Is it something you should invest in?
- Installing solar panels is a great way to reduce your energy costs.
- You will first have to shell out a good sum of money to set up a solar installation.
As the cost of living continues to rise, many homeowners are struggling with exorbitant utility bills. And even during times when the cost of living is more moderate, the reality is that electric bills can be astronomical for some homeowners, especially during the summer when heat waves can lead to perpetual air conditioner use.
If you’re tired of paying a ton of money to your utility provider every month, you might be interested in equipping your home with solar panels. This way you can generate electricity yourself without having to depend on the grid and racking up expensive bills in the process.
But as with home renovations on all levels, installing solar panels comes with costs. And you’ll have to see if they’re worth paying for.
What homeowners pay on average for solar panels
The cost of solar panels will depend on a number of factors, including the size of your home and the type of system you wish to install. But Investopedia reports that the average initial cost of solar panels is $3,500 to $16,000.
Clearly, that’s a huge range. And so if you are really interested in installing solar panels, it pays to contact companies in your area that do this kind of work and get estimates. This is really the only way to know what specific price you might be considering.
Keep in mind, however, that if you pay for solar panels, you may be eligible for a tax credit that helps offset their cost. Systems installed in 2022 may be eligible for a credit of up to 26% of their cost, while systems installed in 2023 may be eligible for a credit of 22%. As of now, these tax credits are set to expire in 2024 unless lawmakers renew them, so if you’re serious about buying solar panels, you might want to start doing your research as much as possible. as soon as possible.
How much money will solar panels save you?
The amount of money you save on energy costs will depend on how much power your solar panels can produce. But let’s say your panels are able to power your home so you don’t use any electricity at all. If your average monthly electricity bill is $200, you’ll save $2,400 per year. And from there, you can calculate your break-even period.
So let’s say you end up spending $10,000 to have solar panels installed (and for simplicity, we won’t include a tax credit in this calculation). Divide that by $200 a month, and it will take you 50 months, or just over four years, to get your money back and get by financially. So if you plan to stay in your home for more than four years, solar panels might be a good investment for you.
How to pay for solar panels
You may not have the money in your savings account to fully cover the cost of the solar panels. Many companies will allow you to fund your setup directly, or you can consider getting a home equity loan to cover this cost.
A personal loan is another option to explore for financing solar panels. But you may find that you are able to get a lower borrowing rate if you opt for a home equity loan.
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