Chances are you’re seeing your neighbors install solar panels left and right and those little solar company signs in yards everywhere. We wondered – what exactly is the cost of installation? What is the real savings? Is it worth it? How do you choose a company? Should you lease or buy?
We did a little research and came up with some anecdotal numbers. In one neighborhood in Southern California, homeowners report that a purchased solar system costs in the range of $21,000 – $27,000. Tax credits can save you as much as 30%. Homeowner & engineer Joe Cahak did some calculations and estimates that his purchased system (paid for in cash) will pay for itself in 4-7 years. Once the system is paid for, he estimates the savings to be around $3,500 per year for his home.
Homeowners in this same neighborhood who have leased their systems report that their monthly lease payment is in the range of $200 per month (your lease costs will vary based on the number of panels, home size, etc.). All the homeowners we talked to report that their monthly electric bill was reduced to $5 – $30, and some even received money back from their electric company at the end of the year! All electric homes will see a larger overall savings than those that utilize natural gas or propane for some of their appliances. (Again, it will depend on what percentage of your power your solar panels cover.) Some other points to consider:
- A leased system will typically come with a “production guarantee” (they guarantee the system will produce a certain amount of electricity) and free maintenance of the panels and system.
- Tax credits are also available on leased systems.
- There should be no upfront costs with a lease.
- Make sure the lease can be easily transferred to a buyer should you sell your home.
Make sure to do your research and ask your neighbors with solar for their experiences with local solar installers. Read online reviews. Get multiple quotes. A good starting point would be to calculate your annual electric costs (factoring in likely utility company cost increases). What would your annual lease costs be? If you purchase and require a loan, what would your monthly payment be, with interest? Bottom line: How much would you actually save per year by going solar?
Here are some helpful websites we came across in our research:
Choosing Solar Panels:
Financing (California Only):