Have you considered installing a solar power system on your home? Do you have concerns about the affordability of a home solar system? This article is the last in a three-part series that explores the financial aspects of installing home solar.
Installing a solar panel system reduces your electricity bills for roughly 30 years, but it has a significant upfront cost. Let’s explore ways to reduce the cost of a solar system by focusing on energy consumption.
Start With Energy Efficiency
Most solar installers size systems partially by examining household electricity use. Add up your historical usage by viewing a year of electricity bills. If you can reduce your home energy consumption, it reduces the size of the solar system. Begin by examining where your home is inefficient and take action.
Determine if your home still uses incandescent and halogen light bulbs and replace them with LED bulbs. Turn computers off when not in use and unplug idle electronics which could be sucking power. When some electronics are in standby mode, they can continuously consume a small amount of energy.
Air conditioners and heating systems can use a lot of power. In the summer, set the temperature as high as possible while still being comfortable and use window treatments to keep your home cooler naturally. In the winter, put on a sweater and keep the thermostat as low as possible.
If you have old, inefficient appliances, replace them with Energy Star-certified products. Some water heaters use electricity. Save energy by installing low-flow plumbing fixtures and use cold water instead of hot water when it’s a viable option.
Get Competitive Bids
When installing a solar system, shop around. Many small solar installers have lower prices than the bigger solar contractors. The price of a solar system also depends on the cost of the components. Ask for solar bids that include high-quality but lower priced solar panels and equipment. Including battery storage also adds a significant amount to the cost of a solar system and might not be worth the upfront cost.
Shop around when choosing an installer to find the best prices, warranties, and solar equipment available. EnergySage is an excellent free service that connects solar shoppers with the best solar installers in their area for customized solar estimates.
Take Advantage of the Federal Solar Tax Credit
There is a federal tax credit available that is applied to the total cost of installing a solar system, including labor and materials. The tax credit is a dollar-for-dollar reduction in income taxes, significantly reducing the total cost of the solar system. For example, in 2019, a $15,000 solar system has a 30 percent tax credit of $4,500.
However, starting in 2020, the federal solar tax credit for residential solar is being phased out. The same $15,000 solar system would receive a 26 percent tax credit of $3,900 in 2020, or a 22 percent tax credit of $3,300 in 2021. So, installing a solar system in 2019 while the tax credit is still available at 30 percent will result in a larger tax credit.
The federal tax credit will be eliminated for residential solar by 2022, so you still have a few years to get at least some federal tax credit if you can’t install solar in 2020. You may also qualify for local incentives, so search the DSIRE database to determine if there are any in your area.
Gas or electric? Which is the more eco-friendly home fuel option?