Benefits of solar panels
If you are like me, you may have wondered if it is worth the investment to install solar panels on your home or office building. I recently had them installed and it prompted me to share the process with you! Shontay Butler from Butler Holmes Design sat down with me for this open and informative discussion about the benefits of investing in Solar panels.
PLUS I'm giving away a FREE Google Nest Learning Thermostat to one lucky person! Keep reading for the deets!
Benefits of Going Solar
Clean, Affordable, Renewable energy
It harvests the natural power of the sun reducing the impact on the grid. We get LOTS of sun here in Texas. Our summers can be brutal, but all the better to get solar energy as it will still provide enough electricity to even last throughout the night. When we had the big snow storm here in Texas, I’m sure the homes who have solar energy were definitely more comfortable than those depending on the grid.
Federal Tax Credit
Now let me plug in my Disclaimer, because I don’t need y’all coming after me for misinformation: This is just for informational purposes only. You would still need to get formal advice regarding federal and local tax credits from a tax professional. Now, with that out the way, let me say that in the US, home and business owners can receive a tax credit. This is the Federal Solar Investment Tax Credit (ITC) that's equal to 26% of the qualified system costs. So if your system costs $20k, you can likely receive a tax credit for $5,200. This would need to be claimed on form 5695 (Residential Energy Tax Credit) or form 3468 (Investment Tax Credit) for Commercial buildings.
NOTE: To my understanding, For residences, the solar panels do not have to be on your main home. It could be for your income property as well.
No Energy Bill
This is probably the most favored selling point for homeowners. I know it sold me when my guys came to discuss it with my husband and I. Solar panels produce enough energy for a home and office to significantly reduce your energy bill and in most cases, resulting in a $0 energy bill monthly! You should see the savings immediately after having the panels installed and operating on it.
Immediate Increase in Home Value
TheNational Renewable Energy Laboratorycites a study in the Appraisal Journal which shows that home value increases$20 for every $1 reduction on annual utility bills. In other words, a solar energy system that saves $400 per year would add a value of $8,000 to your home.
My currently electric bill can get as high as $130/mo. Which is good considering I have an energy efficient home (thermal windows, some appliances run on gas, we comfortably leave our thermostat on 70 even during scorching summers). So at $130/mo = $1,560/yr. Multiply that by $20 for every dollar, my home value should have increased by over $31k for installing solar panels. Even if we see only a $10k - $15k increase (which is the norm), that’s still value, which is what I love about real estate and home investing.
Challenges of Going Solar
Getting Permit Approval from HOA
If you live in a home that is monitored by the Home Owner's Association, then you'll likely need to get approval from them before installation. Sin
ce this is considered an addition to the home, it will alter the existing roof. Plus, depending on the type of Solar System you get, you may need to install an additional Battery to charge the solar panels. In this case, you would have to consider zoning setbacks, which your installer can verify on your behalf.
Switching Power Distribution with our Co-Op
If you are like me and live in a community where power is distributed by a Co-Op, then you'll have to contact your Co-Op electric provider directly to ensure they come out and switch your electricity from their grid to your solar panels. This could take days or weeks. In our case, we will provide our own energy, but we feed our usage back to our Co-Op basically letting them know, we are providing our own power and aren't using any of theirs. At the end of the month, I should expect to get a bill from the Co-Op indicating that I owe $0, because I'm not using any of the power from their grid.
Subject to Credit Approval
If you are financing the equipment, you are subject to credit approval. For some, this won't be problem, but is something to be aware of if you aren't paying out-right for the purchase of your solar panels. Unfortunately, I am unaware of the minimal credit score you need to approve. That would be up to the solar energy company you choose to partner with.
As I mentioned previously, installing solar panels is considered an addition or renovation to your home, so some construction will happen. In our case, it was minimal. Just drilling into the roof and cutting around a few shingles to ensure the rods are properly secured. If you have to install a battery, additional construction may or may not be required. It took at least 4 hours to install our panels and is lots of noise during construction. You'll want to be sure to schedule install on a day that you're you’re not sleeping in or intending to be on lots of business calls. Furthermore, it would be wise to be home as much as possible during the install, just to ensure there are no issues with your property while installation is happening. And of course, so there is a homeowner your guys can speak to in the event of an issue or emergency.
