Keller Williams Arizona Realty

Are Solar Panels Worth the Investment in 2020?

by Maureen Tatum 05/17/2020

Photo by Vivint Solar on Unsplash

There’s little doubt that we all want to do our part to protect the environment and solar energy gives us an opportunity to get off fossil fuels. In a perfect world, we would all promptly discard our furnaces and adorn our roofs with solar panels. But if we lift up our eyes for just a moment, only a small percentage of homes have taken the initiative.

That’s largely because we do not live in a perfect world and converting to solar must be cost-effective for the average homeowner. There are a variety of factors that everyday people can weigh to determine if solar panels are worth the investment in 2020.

Calculate Your Annual Electricity Usage & Cost

Understanding energy costs tends to be complicated in the U.S. According to the Energy Information Administration (EIA), the average monthly electric bill was $117.65 in 2018 with the average price per kWh coming in at 12.87 cents. But costs around the country can differ dramatically. The EIA’s 2018 regional calculations highlight precisely those differences.

  • New England: $129.49 at 20.60 cents per kWh
  • Middle Atlantic: $113.39 at 15.97 cents per kWh
  • East North Central: $106.03 at 13.25 cents per kWh
  • West North Central: $115.68 at 12 cents per kWh
  • South Atlantic: $130.51 at 11.70 cents per kWh
  • East South Central: $137.80 at 11.14 cents per kWh
  • West South Central: $127.42 at 10.77 cents per kWh
  • Mountain: $101.55 at 11.94 cents per kWh
  • Pacific Contiguous: $100.93 at 15.56 cents per kWh
  • Pacific Noncontiguous: $151.22 at 28.03 cents per kWh
  • As you can see, energy costs around the nation complicate decision-making. Places such as New England have far fewer sunny days to power systems yet struggle with the second-highest utility bills. In the Noncontiguous Pacific category, Hawaii leads the nation in high energy bills at $168.13 per month. Given the high number of sunny days the islands enjoy, solar panels would seem to be a viable option in terms of savings and environmental protection.

    Solar Panel Tax Credits are Available

    Although much of the conversation revolves around the “average” cost of a system and the range of kWh savings, it’s safe to say that all solar is local. Deciding on a system in your state will be a matter of calculating how much energy it can generate based on sunlight and how many panels you will need.

    The good news is that the federal government continues to offer the investment tax credit (ITC), which allows homeowners to deduct up to 26 percent of installation costs. Some states and local municipalities may offer additional benefits. But based on the ITC, the average 2 kW system is expected to be discounted from $5,920 to $4,381. Higher producing solar systems such as a 10 kW system enjoy reductions from $29,600 to $21,904. Still, all this data doesn’t answer the question of whether solar panels are cost-effective in 2020.

    How to Know if Solar Panels Fit into Your Budget

    Doing “solar math” involves figuring out your average monthly electricity cost. Take into consideration how much that utility bill has increased during the previous 10-20 years. Now calculate the size of the system needed to power your home. If you live in low-sun northern states, you will likely need a large system. The next step is to look at your investment.

    Most homeowners finance solar systems with a common goal of the monthly payment being equal or less than your current utility bill. If you can power the home and get even close to current grid costs, it’s entirely likely this is a prudent move. As you can see from the past decade or two of electric bills, they keep increasing. The sun doesn’t charge extra year-over-year.

    About the Author
    Author

    Maureen Tatum

    I pride myself in providing exceptional customer service to my clients by responding back to them quickly and addressing their own unique needs. I have been involved in real estate in the Phoenix area for over 25 years and I look forward to helping you sell your home or finding you a beautiful new one. Unlike other realtors, I am also a licensed Real Estate Appraiser, which gives me a unique in-depth background and a more complete understanding of the industry. My goal is to make your transaction as seamless as possible, while minimizing any surprises along the way. I would love to hear from you, please call or text me at 602-750-8711.