Should You Go Solar?
Dated: November 18 2020
Should You Go Solar?
Installing roof solar panels has become an increasingly popular option among homeowners in the United States. Solar panels will convert sunlight into energy, and then you can use that energy to power your home.
We've had our Solaria solar panels with Enphase electronics active since February of 2020. 21 solar panels have saved us a significant amount of money on our power bill! It was a great investment for our home, but it may not be right for everyone.
While the cost of solar panels has gone down over the years, and increasingly people are installing them, it’s still a big investment. There’s a lot to consider and both pros and cons to weigh.
Is Your Home a Good Fit for Solar Panels?
Solar panels work great anywhere in Florida, but your roof may not be suitable for installation. Tree coverage or age could be two factors making your roof unsuitable.
For example, if trees shade your roof too much, rooftop panels may not be optimal.
In most cases, solar panels work best on south-facing roofs, with a slope up to 40 degrees.
If your roof is old and nearing the time for replacement, this may also make your home unsuitable for solar. Although, installing after the roof is replaced would be optimal. Solar shingles may even be a better option!
There are alternatives if your roof doesn’t make you a viable candidate for solar panels, including ground-mounted panels or a community solar garden, but you'll need the space for them.
When Do You Plan to Move?
If you plan to move in the near-term, solar panels are probably not a good investment.
First, since they are an investment, it can take time to see a return. It usually takes around five to eight years to pay off the cost of solar panels. In Central Florida, homeowner average length of ownership is about 10 years. If you’re going to move any time soon, you'll have to consider the market value of your home against your mortgage and solar loans.
How Do Solar Panels Affect Home Prices?
It depends. Will you lease or own (finance) the system?
Per FHA and Fannie Mae guidelines, an owned system (or purchased with financing) can be used in the appraisal of your home. While you won't see a full dollar for dollar value, this is true with any renovation or addition to your home. A new swimming pool may cost $40,000, but the appraised value will likely be much less. An owned system is a fixture that stays with the home, so the home should be priced accordingly to reflect that value.
If you're selling or buying a home with solar, you'll want to ensure that the lender's appraiser is certified for green and solar homes prior to them coming out. Having an appraiser knowledgeable about the value is key!
As a homeowner, if you decide to sell your solar home, make sure you keep track of your power production and your bills. A well designed system should save you $2,500 or more per year! Is savings of $12,500 over 5 years or $25,000 over 10 years a good selling point to a buyer?
Leased solar can be problematic. There are no guidelines that allow for increased home value, and can cause issues for potential buyers. Solar lease payments also must be included into the buyer's debt to income ratio!
Florida also provides a 100% property tax exemption for residential renewable energy, or solar panels (PV photovoltaic). For the purpose of assessing property taxes for a home, an increase in the just value of the property attributable to the installation of this equipment should be ignored. So if your appraised value includes $10,000 for solar you won't be taxed on that portion of your home value.
How Much Do You Pay for Electricity?
If you don’t pay a lot for electricity each month, then you’re not going to save much with solar panels. While solar panels can benefit any home, the return on investment may not make sense.
What I suggest to anyone looking at solar is to first look at two things that are energy hogs in every home: the air conditioning and water heater.
If your A/C is over 10 years old or has a energy SEER rating of 15 or less you may want to start there. That could be half of your power bill! Upgrading to a modern, variable-speed unit with a smart thermostat can give you significant savings. Check with your power company, and most have rebates in the hundreds of dollars. Different brands may also offer more incentives to help lower the cost. Lennox provided us with $1100 for the system, and Duke Enegy gave us an addtional $600.
For water heaters, if yours is over 10 years old it may be time to go. Older units can cost you $400-600 per year! I highly recommend a "hybrid" heat pump model. Newer units provide wifi and smart home connectivity that you can easily set to away mode or change the temperature, and provide instant reports on your energy usage. In the 11 months we've had our Rheem EcoNet, energy costs are estimated to be about $50! These hybrids are much more efficient than the "tankless" models on the market. Again, check your power company and manufacturer for rebates and incentives!
How Will The Weather Affect Solar?
