Solar panels can seem like an overwhelmingly large investment. There are a lot of factors that can go into the cost and there are equally as many stories about installation. Maybe you heard a number through the grapevine or there’s an estimated figure in your head as to how much they cost (that was me). Either way, every solar story is sure to be different and the decision to install them should be an educated one.
Knowing whether now is a good time for you to invest in solar involves a number of factors. Financial incentives and perks should absolutely be part of that consideration.
Here are a few that you may not have considered.
1) Mitigate energy prices hikes
There is no doubt that energy costs have begun to soar in recent years. However, with solar this can be mitigated.
This past winter, a number of our friends commented on the increased size of their energy bills. As we live in Wisconsin, our solar production in quarters 1 & 4 isn’t amazing, but it still helps keep our bill down. In quarters 2 & 3, our bills are zero or very close to it and, if we produce extra in one month, it rolls into the next. Cha-ching!
2) Federal tax credits expire!
The sunset on the original federal tax credits started in 2020, but thanks to an extension, some credits are still available.
According to energy.gov, there is “26% tax credit for systems installed in 2020-2022, and 22% for systems installed in 2023.” If you’re interested, but unsure that your installation will be complete before year end, talk to a tax professional. You may only need to have a down payment paid on the system within that calendar year.
3) State credits and rebates expire, too
Much like the federal credits, state and local rebates have started to phase out, too. Any good solar professional will be well-versed in the state and local rebates available in your area, so reach out to one (or a few) to find out what they know.
A note on credits and rebates
The great part about credits and rebates is the flexibility they provide. You can choose whether you want to put those funds back onto your loan or spend them on something else.
Your financing agency may be able to factor these credits into your repayment schedule, as well, reducing your payment based on the receipt of these sums. (Note: If you don’t make these payments, your payment may increase or you may be subject to penalties.)
Which brings me to my next point:
4) Low fixed interest rates now
There are a couple of ways to go about financing solar panels. Both are great options.
Solar loan
Our experience working with our solar provider was wonderful. They handled it all, including the financing. Just like any loan, it wasn’t an easy pill to swallow, but the interest rate was fixed for 15 years. The rate? Ours was 3.5%. We still have energy bills a few months out of the year, but on the months we have no bill? Covered.
The company also worked with us to keep our payment in our comfort range. They could do this by calculating in future intended repayment from the rebates and credits (your tax refund). If we paid accordingly, our payment stayed the same. If not, it increased.
Home refinance
Another option is to refinance your home to include the loan sum. Obviously, this is only available if you have the equity to do so. Refinancing also costs a fair amount of money, so there are other factors to consider before going this route.
Is a refinance right for you? Here are some things to consider.
Solar increases the value of your home
As this isn’t a money saving item, I’m not counting it in the list, but it is worth considering.
According to a 2019 study by Zillow, solar panels increased the value of homes nationwide by an average of 4.1%. Of course, this varies from state to state, but if you don’t plan to move for several years, taking advantage of the expense savings and still being able to offer a relatively new system to a prospective purchaser is likely to provide substantial reimbursement of the cost.
(FYI, the estimated useful life of solar panels is 25 years.)
We hope this list helps you make your big decision! We’ve thoroughly enjoyed our solar journey and love sharing our story. To learn more about the company we used, feel free to visit their website. They offer free consultations and are very low pressure.
If you have any questions, please leave them in the comments below! We’d be happy to answer.
– Ryan & Melissa, The Joneses Four
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