Q: What are the cost to purchase and install solar panels?
A: The cost will vary based on the number of panels you need to produce enough energy for your home or office. In general, they average between $20k-$30k for a 10kw panel system.
Q: When will I break even on the purchase?
A: Let’s say the panel system cost $20k and you financed it. My awesome solar experts handed me a $1,000 check the day they installed, plus with the 26% tax credit, I can get an additional $5,200. If I apply that $6,200 back on my panels, I’m looking at a difference of $13,800. Now, I’m not paying an electric company because my panels are producing energy, that bill will be replaced by the bill to pay off the equipment instead. The equipment bill could be only $50/mo, but I’m going to still pay my usual $150/mo that I would have paid on my electric bill. By doing this I can expect to see it break even in 7-8 years. Even shorter if I double up payments to pay the equipment off sooner.
Keep in mind though that the panels already average an increase of $10k - $15k in home value once installed. So a $15k home value + a $5,200 tax credit, you’ve already broke even and earned a little back. Plus, you’ll be reaping the benefits of free or greatly reduced electricity for possibly the rest of your life. I see it as keeping $1,800/yr in my pocket that I can redirect to invest in Index Funds, Growth Stock Mutual Funds or 401k. So I consider it a wise investment.
Q: How much power does a solar system produce?
A: A 10kw solar system can produce between 11,000 – 15,000 kilowatt hours of electricity per year. My household uses roughly 1,100/mo (13,200/yr). So we got a 10kw system installed because it will produce enough power to cover the average amount of energy my
household uses. Even during the Texas winter storm in February, we used LESS energy because we have thermal windows and a gas burning fireplace and stove. Win win!
I'm not a big fan of debut, so it took a slight mental shift to justify my husband and I
financing the solar panels (as we didn't have $20k cash on hand). Since these panels will replace our electric bill, we are looking at paying off the equipment the same as paying on an electricity bill. In this instance, it isn't necessarily a debt, but rather the general cost of living. Part of the necessities we need to secure our four corners: Food, Shelter, Clothes, and Electricity.
If you are looking for ways to add value to your home or office building and receive immediate benefits, investing in solar panels may be a great option for you! With significantly reduced electricity bills (or no bill at all), tax credit, and an increase in value, you can't go wrong. Not only will you be using clean, renewable energy, but it will also be very affordable with little to no upfront cost. Research your local solar energy company for more details or you can reach out to me and I can share with you the company we used. I will disclose that if you mention my name, I will receive a nice $500 referral gift, but so will you when you refer your family and friends. Which, I'm sure you will as much as my colleague Shontay does. Check out the video above for more info on this topic and our in-depth conversation regarding the benefits of solar panels.
Now, for the moment you've been waiting for, the Google Nest Learning Thermostat GIVEAWAY! As an added incentive for you taking the time to read my blog post, and in the spirit of Summer, I figured it was time for a little gift giving. The Google Nest Learning Thermostat uses an algorithm to program certain temperatures for certain times of day - letting you maximize on energy savings and reduce the usage of your HVAC system. For instance, the thermostat can set to lower temperature when you leave and raise it back up when you're home dependant upon your behavior patterns and desired temperatures. It has an improved design, saves energy, works seamlessly with your smart home and is fairly easy to install. I'm giving one away and is a $249 value!
Simply like the Instagram post on IGTV over on my page @designwithronnie and comment about something related to solar energy, like "I want solar panels!" OR "I want that Thermostat!" and you'll be entered into the drawing. Follow @designwithronnie for additional entries.
Must be a resident of the US. This is not sponsored. Must enter by Tuesday, July 27, 2021 11:59p CST to be eligible. The winner will be announced via a post on Instagram on Wednesday, July 28th. Peace and blessings!