By Adam Petersen
•
03 Jan, 2022
Solar panels aren’t just good for the environment — they’re good for your wallet. Solar panels really will save you money in the long run, but everyone’s solar journey is unique and leads to different savings. Factors to consider when determining your savings include the amount of electricity you use, the size of your solar system, and the solar financing option you choose. Some savings, like a lower electric bill, will happen right away. Others take patience but are well worth the payoff. OFF SET YOUR ELECTRIC BILL If you want to know how much money you’ll save on your electric bill with solar, you first have to know how much electricity you use. Start by looking at your monthly electric bills. The amount of electricity used is listed in kilowatt-hours, or kWh. From here, you can do some math to figure out how much kWh you use in a year or on average per month. Using that information, online solar calculators can help you figure out how much kWh your solar system would have to run your home entirely on electricity produced by solar energy. Google’s Project Sunroof is another useful tool. With Project Sunroof, you can enter your address and your monthly electric bill to receive an estimate of electric bill savings over time. Now you need to know if your solar panel system can accomplish what you need. The amount of solar energy you’ll receive depends on how much sunlight you get, how many solar panels you have, and the kW size of your system. To get an idea of how much solar potential you’ll have, you can find your Sun Number score. If you have extra solar energy, it can be sold back to your power company through net metering. However, there is some bad news — Indiana is phasing out net metering over the span of several years. If you install solar after June 30, 2022, you’ll see less profit for your solar energy. Owing nothing at all on your electric bill isn’t a likely scenario, but the more energy you’re able to use from the sun, the lower your bill will be! CHOOSE A SOLAR FINANCING OPTION Solar panels are an investment. The cost to install solar panels depends on the size of the system, but before tax credits are applied, the average cost to install solar panels in Indiana is $16,000 to $33,000. The best solar financing option comes down to what is most realistic and doable for you, but buying a solar system outright or taking out a solar loan is typically going to lead to the biggest savings. Paying for your solar system all at once would amplify your savings in the long run, but it is a lot of money at once because it’s like paying for 25 years of electricity in advance. By paying upfront, you avoid paying interest on a loan and are eligible for tax credits and other incentives since you own the system. Solar loans are another good option when looking for maximum savings. With a solar loan, you borrow money to purchase and install the solar panels then pay it back over time with interest. With this option, you own your system outright, so you are eligible for tax credits. Another cost effective benefit of solar loans are that they can be rolled into other home improvement projects that require financing, such as installing a new roof. Monthly solar loan payments are often less than a typical energy bill, according to the U.S. Solar Energy Technologies Office , which means you start saving immediately. With a solar loan, you can save between 40-70% of your electricity bill over your solar panel’s lifetime, which is about 25 years. With solar leases and solar power purchase agreements (PPAs), that percentage is smaller, but you’ll still save an estimated 10-30% of your electricity bill. With a lease or solar PPA, you don’t own your solar panel system. TAKE ADVANTAGE OF TAX CREDITS The federal solar investment tax credit allows you to claim a credit on your federal income taxes for a percentage of the money you spent to install and use solar energy in that calendar year. The ITC was renewed by Congress in December 2020 and extended the credit to 26% of eligible costs through 2022 and 22% through 2023. That means if your system costs you $20,000 in 2022, you would receive a $5,200 credit on your taxes. Unused credits for solar panel systems will roll over to the next tax year if you don’t owe taxes in the calendar year you install it — as long as you’re still the owner of the system. Before claiming the federal solar tax credit, talk with an accountant or tax expert to make sure you’re eligible. RE-AMORTIZE YOUR SOLAR LOAN To utilize your tax credit money, consider re-amortizing your solar loan. If you use those savings to pay a lump sum toward your principal balance, your monthly payments will be lower going forward, which will help you pay off the loan quicker. Before you re-amortize your solar loan, find out if you only have the chance to re-amortize within a specific time frame and if there is a fee to do so. Talk with your financial advisor or a tax expert to find out what’s most beneficial for you. READY TO SAVE? If you’re considering getting a solar panel system installed, now is a great time. According to the Solar Energy Industries Association , the cost to install a solar system has declined more than 70% over the last decade. We can help you start saving. At Sun Warrior Solar, we offer free consultations and can provide you with a free energy report and solar quote. Fill out the contact form on our website so we can help you get started on your solar power journey.