Weather and, in particular, the sun are the most important things with solar panels. If you live somewhere there’s a lot of cloudy weather or rain, you’re not going to get as many benefits from going solar. Florida does have plenty of rain, but we're also in the prime zone for solar production with abundant sunshine all year round. A well designed system will produce results for you.
Will You Qualify For Financing?
There are flexible options to help consumers afford the initial, upfront costs of solar panels. Solar installers generally have several options for financing and terms will vary.
There are leasing programs available, but that's generally not the best option for most homeowners. While you'll avoid the upfront cost of the equipment, you're locked into a 20-25 year lease that may not provide you provide you much in terms of actual savings on your power. There can also be difficulty if you need to sell your home, as the buyer will need to qualify for the solar lease and agree to the payments.
For our system, we went with a HELOC, or Home Equity Line of Credit loan. This allowed us to borrow against the equity in our home with a low interest rate. The interest may also be a tax deduction. Check with your tax professional to understand the options.
Speaking of taxes, there are also federal tax credits available. These are not just deductions, but dollar for dollar credits against your income. Current IRS rules provide for a 26% tax credit through January 1, 2021 and 22% through January 1, 2022. You should make sure to consider this credit when looking at the total cost of the system.
Shop around and see what you qualify for. If you decide to go the HELOC route, you'll want to get approved in advance and have the line of credit available to start the solar installation.
Are There Quality Installers Where You Live?
In Central Florida, finding solar panel installation professionals isn't a challenge. However, finding a reputable company with quality products is important.
Find installers with a good reputation through friends or business reviews online. The cheapest isn't always the best! Good panels with 25 year warranties and good power output come with a cost. I recommend Solaria panels with Enphase electronics. Both provide a 25 year warranty and are considered best of class for technology and reliability.
You’ll have to do the research and find a company with a strong background, and also one that’s not going to try pushy sales tactics to lock you into a long-term contract that you might not want. For those that may be interested in going solar, I parter with a great team of professionals that will do the job right.
How Much Does Solar Cost?
Again, it depends. There are cheap panels and electronics that come with 10-year warranties. You can save money here, but you may pay more in the long run if the electronics fail. Aesthetics may matter to you. Cheaper panels may have white frames and lines that are visually unappealing. The quality brands not only make a nice looking all black panel, but have 25-year warranties to go with it. Some brands, like Solaria, have a USA made high quality panel with patented tech that provides power output even with some shading. You've got options, so make sure you research and ask the installers about what warranties are offered.
In general, an installation using quality products runs about $1,000 per panel. This is a rough estimate that includes the panels, electronics, racks, installation hardware, and labor. So assuming 20 panels is all you need to cover your power needs, $20,000 is a ballpark figure to work with. With the 26% federal tax credit of $5,200 you net cost would be about $14,800.
The Benefits of Solar Panels
While the above are questions to ask yourself, there are benefits of solar panels including:
• Reduced electric bills are one of the biggest reasons homeowners opt to install solar panels. Over 20 years, you could save close to $50,000, depending on where you live and the size of your home.
• Solar panels allow you to be energy independent. Most power companies will pay for power you produce over your needs after installation of a net meter. When your system produces more power than you use, the meter will "run backwards" and the power company pays you! With Duke, power produced is subtracted from power consumed for your net power bill. If designed right, your system can provide a "net-zero" bill over a 12 month period!
• You can reduce your carbon footprint when you go solar.
• Solar panels are almost entirely maintenance-free. You will want to wash them down occasionally. Birds flying overhead don't care about your power bills. :)
Solar panels certainly have pros and cons. While they don’t work for every family or home, they can have big advantages in some cases, making them a worthwhile consideration.
Have Questions? Call Me!
Sean Rooney, Realtor
If you have questions about solar or how it might work for you, give me a call. I can explain my system to you and the benefits it's given us. I can put you in contact with one of my partners for solar or air for a consultation for energy savings options. As a home buyer or seller, I can help you understand the pros and cons of solar and if it makes sense for your needs.
Focused on Results for You - Serving Orlando and Central Florida Let me handle the details to lessen the stress of the home buying or selling process. It's my goal to get you the best price, the best....