Whether or not solar power makes sense for you, now, more than ever is the best time to weigh your options and jump on the solar bandwagon. Sunshine is free, so why waste time paying the high costs of electricity if you can harness the sun’s energy to power your home at a lower cost?

If you are interested in going solar, it's important to first explore whether or not your particular home or property is suited for solar power. The main points to consider before embracing the solar trend are your financial needs, the value of your property, your roof condition, and your location.

The first thing people tend to think about when it comes to solar is how this decision will impact their finances. For a while, solar power was considered to be a luxury home improvement project; however, that is no longer true today. Luckily, in the past few years, the cost of solar energy systems has dropped more than 50%, making affordable solar the new reality.

As this chart shows, the cost of solar panels in 2013 was 100 times lower than the cost of solar panels in 1977. Now, this graph only shows the price of modules - or solar panels, but keep in mind that the price of other equipment is following a similar trend. Because the solar industry has grown at a faster rate than ever before, this expansion has increased competition and driven down not only the price of equipment but the cost of solar installation as well.

Still looking for more financial incentives?

In the U.S., federal and local subsidies bring down the cost of solar even further. The federal renewable-energy tax credit for solar technologies — which expires at the end of 2021 — cuts the cost of a solar power system by 30%. Even people who do not owe any taxes this year can still save money by rolling over their solar tax credit to the following year. Likewise, state and local incentives which vary by location, lower the cost of solar significantly. For instance, a system that costs around 20,000 would end up costing about 14,000 after the federal credit, with local credits bringing the cost down even lower.

Not only is going solar actually affordable, making the switch to green energy is guaranteed to save you money on your electric bill. In the past ten years, residential electricity prices have gone up by an average of 3% annually. Even if you do not produce 100% of the energy you require, going solar will drastically reduce your electric bill and will protect you from unpredictable hikes in the cost of electricity. With the combination of government subsidies and your accumulated savings on your electric bill, a solar energy system will pay for itself in 5-10 years and will generate a positive cash flow afterward. The overall idea is to pay less than you currently pay, lock in your electricity rate and save money by producing your own power.

The next thing to consider before going solar is your property value. If you are planning on selling your home in the future, installing solar panels will significantly increase your property’s value. Several studies (^1) analyzing home pricing trends in states across the US, have concluded that homes with solar panels have the advantage of a “solar premium” or boost in value of around $20,000 when they are sold because buyers are willing to pay more in order to save money on electricity in the future. This suggests that homeowners with an installed solar system will recoup most or all of their investment when they sell their house, especially if they sell soon after the solar installation.

Clearly, if you are a person looking to sell your home in the near future, your solar investment will pay for itself; if you are not planning on selling your home anytime soon, your investment will still pay for itself through savings on your electric bill. In both cases, solar is a smart addition to your property.

Another factor to consider before making the switch to solar is the condition of your roof.

If your roof is in poor shape or is nearing the end of its lifetime, you may want to wait until you fix your roof before installing a solar system. Solar panels have a life of more than 30 years, so you would not want to go through the unnecessary trouble of removing them after you just installed them, to replace a bad roof. If you think you cannot afford to re-roof just yet, consider the fact that in as little as 5 years after installation, your savings from your efficient solar system will have covered that re-roofing cost already.

Lastly, consider your location and your surroundings. Wherever there is sunlight, you can take advantage of solar energy. However, different places receive varying amounts sunlight, so the same set of solar panels will produce much more electricity in some locations than in others. Still, even if you do not live in sunny California or Florida, you will still reap the savings and rewards of solar power. Even states with cold, rainy climates, such as those in the Pacific Northwest still benefit from solar, since PV panels capture sunlight scattered by clouds or humidity, and not just direct sunlight. In fact, the efficiency of solar panels is actually much higher in colder temperatures, as panels start losing efficiency around 91 degrees Fahrenheit.

Although most locations can clearly benefit from solar installations, you should still consider your immediate surroundings. Ideally, solar panels should be placed facing south, or southwest and tilted towards the sun at a 90-degree angle. Houses that are covered by trees or shaded by other taller buildings might not be suitable for solar power. To get a second opinion on your suitability for solar, contact a solar installer to come to your home and personally inspect your roof.

Sources:

     Understanding the Solar Home price premium: Electricity generation and "Green" social status
     Dastrup S.R., Graff Zivin J., Costa D.L., Kahn M.E.
     (2012) European Economic Review, 56 (5), pp. 961-973.

     Financial payback on California residential solar electric systems
     Black, A.J.
     (2004) Solar Energy, 77 (4 SPEC. ISS.), pp. 381-388.