What You’ll Learn in This Article:
- What is Solar Energy?
- What are Solar Panels?
- What is A Solar Battery?
- What is Net Metering?
- 3 Financial Advantages of Purchasing Solar Panels
- The Bottom Line
What is Solar Energy?
Solar energy, the world's most abundant renewable energy source, is sunlight converted into electricity.
Once converted, solar energy can be sent to a power grid, banked for future use, and used in a variety of ways—from charging the battery in your calculator to powering the lights in your home.
What Are Solar Panels?
A solar panel, also called a photovoltaic panel or module, is a device that converts the earth’s most abundant renewable resource—sunlight—into usable electric energy. As you might expect, solar panels are most efficient—and can save you the most money—when they’re installed in sun-drenched areas, but they can still lower your energy bills in cloudy climates.
What is A Solar Battery?
A solar battery is an extension of your solar energy system. Solar batteries are not necessary to generate solar power—they allow you to store any excess solar energy your system generates. They can significantly increase your residential solar system's versatility, efficiency, and cost-offset.
What is Net Metering?
Net metering is a billing function that credits homeowners for the electricity their solar energy system adds to the electrical grid. When a home system generates more electricity than it uses during daylight hours, a net-metered home’s credits offset the energy it uses at night or on cloudy days—in other words, these customers are only billed for their “net” energy use. Exported solar electricity is used to power nearby customers’ homes and businesses.
3 Financial Advantages of Purchasing Solar Panels
Advantage #1: Solar Panels are A Surprisingly Affordable Investment with Solid Returns
Investing in a solar panel system for your home can do a lot for your wallet.
With advantages like rebates, state and local incentives, and the federal solar tax credit—which affords homeowners a tax reduction of 30% of installation costs through 2032—solar is more affordable than ever. For those who qualify, it is also possible to apply the 30% tax credit to the cost of a solar battery installation, allowing homeowners to save even more on their average monthly utility bills.
Adding a solar installation to your home can also increase its market value. Just like beautifully renovated design and interiors, residential solar energy systems are often seen as upgrades by prospective buyers—upgrades that buyers are willing to pay a premium for.
Whether you pay cash upfront or get a solar loan from Lumifi, owning your panels outright means you can take advantage of these incentives right away and boost the strong returns you can expect on your investment in solar energy. And just how strong is that return? EnergySage estimates homeowners will save an average of $20,000 to $96,000 over the lifetime of their residential solar energy system.
Advantage #2: Solar Panels Can Lower Your Short-Term Expenses
On average, it takes about 8 to 9 years to break even after your initial investment in a solar panel system. But don’t let that fool you—once your rooftop installation is complete, you’ll start saving money with solar panels almost immediately. Lowering your monthly energy bills by offsetting the amount of electricity you need from your utility company’s grid will help keep costs down and bank balances up.
Add a solar battery to your home system to lower your average monthly energy bills even further. Solar batteries range in cost from $200 to $14,000, depending on several factors like battery type, system size, and power capture goals. The upfront cost can be steep, but their ability to bank any extra power you generate will help you save more with solar month after month. Instead of drawing power from the grid on those long winter evenings, using banked power will keep your monthly costs right where you want them.
Advantage #3: Solar Panel Systems Can Protect Your Financial Future
Fluctuating costs caused by inflation, supply chain challenges, and changes in demand can wreak havoc on your budget—and energy costs certainly aren’t immune to sudden spikes.
In 2024, the International Energy Agency (IEA) projects that wholesale energy prices in the US will remain two to three times higher than in 2020. Going solar can stabilize those costs—especially for homeowners who install solar batteries and take advantage of net metering—and help protect their financial future.
Adding a solar battery to your residential solar energy system can be a great way to even out the ups and downs in the power your home pulls from the grid during non-daylight hours and cloudy days. As an added benefit, stabilizing your home’s access to power during periods of high demand, like winter storms or heat waves, affords you a degree of energy independence from local and state power grids when those systems are overloaded.
In Missouri, the Easy Connection Act requires all utilities to offer net metering for customers with solar, wind, or hydroelectric systems of less than 100 kW on their home or business. When these systems are connected to the local grid, the customer receives full retail credit toward their monthly usage for the excess energy they generate. Any energy beyond monthly usage is credited at a wholesale rate.
The Bottom Line
Residential solar energy systems are an investment in your financial now and your financial future. While upfront costs for solar panels are significant, the economic advantages of most home solar panel systems make going solar worth it.
Taking advantage of tax incentives and rebates, net metering, and system add-ons like solar batteries can help your solar savings add up. Regardless, homeowners who go solar will continue to see increased savings across the lifetime of their solar energy system—during and after the break-even period.
Financing your solar panels with Lumifi allows you to begin using your solar panels—and see savings—quickly. Ready to invest in your financial future by going solar? Contact Lumifi today!
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