The Financials of Residential Solar Energy
When does it make sense financially to get solar panels on my home?
The straight answer is that it almost always makes sense to switch to solar. These days, solar panels are more efficient than ever, and if you’re spending more than $150 monthly on your electricity bill, it almost always makes sense for you to make the switch to a PV (photovoltaic) system in your home. It’s better now and in the long run to replace your utility bill with a lower monthly payment towards energy independence.
How much does a solar/PV system cost?
This depends on many things—the size of your home, the amount of energy you use, even what time of day you use it. On average (based on home size, location, and energy usage), the full cost of installation is around $50,000 to $60,000, but that’s before federal and state tax incentives. (More on that below.) But don’t rule out solar yet. Of course that seems like a jaw-dropping number, and has made many people decide solar isn’t for them. But that’s because they haven’t done the math of how much they actually spend on utilities already.
The real question you should be asking is this:
How much does NOT going solar cost?
The average cost of an electricity bill in Hawaii is a staggering , $347 a month—and rising. With the end of coal-powered electricity, the end of Russian oil imports, and the effects of inflation, you can expect that number to rise substantially in coming months and years. But let’s say that number magically stays the same. That means that even at full price, it would take you less than 15 years to break even for the full price of solar installation ($347 x 12 months x 15 years = $62,460). (But here’s the thing: you won’t pay full price.)
Really, you’re paying up front for the next 15 years of electricity—and your PV system should last much longer than that, continuing to provide energy for your home. Even if there were no tax incentives and you were paying full price for your solar installation, it would make sense to switch to solar. Not only does it make sense today, it locks in your energy costs as a hedge against inflation.
Tax credits mean you won’t pay full price for solar.
Right now there are substantial state and federal incentives for installing solar in your home. The current federal tax credit for solar installation covers 26% of the cost of installation and the state tax credit adds another 35%. That makes it much more affordable. There’s never been a better time to go solar. (As an added note—we are not tax advisors or attorneys and cannot give you tax advice. Always check with your tax expert on how to take advantage of tax credits.)
Can I finance my solar installation?
Yes! In fact, almost 95% of solar customers do finance their PV system. We have some excellent lending partners with very competitive rates to help you make your solar dreams a reality. You will save money immediately because your monthly payment will be less than your old utility bill was—and won’t fluctuate month to month based on your energy consumption. Ask us how to get a 25-year warranty on your PV system and batteries.
What happens if I sell my house after getting solar panels installed?
That’s often up to the seller to negotiate, but if you still are paying on your PV system, that’s often included in the purchase price of the home, so you can close out your loan. There are some instances where the loan can be transferred to the new owner’s name, but that will be up to you to decide and navigate at that point.
When will I break even?
With tax incentives, all together you can expect to save around half the quoted price, making your break-even point around 7-10 years from the time of installation. For some it takes a little longer or a little shorter, but that’s a pretty good target. And after that, your monthly bill drops to almost nothing, only going to cover the small amount you pull from the grid when your usage is high.
Does installing solar panels mean I get free energy?
Almost, but not quite. Your PV system will still be connected to the grid. When we size your system, we generally aim for a system that will cover your average energy usage. However, if you look at your utility statement, you’ll probably notice that some months you use more electricity and some months you use less energy. When your PV system is live, that means some days you’ll be using more electricity than your system is producing, meaning you’ll be pulling some electricity from the grid. You’ll still get a monthly HECO bill.
But some days you’ll use less than your system produces, and all that energy comes from the sun. Any extra you produce is stored in batteries for nighttime when the sun isn’t shining and energy use is typically higher.
How do I get started?
Give us a call or a text! We will come to your home and give you an estimate based on your energy needs. Reach out to a team member at 808-425-9566 to get started.
Looking for more information?
Read more about solar pricing and financing.