he cost of installing a photovoltaic system can be a sticking point for some, but the savings mitigate the expense. Basically, getting PV modules on your rooftop should be seen as a long-term strategic investment, as you can reduce your monthly electricity bill drastically.
But as with any other investment, it involves some degree of risk – the outcomes might be a little different from what you expected. So let’s try to figure out how big the risks are in the case of solar panels investment and whether it’s worth taking.
Incentives to compensate for the investment solar owners make
Fortunately, federal and state governments are committed to providing support for investing in renewables, which results in numerous attractive incentives.
Investment tax credit: what benefits for the investment solar ITS has to offer
The federal investment solar tax credit, otherwise known as ITC, allows you to deduct 30% of the cost of installing a PV system from your federal taxes. The ITC has been in operation since 2006 and has contributed significantly to solar uptake over these years. The current investment tax credit rate of 30% will be available until 2032, after which it will decrease to 26% in 2033 and 22% in 2034. So don't lose time, learn more about the investment solar tax credit and how you can apply for it to save on electric bills.
State-level incentives can make your purchase even more affordable
Some states offer local tax credits similar to the ITC. Combined with the ITC, these incentives can partly compensate for the investment solar shoppers make. It is to be noted that support measures aren’t limited to tax incentives. Many states offer additional programs such as net metering and solar renewable energy credits (SRECs), which enable you to increase your ROI (return on investment) by earning the equivalent of cash back on surplus power your PV system produces.
Net metering is an electric billing tool that uses the grid to store surplus electricity produced by your PV system. For example, on a cloudy day when your panels cannot generate enough electricity, the grid will provide your home with energy and count it against the credits you have banked over time. As a result, you will only be billed for your “net” electricity usage.
SRECs are another incentive that helps speed up the return on your investment. SRECs are renewable energy certificates that owners of PV systems can sell to utilities and earn some solar money. In some states, any company that supplies electricity is obligated to buy SRECs under state law. As a homeowner, you can earn one SREC for every megawatt-hour (MWh) of electricity your PV system produces - and then turn it into solar money.
Investing in solar panels with federal grant programs
Created by the Federal Housing Administration, the PowerSaver grant program helps householders make cost-saving home improvements, including installing PV systems. Homeowners can borrow up to $25,000 and have as long as 20 years to make any cost-effective improvements approved by FHA. Applicants must have a minimum credit score of 660 and be prepared to pay a fixed interest rate of five to 10 percent.
How long will it take for your solar panels investment to pay off?
Most householders in the United States can expect their PV panels to pay for themselves in between 9 and 12 years, depending on, for example, the amount of sunshine in their area. However, the climate is not a crucial factor – the payback period for this investment mostly depends on the cost of electricity replaced by solar power and the incentives available.
Cons of investing in PV panels: what risks and challenges one may encounter
Despite all the advantages of solar panels investment, it still comes with a bit of risk. Let’s take a look at some of the possible constraints.
- Inconsistent sunlight: the sun only shines during the day, resulting in volatile output. Therefore, a net metering program or battery storage is essential.
- Maintenance and repairs: PV modules are durable but aren’t immune to failure as any other electrical equipment. So you’ll have to deal with regular inspections and possible malfunctions.
- Accurate calculations are needed: when installing a PV system, many things have to be taken into account. For example, improper system sizing or even the wrong module tilt can result in much lower savings.
Pros of investing in a PV system: why is it worth it?
Investing in solar panels can benefit you in numerous ways. Here are the major ones:
- Sustainability: we will never run out of sunlight, so solar power is permanently available.
- Environmental impact: compared to fossil fuels, the carbon footprint of panels is much lower.
- Energy independence: you can become less reliant on the local utility grid or be entirely independent of it. Thus, grid outages on spikes in electricity prices won’t be a problem anymore.
- High savings: PV investment offers a solid yield. Generally, you can save up to $30,000 over the lifetime of a PV system.
Despite what a risky investment solar PV may seem, the pros outweigh the cons
To conclude, a PV system is definitely a purchase worth considering. While the upfront costs might look overwhelming, your investment will most likely reap huge returns. So learn more about the investment opportunities available in your area and give thought to fitting your some with PV modules.