Bright Sunshine Day
Are solar panels worth it? This week’s blog features a client request on how to calculate if it’s a wise decision to have solar panels installed at your home.
Most of us are aware of the great benefits of having solar power including offering a clean and renewable source of energy:
- Saved Costs on Electric Bills (Especially with potential of rising energy costs)
- Increased Property Value
- Environmental Benefits
The typical Residential Solar Panel System will eliminate around 3-4 tons of carbon emissions per year.
In addition to these continuing benefits, you will also receive a one time Federal tax credit for the cost of the solar panel installation. (26% in 2022 & 22% in 2023). While Virginia does not have any state tax credits for solar panels, there is the Virginia Solar Renewable Energy Credit (SREC). You receive an SREC for every 1,000 kilowatt hours of electricity generated with a maximum payment of $75 per 1 Megawatt Hour (1mWh). The going rate is closer to $30-$50 per 1mWh. Through a new bill (SB 686) signed into law in Virginia starting January 1, 2023 solar facilities not more than 25 kilowatts are wholly exempt from state and local taxation under the Virginia Constitution.
The question of how much solar panels will save you depends on a number of factors including the hours of daily direct sunlight available to the panels, the angle of your roof and the size of your solar panel system. The most important factor in determining how much money solar panels will save you, is simply your local electricity rates. Solar panel systems cannot exceed customers annual load power.
- 20kW for Residential Use
- 3,000kW for Commercial Use
- 500kW for Agricultural Use (Aggregated)
The optimal solar panel system will be on a south or southwest facing roof with a ideal slope of 30-45 degrees. Another key point to keep in mind is that solar panels have a limited productive lifetime of 25-30 years. The panels may last longer than this, but the amount of energy they output will decrease significantly. Degradation rates range from 0.3% per year to slightly over 1% per year depending on the brand of panels.
|As of 2020 the average Solar Panel System was 10kW.The average per watt price for the installation of the system in Virginia is $3.01
10kW system = $30,100
|Average amount of power used for a residence is 1,000kWh per month.|
|1kW Solar Panel produces 4kWh per day|
|10kW System could produce between 600 and 1,300 kWh per month|
|Dominion Energy says the Average Cost of Power in Virginia = 11.66 cents per kWh|
|10kW system producing 950 kWh of power per month would save around $110 per month on an electric bill|
|Total Savings of $1,320 per year, would receive around 11 SREC’s per year for additional savings of $440|
|10kW System = $30,100
o Subtract Federal Tax Credit of $7,826 ($30,100 x 26%)
o Total Cost = $22,274
o Total Yearly Savings and SREC = $1,760
|Would take 12 years and 8 months to recoup the money spent to install the system|
|Leaves up to 17 years of energy for free before having to install new panels and converters|
A common misconception is that solar panels will eradicate your electricity bills altogether. While this is sometimes the case, solar panels will significantly reduce your electricity bill each month, and may be worth the investment as a whole.
Whether you’re trying to reduce your electricity costs, carbon emissions, or more, solar panels can generate major savings. Solar panels tend to be worth the investment as long as you go about the installation process wisely and plan to stay in your current home for at least 15 years.