Many people do not realize that in 1839, a French physicist discovered that electricity could be generated with sunlight. Up until year 2000, most people’s exposure to solar was power calculators and digital wrist watches.
Today, more than a million homeowners have installed solar panels and for many good reasons too. Most homeowners in California are going solar because they simply want to save money. Here are the top financial benefits that a homeowner can look forward to after installing solar:
- Lower Electricity Bill – This is an instant benefit! Once your solar system is installed, your meter is programmed to reverse and spin backwards as your solar system generates more energy than your home is using. This instantly reduces your electric bill and saves you the cash you would otherwise pay to your utility. On average, you can expect 30% savings on your electric bill by going solar and locking in the rate.
- 30% Federal Tax Credit – This is one of the biggest financial benefits, assuming you can benefit from the federal tax credit. Federal Tax Credit is a dollar for dollar refund you will get from the government for going solar and is set to expire in 2020. For example, if you purchased a $30,000 solar system, you will get $9,000 back assuming you paid in $9,000 in Federal taxes. You can even roll over that amount for up to 5 years, of you can’t take in the credit all in one year. Essentially, it’s like getting 30% off your solar system.
- Return on Investment – A homeowner with a solar system will often get a return on their investment greater than what they paid for. Average payback on a solar system in California is about 5 years. That means that within 5 years, you have saved enough money on electricity to pay for the entire system itself. In addition, you have to consider that the price of electricity from your utility provider increases every year. So as rates rise, your savings rise and your payback lowers. California is particularly notorious for its high energy costs. According to the US Energy Information Administration, in the last 6 years electricity prices in California increased by 24%, which is almost 5 times the US average. Homeowners with solar are generally able to “lock-in” their rates and remain insulated against future increases by the utility companies.
- Property Resale Value Increases – Smart home buyers are willing to pay more for a home with a solar system because they understand the benefits more than ever before. The actual resale value will vary with the neighborhood and other economic factors, but a home with a guaranteed lower electricity bill will sell for a higher price. In California, a 5kW solar system will add an average of $29,555 to your home value which is often higher than the cost of the solar system itself. Other factors such as the amount of electricity the solar system generates, technology used, and warranties are other critical factors that that can help increase the resale value.
As discussed, going solar has incredible financial benefits. In the past, we did not have an opportunity to choose our utility provider. With solar we can choose our electricity provider and save money while going green.