Are Solar Panels Worth It: What Makes Solar Panels Worth It and Are Solar Panels Worth the Investment

s our world moves towards a greener future, questions about what makes solar panels worth it are being asked increasingly often. From being a somewhat niche technology just a few decades ago, solar energy is now at the forefront of renewable energy conversations.

But are solar panels worth it, really? Join us on our journey and find out.

Solar Energy and the Increased Clean Energy Worth

Many countries have put a lot of effort into making solar the norm. The United States alone has over 140GW of solar power capacity, while globally, the capacity stands at an impressive 1TW. With falling costs and increasing efficiency, solar is transforming into an increasingly viable energy source for millions of people.

‍How Has Solar Energy Grown So Fast?

There are main two main factors that contributed to the rapid growth of the renewable energy sector. The first one includes technological advancements and, consequently, declining costs. Government initiatives and increased awareness of the environment constitute the second group of factors that motivate homeowners and business owners to turn to solar as a clean energy source.

Averages: Are PV Prices Making Solar Panels Worth It

The cost of solar panels is a critical factor for anyone considering whether they should get solar or not. The average price for residential solar panels in the US is approximately $3.21 per watt, while commercial installations are significantly cheaper due to economies of scale, averaging around $1.66 per watt.

Leading Solar States: Champions of the PV Race

California

With over 40GW of installed solar capacity, California is truly a solar powerhouse. Its sunny climate allows smaller systems to generate more power, while the slightly higher electricity rates are equal to more savings on the bills – the perfect combo for PV success.

Texas

In the Lone Star State, solar power has grown to a remarkable 18GW, thanks in part to its year-round sunshine and deregulated electricity market.

Florida

Known as the Sunshine State, Florida has embraced solar energy with open arms. The state currently has over 11GW of solar capacity installed, with more on the way.

How Can Solar Energy Incentives Make Solar Panels Worth It

There are various incentives that determine how much you can save on upfront solar costs, so you should always check what is available in your area. Some of the major ones include:

Investment Tax Credit: The Right Way to Save on Photovoltaics

As of 2023, the federal government offers a huge 30% tax credit for solar panel systems through the ITC, making solar panels a more cost-effective investment.

‍Net Metering

Net metering is a billing mechanism that credits solar panel system owners for the electricity they add to the grid. This effectively lowers their electricity bills and enhances the return on their solar investment.

Grants for Low-Income Households and Local Incentives

Certain states offer grants and other incentives for low-income households to switch to solar power. There are also local incentives, such as grants for storage installations, further sweetening the solar proposition.

Payback Period and Return on Investment: How Good Are the Savings

So, are the hyped solar panels worth it? First, we should understand the payback period and the potential ROI since it is essential when looking for an answer to this question.

What Are Solar Panel Payback Period and ROI

To understand if a solar panel system is worth the expense, two significant factors to consider are the payback period and ROI. The payback period shows how much time it takes for the initial investment in solar panels to be recovered through energy savings. The ROI, on the other hand, shows the profitability of the system over its lifespan.

Payback Period in Different States

In different states, the payback period for solar installations can vary dramatically, primarily due to factors such as electricity rates, sunshine duration, and available solar incentives. For instance, California, known for its abundant sunshine and relatively high electricity rates, boasts an average payback period of less than six years. This swift payback is due to the state's high-cost electricity from the grid, meaning solar owners save more on their electricity bills. Additionally, the state's policies and incentives further reduce the payback period by offsetting the installation cost.

In contrast, in Washington State, the average payback period is around 16 years. This longer payback period can be attributed to Washington's lower electricity rates, which means solar owners save less on their energy bills compared to those in California. Furthermore, while Washington State does receive a decent amount of sunshine, it falls short compared to California, hence affecting the overall electricity generated by the solar panels.

For the U.S. as a whole, the average payback period is around 12 years, considering the various conditions across different states.

Average Return on Investment Stats

While the payback period gives an estimate of the time needed to recover the initial investment, the ROI gives a more comprehensive overview of how profitable a solar system is over its lifespan.

New Mexico, for instance, has an impressive average ROI of around 50%. This is due to a combination of factors, including excellent solar resources, high electricity rates, and state-level incentives such as the Solar Market Development Tax Credit, which can get residents up to $6,000 per installation. These factors reduce the solar system's upfront cost and increase the revenue generated, thus leading to a higher ROI.

However, states like Illinois see a lower average ROI, around 11%. While Illinois offers decent incentives and rebates for solar energy, the state's relatively low electricity rates and less optimal sunlight conditions limit the savings and revenue you get from a solar panel system, thereby reducing the ROI.

Hence, understanding the payback period and ROI in your specific area is critical when determining whether solar panels are worth it. It allows you to analyze the financial feasibility and long-term profitability of a solar investment, contributing to a more informed decision.

Example: How Much Can a 5kw Solar Panel System Save?

Let’s take a 5kW solar system in Hawaii as an example. The average solar cost is $2.67 per watt, which equals $13,350 for the system. However, with a 30% federal tax credit, the overall cost reduces significantly to $9,345.

The system will be able to generate around 6,000 kWh per year, and considering the average residential electricity rate of $0.40/kWh, this solar system would result in approximately $2,400 of savings annually. We’ll skip the boring calculations and go straight to the results: the payback period is going to be around four years, and the return on investment over the solar system's 25-year lifespan would reach an impressive 500%, making it an exceptionally appealing investment. This is an extreme situation since Hawaii is one of the states with the highest electricity rates in the US, four times the cost in Idaho, for example.

Getting a Clearer Understanding: Are Solar Panels Worth It?

While solar panels can be a great investment, it's not quite the “one-size-fits-all” kind of energy solution. The following questions can help you decide whether a solar panel system is the right energy solution for you:

1. How high is my electricity rate, and does it justify the investment?
2. How much sun exposure does my area get throughout the year?
3. How suitable is my roof, or do I have an alternative area good for solar panel installation?
4. How long do I plan on living in my current home?
5. Am I interested in reducing my carbon footprint?
6. Can I afford the upfront cost of solar panels, or am I willing to explore financing options?

The answers to each of these questions vary and are specific to the individual needs of each person. However, they might help you get a better idea of whether it’s the right decision for you.

Are solar panels worth it in 2024?

Frequently Asked Questions About Solar Panel Systems

Q: Should I get solar panels, and how many panels do I need?

A: If you consider switching to solar energy, you need solar panels as they are the main part of a solar system. The number of solar panels you need to get depends on how much electricity you consume and the amount of sunlight your property receives. A good solar professional can get you the right estimate based on these factors.

Q: What happens at night?

A: Solar panels do not produce electricity at night. However, excess electricity produced during the day can be stored in a battery or sold back to the grid through net metering.

Q: What happens during an outage?

A: Most solar systems are designed to shut off during a power outage for safety reasons. However, systems equipped with good battery storage can continue to provide power during an outage.

Q: Should I get solar batteries?

A: While not necessary, it’s it can be the right decision if you want to make the most of your solar system and have access to electricity all the time.

Q: Can I expand my solar system?

A: Yes, you can get more solar panels to your system if you have the space and if your inverter can handle the increased capacity.

Are Photovoltaics Worth Committing To?

The answer to the question "Are solar panels worth it?" isn't a simple yes or no. It depends on many factors, including your location, electricity rates, and personal preferences. However, for many homeowners, the benefits of solar power - including cost savings, energy independence, and environmental stewardship - make the investment well worth it.