As energy costs continue to rise, the number of people who are turning to solar energy continues to increase dramatically. And if you’re considering installing solar panels on your home, there are several things that you should first know about. That’s because the actual cost of solar installation, and the amount of money that you’re going to save, is going to depend on a few important factors.
So, how much do solar panels save on electricity bills? There isn’t one single answer that can be used for everyone. However, on average, it can cost between $15,000 and $25,000 to purchase and install a solar system.
Before you’re ready to spend that kind of money, you should first learn about how your location, electricity bill, and government incentives can impact your finances over time. So continue reading and we’ll walk you through the steps you can take to figure out if and how much you could save on solar energy.
Review Your Electricity Bill
Solar panels create their own power. This can significantly offset your monthly electric bill.
In fact, it might even get rid of it altogether. The more you spend on your bill, the more likely you’re going to benefit from moving over to solar.
With that said, you should be aware that electricity usage and rates – the main expenses on your statement – tend to fluctuate. If the costs of electricity are volatile, then so are the amount of savings that you can generate. And if your consumption of energy changes, then the amount that you can save can also change.
The national monthly average price of electricity was about thirteen cents per kilowatt-hour, according to a June 2020 study from the U.S. Energy Information Administration.
Evaluate Your Exposure to Sunlight
The more exposure to the sun you have, the more energy your solar system can produce. This leads to a greater potential to save money with solar energy. Certain states, like California and Colorado, get more sunlight on average than other states.
Your house’s orientation toward the sun, the type of roof, and the amount of shade are also going to affect the amount of power that your solar panels can generate. You can use a Solar-Estimate calculator to estimate how efficient solar panels in your area will be. Simply input your address, your utility provider, and the average cost of your monthly electricity bill.
Estimate Residential Solar Panel Costs
The bulk of your costs with solar panels are going to come from the purchasing of the actual panels and their installation. You can often make up for the upfront costs by calculating the long-term costs.
Many solar systems don’t demand that much maintenance. These systems are built to last for decades and should continue to generate consistent amounts of energy.
When you’re coming up with the total price, you should consider how much electricity you consume regularly. Your usage amount is going to be listed on your monthly power bill. You also need to think about what size system is going to produce the amount of energy that you need.
Some online tools, like the Solar-Estimate calculator, can estimate the system size for you.
An average residential 5kW size system, with installation, will likely cost you between $3 and $5 per watt. This can result in a system costing between $15,000 and $25,000. It should be noted that these costs come in before any incentives and tax credits are considered.
If you know what your current electricity usage is, then you can calculate how much money you will need to have in order to afford solar panels.
You should then shop for solar panels as you would for other big-ticket items. Get quotes from different solar panel companies to find the best provider for your situation.
Look for Incentives
When researching the savings of solar panels, one thing that you’re going to hear a lot about is the incentives. The government gives big incentives to homeowners when they install solar panels as a source of alternative energy.
For one example, taxpayers can claim 26% of installation expenses for systems that are installed by the end of 2020 on their federal taxes. That number shrinks to 22% in 2021 and expires after that.
This federal tax benefit is nonrefundable. That means that you won’t be seeing those savings in the form of a tax refund. Instead, you’ll be able to reduce the amount of money that you owe in taxes.
You may also be able to receive additional credits depending on where you live. Some such credits might include property tax exemptions, expedited permits, cashback, and waived fees.
In certain states, residents who install solar panels can actually sell their excess energy to the local power companies. Make sure to check out the database of state incentives for renewables and efficiency to see what credits are available in your state.
So, How Much Do Solar Panels Save on Electricity Bills?
As we can see from the article above, there is no one answer to the question: how much do solar panels save on electricity bills?
However, investing in solar energy for your home can generate significant savings. The important thing is to review how much you are currently spending on electricity and then calculate how much you stand to save based on the points described above.
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