Will solar really save me money?
Yes, assuming your solar panels are placed where the sun can reach them. However, the question of savings has as much to do with your electrical company as the actual solar system. Let’s look at the ways solar saves money so you’ll understand our proposals as well as any others you receive.
Solar savings part 1: Electric Bill
When was the last time you looked closely at your electrical bill? Possibly never? When evaluating solar for a home, we have to look closely. There are key aspects we need to consider.
- Energy usage is how much energy you use in total, stated in kwh (kilowatt hours). Calculating this savings is simple. We model how much the panels will produce on average and compare with your current bill.
- Demand charges measure the highest amount of power you used during the month during a single 15 minute time span. This is stated in kw (kilowatts). Unless we know when your demand is highest, modeling this savings is a challenge. Reducing demand charges can be done through batteries, smart controls, or being aware of when you use your heaviest loads.
- Time of use plans charge different rates during different times of the day, typically from 2-6pm when demand is high. If possible the design should be adjusted to produce more power during those times. We can also incorporate batteries to supply power when electricity is the most expensive.
- Load Factor tracks spikes in usage. Most electric companies avoid this, but customers of IREA will be affected by this charge, which can increase after solar. The best way to minimize this charge is by adding batteries.
Each of these types of charges can impact the system design. This is why we do not provide a quote without actual electrical usage. If another sales person is trying to do so, this is a red flag. If they’re asking you to sign anything without having analyzed your usage, please don’t sign. It will not be in your best interest.
Watch the video below to understand how solar panels produce power.
Solar savings part 2: Tax credits and other incentives
Tax credits and incentives vary by year and location. The largest incentive by far is the federal tax credit which is 26% of the system cost in 2020. It is set to drop to 22% in 2021.
You may see this mistakenly discussed as a tax rebate or refund, but that isn’t completely true. For most people it will be a refund, but we recommend you discuss the potential with your tax accountant or a CPA. If you don’t have one we can refer you to someone who can help.
If you don’t file taxes, or don’t have much taxable income, then this might not help you.
If you don’t have enough taxable income, you might only be able to claim part of the credit the first year. The good news is that you can roll over what you didn’t use into the next year. Again, we recommend contacting a tax professional who is well versed in this part of the tax code.
Solar savings part 3: Resale value
Resale is a fickle thing, made more complicated by the different ways to go solar. Until recently, most homeowners leased their solar panels due to the high cost of ownership. Unfortunately, when they decide to sell the home, the lease needs to be transferred as well. The process should be simple, but rarely is. This has given solar a bad reputation within the real estate world. It’s rare to see an increase in home value with a leased system in Colorado.
We don’t offer leases because we want you to save as much as possible. When selling a home with a purchased system there are measurable savings to show the future buyer. When buyers see the value, it’s easy to justify the increased sale price.
In Colorado, the current estimate is a 3-4% home value increase, easily covering the majority of the system cost.
If you have no plans to move, that’s not a problem. Your system is designed to last for decades and will more than pay for itself through electric bill savings, in most cases.
Solar savings part 4: Electric and hybrid vehicles
You may not have an electric or hybrid vehicle today, but chances are you will in the next 10-15 years. Powering your car with the solar power generated on your roof means you’re saving on your electric bill and reducing your trips to the gas station.
As your gas appliances wear out, consider replacing them with electric ones and adding solar panels as necessary. This will extend your savings further.
Ready to learn more?
I hope you understand why it’s important to know more about your specific situation before we can tell you whether solar is the right decision for you or not.
If you’re ready, either call your electric company or login to your account online and retrieve your usage as well as the name of the rate you are on. Then click the quick quote button at the top of the page. You can also use the contact us button or reply here with your questions.
Thanks for reading!