Everyone has their own reasons for wanting to install solar panels on their home. There is no one right reason to go solar, and your reasons may even change over time. Many people first become interested in solar because of the environmental benefits of creating electricity from the unlimited supply of free sunrays. Others appreciate the independence gained from utility companies and their rising energy rates. There is also the benefit of being a trendsetter in your neighborhood. Home solar panels are a great neighborhood conversation piece, and many homeowners are inspired to go solar themselves after seeing panels on their neighbor’s roof.
Even with all these other reasons to go solar, there is one key question you’ll want answered: are solar panels worth it financially? Solar won’t be right for everyone (Is your home hemmed in by 60-foot tall cottonwood trees?), but for many homeowners, the short answer to this question is yes. Solar panels are a home improvement project that pay for themselves over time, add value to your home, and often can be a better long-term investment than some traditional investment opportunities.
The Home Improvement Project that Pays You Back
When you install solar panels on your home, those panels will start capturing energy from the sun to create electricity. These little power producers will offset your usual electric usage, reducing your monthly electricity bill as soon as the system is on. Over time, the money you save on your electric bill provides a return on the money invested to install solar panels on your home. How many other home improvement projects will actually pay for themselves? Not many. That granite countertop, though very beautiful, sure won’t!
On average, homes on the front range in Colorado will see a payback period of 10-14 years. For some people it’s sooner, others later – it depends on your energy usage and utility rates. One interesting development is the increasing popularity of electric cars. People who go solar now and then add an electric car to their household later are likely to see a faster payback; they are now running their car off their roof with low-cost electricity instead of paying for gasoline.
You’ll see more financial gain in a shorter amount of time if your household has high electricity use and higher utility rates. If you consume less electricity, you will still see long-term savings and a return on your investment over time. Either way, a solar system is also a hedge against the inevitable increases in electricity rates over time, as the panels on your home will insulate you from these rising costs.
Solar & Home Values
As solar panels proliferate across more rooftops, there has been plenty of deliberation and debate about the impact solar panels have on home values. Luckily, answers came in the form of a 2015 study sponsored by the Department of Energy and conducted by the Lawrence Berkeley National Laboratory. The study looked at data from the sale of over 22,000 homes across eight states between 2002 and 2013. Of those homes, roughly 4,000 had solar panels.
The research confirmed what past research had shown: home buyers are willing to pay more for houses with solar panels. On average, home buyers were willing to pay an additional $15,000 for a home featuring a 3.6 kW solar system. This was true across the eight states studied, their unique housing and solar markets, and different home types. This is great news for anyone who’s considering solar but hesitating because they’re not sure how long they’ll be in their home!
So, are solar panels worth it when it comes to home value? Let this study ease your worries if you think you might sell your home sooner than later. You can still earn value from solar panels when you go to sell, and in the meantime, you’ll enjoy lower monthly energy bills. (One note for transparency: leased systems are a whole different ballgame because they are a unique form of solar financing. For the most part we recommend against leasing, and Namasté Solar does not lease solar panels so you get the full value of solar panels for your home.)
Solar Compared to Other Investments
When people say that solar is an investment in the future, they are often talking about the environmental benefits of clean energy. Home solar is also a smart investment opportunity for your financial future. Solar panel prices have dropped dramatically since 2010, and solar can now compete as a long-term investment option.
Consider that a typical payback period of around 12 years is roughly the equivalent of an 8.3% return on investment. This compares favorably to returns on other common investments like intermediate term bond funds, which at the time of this writing are yielding around 2.4%*, or even the S&P 500 index, which is currently at all-time highs (not an easy time to put dollars in!) and has a trailing 10-year return of roughly 7.4%*. When you combine all of this with the fact that solar protects you from rising electric utility rates and increases the value of your home, the case for solar as a smart investment looks even better.
Are Solar Panels Worth It?
In the end, you’ll have your own combination of reasons for going solar that resonate and make sense for you. There are many benefits to choose from and no right reason to choose solar for your home and your family.
But are solar panels worth it financially? Installing a home solar system can add value to your home, you can see a return on investment better than the stock market, and your system will pay for itself in the end. Homeowners with solar also enjoy the benefits of clean energy, energy independence, and solar bragging rights. So, yes. We, and our many happy customers, think solar is worth it for many reasons. Learn how much you could save with solar to decide for yourself.
*If we had consulted with lawyers, we’re sure they would have wanted us to tell you that we are solar advisors, not financial advisors. We’re pretty good with numbers, but you should still check with your financial advisor when dealing with your investment portfolio.