What Homeowners and Future Homeowners Should Know About Solar in 2016
You’re a homeowner or future homeowner in 2016. You’re hearing about solar power constantly. It’s all over your newsfeed. Your friends are talking about it. You’re officially intrigued, but this little thing called life has kept you from fully looking into it.
Is it really worth it? Is it affordable? What are the pros and cons as it stands right now? We were thinking it would be great to answer some of these questions for you. And, who are we kidding, we wanted to answer them for ourselves, too.
Of course, each individual case is unique, but we sat down with our friend Kevin Post, energy consultant at Greempire Energy, to get some insight. In our conversation, we wanted to know about the questions and concerns that homeowners often express during solar consultations.
Common Questions and Concerns
What happens when your section of the grid loses power?
Unless you have home energy storage like a Tesla Powerwall, which have a high price tag, you rely on the grid like everyone else. When your neighbor’s power goes out, yours does too.
Note: energy storage will be getting cheaper over the next 5 years.
Let’s say you own a townhome or a condo and you’re interested in solar, how does that work?
It has to be worked out with the homeowners association that you are a part of which adds a layer of complexity. They may be a barrier to entry.
How will it affect my bottom line?
That depends on a variety of factors that are unique to you. For example, what you pay now, how much energy you use, and where you live. The potential benefits of solar have a lot to do with how you decide to finance your system.
Financing Options
Option 1: Power Purchase Agreement
In a Power Purchase Agreement, instead of owning the panels, you pay for the power your panels produce.
Normally on your power bill you have tiers that look like this:
As your energy use exceeds Tier 1, the price for each kilowatt hour goes up a little bit, and so on. In a Power Purchase Agreement, the tier system goes out the window. You lock into a fixed rate that is comparable to your Tier 1 for the next 20 years.
So while your electricity bill isn’t going anywhere, you’ll start saving money right away. However, if you decide to sell your home someday, and the buyer does not want to use the panels, it will cost you.
If you own your home and plan to stay there long term, but money is tight, maybe you’re trying to support a big family, Option 1 may be worth looking into for you because of the immediate savings.
Now, let’s look at Option 2.
Option 2: Financing
If you decide to take out a loan, you can own your own system and make fixed payments over a period of time. The less time you decide to pay it off in, the lower the interest rate will be on your loan, and the sweeter the deal will ultimately be.
A desirable benefit of owning your system is the one-time 30% federal tax credit. You’ll get to write off a nice chunk of change on the following year’s income taxes.
Note: as of now, this tax credit is only available until 2020.
In addition, you can say goodbye to electric bills — for good! You can think of your loan payment as your electric bill until it is paid off, at which point your electricity becomes free.
Now, let’s look at our last option.
Option 3: Cash
For those who can afford it, you can purchase your system up front and own it outright. You won’t make any electric payment during the next 25 years. And you’ll also receive the federal tax credit.
Furthermore, solar systems that are owned outright can add a significant amount to the resale value of your home.
To Go Solar, or Not to Go Solar
That is the question for homeowners in 2016. In our last post, we emphasized the importance of voting with our dollars, and how it’s become more important than ever. Switching to solar energy for your home is one of the best ways to do that.
In many cases, it can save you a lot of money in the long term, not to mention you’ll be a champion of the environment. For every 5-kilowatt panel system you install, you’re removing 240,000 pounds of carbon from the environment.
Are you ready to be the envy of your neighborhood and harness the natural energy that lights up our world?
Act on Climate
We really enjoyed our sitdown with Kevin. If you’re interested in crunching the numbers and exploring options for yourself, our friends at Greempire Energy service all of California and are happy to help.
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