One Solar Systems

How Does Solar Power Save You Money

It’s a well-known fact that renewable solar energy is an eco-friendly way to power your home, but does it generate as much green for your pocket as it does for the environment?

Solar power can help you save money in many ways. Understanding the specific benefits for your home will give you a good idea as to just how much green this technology can put back in your pocket.

 

How Solar Power Works

At the most basic level, solar power is energy generated by the sun. The sun’s rays produce electromagnetic radiation which is then absorbed by solar panels used to power your home. Solar cells within the panels react to the sun’s rays and produce a type of electricity. A complex circuitry system then transmits that electricity throughout your home, powering it just like standard electricity.

 

There are many types of solar power cells — the type you use will determine how much money you’re saving based on efficiency:

Standard crystalline silicon cells can convert as much as 23% of the sun’s light into electricity.

Highly efficient cells, such as those used on satellites, can have efficiency levels of up to 50%.

The cells that are affordable enough for you install on your roof, however, typically have power efficiency of just 15 to 18%.

Solar power is most readily available when your panels are actively collecting power from the sun. If you have an unshaded roof that faces south, east, or west, it should collect some form of solar power during the day. The panels will store unused energy as well, so you’re not completely without power at night or in the morning before the sun comes up. As long as you connect your system to a power grid, you’ll be supplied with the power you need, though some of it might still come in the form of traditional electricity.

 

Tax Incentives for Solar Power

Tax incentives for using renewable solar power are available from both state and federal governments. State incentives vary. For example, Massachusetts allows a 15% tax credit for the cost of the system including installation costs of up to $1,000. In Arizona, people can take advantage of a 25% tax credit up to $1,000. Solar power devices in the state are 100% exempt from sales tax. Check with your state to calculate the exact benefits available to you.

The current federal tax credit for solar power systems is 30% of the cost with no limit. Rentals do not qualify for this credit, but both new and existing construction projects are eligible. This tax credit is due to expire at the end of 2016.

 

Elimination of Electricity Costs

Electricity costs vary by place. The U.S. Department of Energy reports average electricity rates of 6.1 cents in Seattle, WA, 9.1 cents in Denver, CO, and 13.6 cents in Concord, NH. With such a broad range, it’s important to check the local rates where you live to find what your real savings will be. For the most exact calculations, factor in an average increase of 4.3% each year on your power bill. With solar energy, you can all but drop this cost.

 

Increased Home Value

Installing solar panels on your home increases its value. In California, homes with solar power typically sell twice as fast as homes without this feature. Solar power will also increase the rate of appreciation on your home. In California, homes appreciated 55% with solar panels and just 45% without. Though figures aren’t as readily available for other states, the benefits are comparable in many areas. Buying a home with solar power is a great investment as well because you’ll enjoy long-term energy savings.

 

Savings Considerations

While there are many ways to save with solar power, it’s important that you keep them in the proper perspective. For example, if you sell your home you will reap the benefits of an increased home value, but you will no longer enjoy the energy savings benefits. You can calculate one or the other into your total savings, but you won’t enjoy both at the same time. While you will lower your power bill considerably, you may not cut it entirely if your solar panels are not large enough or efficient enough to supply all your power needs.

 

The Lifespan of Solar Panels

Most solar power systems have a manufacturer’s warranty of 25 to 30 years. For the sake of making the most accurate savings estimates possible, most calculations assume that your system will last for 25 years. However, with proper care and maintenance, your panels may last as long as 40 years.

Solar panels need very little attention. Most only require regular cleanings. Provided that you’re capable of climbing to the roof with a bucket of soapy water and a rag, you can do this job yourself, effectively eliminating any maintenance costs.

 

Calculating Your Personal Savings

To find your personal savings with the solar panels, do the following:

Get a quote for a solar power system in your home.

Calculate your state and federal tax savings.

Use the prior year’s energy bills to estimate the cost of electricity for your home, allowing for the expected increases each year.

Divide the cost of your solar power system after tax incentives by 25 years to find the annual cost of the system.

Compare the annual cost of your system with your annual electricity bills to find your estimated savings.