Understanding the Financial Benefits of Solar Energy

While much of the world has returned to normal in the wake of the global pandemic, many Americans still face the consequences of supply-chain disruptions and growing inflation, especially when it comes to rising utility rates. Despite the upfront costs of renewable energy systems, the financial benefits of solar energy include substantial savings for businesses and homeowners alike. 

How Solar Energy Cuts Utility Bills

Utility costs have steadily increased in recent years, but solar energy can help you lock in lower rates for short- and long-term savings. When you install solar panels on your property, you’ll begin generating electricity from the sunlight your home already receives. Photovoltaic systems include semiconductor materials that capture UV energy in the form of direct-current electricity. An inverter then converts this energy into usable alternating-current power, which is used to run most home appliances. 

Depending on your household energy consumption and the size of your solar array, you can reduce your energy bills by up to 100%. On average, most homeowners save around $1,500 per year with a properly sized renewable energy system. 

Long-Term Financial Savings Through Solar Energy

You’ll start enjoying lower utility bills as soon as your photovoltaic system is up and running, but the real financial savings of solar energy compound over time. 

Solar Energy Cost Savings vs. Upfront Investment

The upfront cost of your solar panel system will vary based on your location, the specifications of your array, and the local incentives available in your area. On average, homeowners spend between $10,000 and $17,000 for a residential solar panel system, and many find these arrays pay for themselves within 7 to 10 years through reduced utility costs, grants, and tax credits. 

Return on Investment (ROI) for Solar Panels

One of the greatest benefits of solar energy is the potential to preserve significant cash through long-term savings. Your solar ROI is the overall financial return you can expect throughout the lifespan of your array. Many homeowners enjoy a return on investment of up to 500% in 20 years.

Let’s say you’re a homeowner in Delaware who currently spends $150/month or $1,800/year on electricity through your utility provider. You purchase a solar array for $20,000. After claiming the Federal Solar Tax Credit and rebates offered by your utility company, your net investment comes to $8,050. If your solar array lasts 25 years, you can expect an ROI of around $36,950 or 459% after deducting your initial investment. 

These figures don’t include additional savings offered by net metering programs or selling solar renewable energy certificates. 

Maximizing Savings Through Solar Incentives

In order to reap the financial benefits of solar energy, claiming state and federal incentives is essential. For instance, the Federal Solar Tax Credit reimburses homeowners up to 30% of initial installation costs, presenting a massive avenue for savings right off the bat. However, the US government won’t offer this rebate forever. Reimbursements will drop to 26% in 2033 and 22% in 2034. 

Each state presents different advantages for clean energy systems, and those with more ambitious Renewable Portfolio Standards (RPS) tend to deliver the most alluring benefits. Renewable Portfolio Standards outline each jurisdiction’s sustainability goals and set deadlines for utility companies to source a certain percentage of electricity from renewable resources. When states set aggressive targets, they typically offer rebates and incentives for businesses and homeowners to contribute to the area’s objectives, including net metering programs, clean energy grants, and various rebates. 

Increasing Property Value with Solar Installations

If it seems like the financial benefits of solar energy simply keep compounding, that’s because they are. A renewable energy system can increase your property value, enhancing your home’s equity if you choose to sell in the future. 

Over the years, studies have shown a direct correlation between solar panels and enhanced property values. Recent assessments demonstrate that houses with solar energy systems sell for as much as 6.8% more than comparable grid-dependent properties. 

What’s behind this boost in property values? Home buyers are increasingly interested in sustainable investments that can save them money and support the environment. Energy-efficient properties tend to attract eco-conscious buyers who may be compelled to act quickly to secure a house with an existing renewable energy system. 

Of course, location may impact the overall demand for solar. Areas with robust sustainability initiatives may offer more ways to save than those without. Additionally, a leased array may introduce more presumed challenges for the buyer, whereas systems purchased outright present fewer barriers to entry. 

Hidden Financial Benefits of Solar Energy

The benefits of solar energy extend beyond obvious financial advantages, offering a number of often overlooked lifestyle perks. 

Traditional energy markets are notoriously volatile. Fluctuating fossil fuel prices, political instability, and aging infrastructure all impact reliable access to grid-sourced electricity. Installing a solar array – particularly one with ample battery storage – can insulate you from unexpected surcharges and frequent blackouts, locking in lower rates and enhancing personal sustainability. 

As you regain control of your energy usage, you may feel a sense of relief. When you generate your own clean electricity with solar, you’re no longer at the mercy of geopolitical turmoil, supply-chain disruptions, or the grid’s aging infrastructure. You’ll minimize your own carbon footprint while simultaneously lowering your monthly costs. This switch can help you hold onto more cash, which you can spend any way you like. 

Achieving Energy Independence with Solar Energy

Energy independence is another important benefit of going solar. Here’s what you can expect from a renewable energy system: 

Shielding Yourself from Rising Energy Costs

Solar energy reduces your dependence on grid-sourced electricity, opening a clear path toward greater long-term savings. Each kilowatt-hour of electricity your system generates is a unit of energy you won’t need to purchase from your utility provider. This is particularly important at a time when traditional energy rates are unpredictable, as solar can help stabilize your energy expenses. 

Energy Storage and Its Role in Independence

Battery storage can help you maximize your financial savings with solar energy and secure enhanced energy independence. Installing a properly sized battery with your solar array allows you to store surplus energy generated during the day for use during peak-rate hours, at night, and when the skies are cloudy. A solar battery is also the ultimate way to protect your home from power outages. Most solar arrays are connected to the grid, so they shut down automatically when outages occur. However, those with a solar battery can keep the lights on, as the setup may automatically switch to the battery supply when a disruption is detected. 

Is Solar Energy Worth It Financially?

Solar energy offers unrivaled financial benefits and enhanced energy independence. Despite the upfront costs of solar, the long-term savings typically exceed initial investments within the first 7 to 10 years of operation. After that, you’ll be swimming in savings! 
Want to learn more about your home’s energy potential? Get a free solar estimate today!