How to overcome the initial cost of solar panels
Residential solar power continues to grow in appeal and popularity. According to a new study from Rocket Homes, 74.8% of non-solar households consider upfront cost to be the biggest barrier.
Despite concerns about cost, 66.5% of households without solar panels are interested in getting one. When asked what would make solar power more accessible to homeowners, 61.2% of homeowners without solar power said a lower upfront cost was the best way to increase affordability.
Save with tax credits
On average, residential solar energy costs around $17,000 if the house in question does not need a new roof or a solar system of more than 6 kWh. Do you want to install a solar system in your home? The following options are currently available to help owners reduce the initial cost.
Local tax exemptions
In addition to state-level tax credits, some states also offer solar sales and property tax exemptions. Property tax exemptions exclude the value of solar panels from being added to the value of a property. Sales tax exemptions exempt homeowners who obtain solar from state-level sales tax.
State tax credit
Many states offer incentives, including but not limited to Arizona, Wisconsin, and California. These incentives can range from New York’s additional 25% tax credit to Illinois’ $0 upfront cost if homeowners fall into the low-income bracket. Also, an additional state tax credit will not take away any federal tax credits from homeowners.
Federal tax credit
Currently, homeowners can take advantage of a 26% federal solar tax credit. In 2022, the 26% solar tax credit was to be reduced to 22%, but has been extended for one year. This 26% tax credit will be reduced to 22% in 2023 and 0% for residential solar power in 2024. However, to use the federal solar tax credit, homeowners must pay taxes during the year. year in which the solar installation takes place. For homeowners who intend to acquire solar soon and want to take advantage of the federal tax credit, find out how it works and how to apply as soon as possible.
Making Solar Payments Fit Your Budget
With rising electric rates and blackouts plaguing many parts of America, solar power can provide a sense of financial and physical security if individuals have a way to overcome the upfront costs. Solar loans and leasing are two options for integrating solar panels into your monthly budget. Both remove the upfront cost and replace it with monthly payments. The pros and cons of each depend on your lifestyle and the level of security you have with solar panels, like choosing between financing or leasing a car.
Solar financing is another way to overcome the upfront cost hurdle. In the same way that financing allows Americans to buy a house or a car, solar financing can help homeowners acquire solar panels at a lower initial cost. The cost can even be rolled into a 30-year mortgage, if applicable. However, solar loans have interest rates that can vary depending on market interest rates and homeowner qualifications.
Rental of solar panels
Like solar financing, renting solar panels is another way to get rid of the high upfront cost. But unlike solar financing, homeowners will never own the solar panels. The positive side of this arrangement is that owners can rent for as little as nothing. In addition, the leasing company will take care of the necessary maintenance and monitoring of the solar panels. However, this means that a homeowner will not qualify for tax credits or exemptions.
Do solar panels have value beyond energy?
The value that residential solar power can provide homeowners depends on a variety of factors beyond just the initial cost. This includes energy consumption habits, local utility provider, estimated solar power generation, etc. But what about outside of energy?
According to data from the Rocket Homes survey, solar home owners believe it adds a median $12,500 to the value of their home. On top of that, house listing data from Rocket Homes indicates that homes with solar panels are 24.7% more likely to sell above asking prices and spend 13.3% less time on the market. .
In deregulated energy markets like California and Texas, where electricity prices are high and reliability can vary, solar homes offer clear value to homeowners and buyers. On May 7, 2022, California warned homeowners that there will likely be a power shortage during peak hours (usually mornings and late afternoons) equal to 1.3 million homes. Homes with solar and battery storage are even more valuable in this type of climate where decreasing reliability can leave homeowners in dangerous situations without access to electricity.
About the Author
Ann Basnett is a freelance writer who earned a BA in Journalism. Its focus areas include environmental technologies, electric vehicles and green home solutions. She is passionate about advances in renewable energy and consumer applications.