy needs. That’s really what adds value in the long run.
Also, as noted, solar rebates and tax credits can make a big difference. Local and state-based initiatives are going to vary based on where you live. But the federal tax credit is pretty straightforward: it is a dollar-for-dollar decrease in the amount of income tax you’ll owe. Keep in mind that this isn’t a refund. But if you install a solar array between 2020 and 2022, the government will reimburse you with a 26% tax credit. Meaning, you can actually claim 26% of your overall project costs on your federal tax return!
Making the Most of Your Solar Investment
As you can see, there are so many benefits that come with installing a solar panel system, and the financial benefits are just the beginning. If you’re ready to move forward on investing in solar energy, be sure to do some research on some of these points to find out how you can get an excellent return on that investment. While using renewable energy is its own reward, it’s encouraging to see all of the ways it can give back to you, too.
