Nearly four decades have passed since the installation of solar panels on the White House. Although they have proven their worth over time, the decision to invest in solar panels remains significant, prompting a thoughtful evaluation of the advantages and disadvantages before committing. We’ve compiled a list of pros and cons of solar to help you decide if this is the right year for you to jump on board.
Pros of Solar in 2023
The cost of solar has plummeted in recent decades
When weighing the advantages and disadvantages of solar energy, numerous homeowners acknowledge that the cost of solar power has reached its most affordable point in history. But just how much more affordable has it become? According to a study conducted in 2018, the costs of solar modules have witnessed an astonishing decrease of 99% over the past four decades.
One significant benefit of solar energy is that there are no ongoing costs for generation since solar panels solely rely on sunlight as their input. Consequently, the expenses that most homeowners need to consider revolve around the purchase and installation of solar modules.
As we enter 2023, with energy costs on the rise and time-of-use rates becoming increasingly extreme, transitioning to solar power can yield even greater savings.
Solar is a hedge against energy inflation
The issue of energy inflation became a pressing concern for households in 2022, as the national average price of utility electricity soared by almost 16% from September 2021 to 2022.
While utility rates continue to increase over time, opting for solar energy allows you to lock in your electricity rate at approximately 7 cents per kWh throughout the 25-year lifespan of the solar system.
In essence, embracing solar power grants you control and independence over your electricity rate, a privilege that you will never experience with a utility provider.
Solar energy is much cleaner than fossil fuels
Solar energy is not only a renewable source of power, but it also generates significantly fewer greenhouse gas emissions per kilowatt-hour of electricity compared to fossil fuels.
When considering the entire lifecycle of solar energy, including manufacturing, operation, and end-of-life processes, rooftop solar systems are approximately 12 times cleaner than natural gas and 20 times cleaner than coal. By adopting rooftop solar, not only can carbon emissions be drastically reduced, but there are also additional environmental benefits to consider.
For instance, rooftop solar installations require no additional land, and large-scale solar projects can be integrated with agriculture (known as agrivoltaics) to enhance crop and livestock production. Moreover, solar panels can be placed above bodies of water (floatovoltaics) to reduce water loss caused by evaporation. This demonstrates the versatile environmental advantages of solar energy beyond carbon footprint reduction.
Solar modules and warranties are lasting longer
With the increasing lifespan of solar panels, the duration of manufacturer and installation warranties is also extending. Leading solar manufacturers such as REC, SunPower, and Panasonic now offer warranties guaranteeing a certain level of output over 25 years, and some companies are even starting to provide 30-year warranties.
A typical rooftop solar system can pay for itself within 10-15 years, which means solar owners can enjoy 10-15 years of free energy production while their panels are still covered by warranty.
It's important to note that solar panels do not cease to exist once they reach the end of their warranty period. Instead, their production capacity gradually diminishes over time. Considering the rapid advancements in solar technology, it is highly plausible that warranties will continue to increase in the future.
The Federal Solar Tax Credit is 30% Until 2032
The passage of the Inflation Reduction Act of 2022 has resulted in the solar tax credit being set at 30% from 2022 to 2032.
For numerous homeowners seeking to maximize their investment, this presents a highly compelling motive to adopt solar energy in 2023. The Federal Solar Tax Credit, also known as the Investment Tax Credit, stands as the most substantial incentive for transitioning to solar power.
While various state and local governments offer their own incentives, the Federal Solar Tax Credit is open to any homeowner who owns their solar system and has a tax liability.
Under the current tax incentive, owners can claim 30% of the total cost of their solar system until 2032. To acquire further information on how to claim the federal solar tax credit, you can refer to this resource.
Solar Increases Your Home Value
There is a whole slew of data showing that solar home improvements truly offer bang for their buck.
According to Zillow, homes with solar panels sell for 4.1% more than homes without. That’s an additional $18,052 on the national median home sales price of $440,300 in the second quarter of 2022.
Zillow also found that energy-efficient features are important to 80% of homebuyers and Zillow’s not the only organization reporting the benefits of solar on home value.
A 2015 study by the Department of Energy’s Lawrence Berkeley Laboratory and Sandia National Laboratories found Californian home buyers will pay up to $4 per watt of installed PV, while homebuyers across the country will pay around $3 per watt. This comes out to about an additional $15,000 for a home’s solar system.
Cons of Solar in 2023
Net Metering Rollbacks
Net Energy Metering (NEM) enables solar module owners to receive credits from utilities for surplus electricity they contribute to the grid. While several utilities still rely on NEM, a few have initiated its rollback due to reasons such as market maturity and financial burdens on the utility.
Nevertheless, there is strong opposition to this rollback from homeowners, solar industry officials, and policymakers. Connecticut serves as an example where a 2018 bill aimed to scale back NEM, but recent legislative efforts have emerged to impede or repeal the bill's objectives.
In states that have scaled back NEM, alternative programs with comparable reimbursement methods are emerging. One such example is the adoption of a Solar Renewable Energy Credit (SREC) system by some utilities. Under this arrangement, homeowners sell SRECs to their utility at market-set prices. As the demand for renewable energy increases, the value of SRECs in many utility regions may rise accordingly.
Solar scams have long plagued the industry, harming both consumers and reputable solar companies. But that is no reason to throw the baby out with the bathwater. Going solar through a vetted and reputable installer is a means to clean, cheap electricity for millions of American homeowners.
Batteries Are Still Expensive
While batteries are not mandatory for solar systems, they can significantly enhance the value of such systems. By utilizing stored solar energy during peak grid periods, homeowners can avoid elevated utility electricity expenses. Although the cost of batteries has been decreasing, it is important to note that the overall expense remains substantial.
For homeowners considering a transition to solar power in 2023, there is an opportunity to benefit from the Residential Clean Energy Credit. This credit applies to battery storage systems larger than 3 kWh and currently stands at 30% until 2032, courtesy of the Inflation Reduction Act.
High Upfront Cost
Despite the presence of local and federal incentives, adopting solar energy still entails a comparatively significant initial expense for homeowners who pay in cash. Fortunately, there are zero-down solar loan alternatives that distribute the cost over a period of time and generate savings right from the outset.
Overall, solar power should be viewed as a secure and long-term investment. By promptly reducing electricity expenses, it not only delivers immediate benefits but also safeguards homeowners from future rate increases.
High Upfront Cost
Regrettably, solar panels cannot be easily packed up and relocated. Since they represent a long-term investment, it may not be financially advantageous to purchase a solar system if you have plans to move in the near future.
However, it is worth noting that solar panels contribute to faster home sales and increased property value. Even if you do move, there is a good chance that you will recoup the cost of your solar system and potentially even make a profit due to the enhanced value it brings to your home.
The pros and cons of solar energy are constantly changing as the industry evolves. If passed, the Inflation Reduction Act of 2022 – perhaps the largest climate bill in history – will add heavily to the pros column. Not only will the solar tax credit be at 30% from 2022-2032, major investments in solar manufacturing will continue to drive down the cost of residential solar.
With that said, solar is a long-term investment. While the future is incredibly bright for residential solar, it’s best to get in early in order to enjoy the return on investment sooner. If you’d like to schedule a call to learn how we can help you, please contact us today.