Add It Up: Solar Energy Can Save You Lots
The environmental benefits of going solar are obvious, and they’re important. Instead of buying coal, nuclear, or oil for energy, you’re harnessing the power of the sun and reducing your carbon footprint. It’s equivalent to planting three-quarters of an acre of trees each year.
But, let’s face it – if you’re going to make the energy switch, it’s got to work for your wallet, too. And it will.
According to Rhone Resch, president of the Solar Energy Industry Association, solar energy is the fastest growing industry in America. Resch cited a recent report that U.S. solar revenue grew from $3.7 billion to more than $6 billion this past year — an impressive growth rate of 67 percent. Compare that to the growth rate of less than 3 percent for the rest of the economy, and it’s plain to see that solar energy is working in our favor.
Let’s consider some specific financial incentives. Every homeowner who goes solar receives a 30 percent federal tax credit based on the gross cost of the installation. The majority of homeowners benefit from net metering as well. Simply put, if your solar system produces more energy than your home consumes, your meter will spin backward, sending excess electricity back into the grid. That translates into a credit on your bill.
In most areas, going solar is an attractive investment. And if you live in a place like my hometown of Long Island, you’ll find it even more appealing. The utility rate in my area is among the highest in the country. If that’s the case for you, any measures you can take to reduce your consumption from your local energy provider is a plus. My region also scores very well on the solar rating scale, meaning the levels are high enough for good solar productivity. (Contact us to check the levels in your area and get a better idea of what you can expect from a home solar system, output-wise.)
Let’s use a hypothetical Long Island home as an example of how going solar adds up to saving. In New York State, homeowners get a tax credit of 25 percent based on the net cost of a solar system, up to a max of $5,000. New Yorkers can also get a sales tax exemption and a 15-year property tax exemption. And in Long Island, you can bank on a rebate of $1.75 per watt DC, up to $17,500, offered by the Long Island Power Authority’s (LIPA) Solar Pioneer Program.
Here comes the number crunching. Assume your average monthly electrical bill runs approximately $200. A 4,000-watt DC system, which is a mid-size range solar system, costs approximately $25,600. (I recently bought my system for much less, but I’ll keep the numbers conservative for this example.) Once you deduct all the incentives, rebates, and tax credits I mentioned above, you’re left with a net cost of $7,500.
A system this size will reduce your bills by 40 percent, leaving you with an annual savings of $1,650 per year, or $41,000 over the life of the system. In simple mathematical terms, if you were to invest the $7,500, you would recoup your full investment in a matter of just over four years. Should you choose to move before you recover your investment, your property value will have increased by close to $20,000, leaving you with zero risk.
The fact is, the minute the panels are turned on, they start putting money back into your pocket. You will see a return from day one! Note: If the $7,500 investment still seems steep, consider a financing program or third-party leasing option so you can go solar without any upfront cost.
Though my example was New York-specific, I can run the numbers no matter where you live. Switching to solar saves money – period. Get your own customized solar savings report now.