What is the true cost of solar panels for your home? Are solar panels worth the investment? We did a deep dive to help you understand the ins and outs of solar cost and financing.
What You’ll Learn in This Article:
- What is Solar Energy?
- What is Solar Financing?
- How Much Can Solar Save You?
- Pros and Cons of Going Solar
- Solar Financing Solutions
- The Bottom Line
What is Solar Energy?
Solar energy, the most abundant source of renewable energy in the world, is sunlight converted into electricity.
Solar panels, known as photovoltaic modules, create electricity by capturing solar radiation and turning it into energy we can use. Once generated, 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 is Solar Financing?
Solar financing provides homeowners with the funds they need to buy or lease solar panels and have them installed at their home. Solar financing works similarly to loans made for cars and other home improvements. They can be a worthwhile option for homeowners who don’t want to pay cash upfront for expensive solar energy systems.
How Much Can Solar Save You?
The True Cost of a Solar Energy System
Solar panel costs can vary widely depending on the type of panel, the manufacturer, and the number of panels you’ll need to offset your home’s energy consumption.
According to recent reports by the Center for Sustainable Energy, solar panels for a 5-kilowatt residential system will cost between $10,000 to $15,000 before tax credits or incentives. However, this figure doesn’t include additional costs, such as whether your solar energy system will be grid-tied or require roof or electrical upgrades, which typically result in higher numbers. At Lumifi, for example, our data shows an average total cost of $21, 000.
Adding optional equipment—such as solar batteries that bank solar power for use during nighttime hours, outages, or even rainy days—can also affect how much you’ll spend on solar. Even your local weather can affect the cost of your solar energy system. See more sunshine than rain? You likely won’t need as many panels to power your home as someone who lives in a cloudy climate.
Will Solar Panels Lower My Utility Bill?
Does going solar save you money? The short answer is yes.
Admittedly, a variety of factors determine how much money you can save with solar—such as how much energy you use, how large or small your solar energy system is, what direction your roof faces, the tilt of your rooftop, and how much shade falls across your panels—and it often takes up to three months before you’ll see a noticeable change in your average monthly electric bill with solar panels But despite all that, your home solar energy system will continue to generate electricity, kilowatt after kilowatt. And each kilowatt produced is one you don’t have to buy from the utility company.
In other words, the long answer is still yes. You can future-proof your expenses with a rooftop solar panel installation and protect your energy costs from rate hikes.
Can I Buy My Own Solar Panels?
It is possible to purchase your own solar panels directly from manufacturers and DIY your installation. Doing it right could even save you around 10% on “soft” costs like labor and fees. But unless you’re incredibly electrically savvy, a DIY installation will likely cost you more in the long run—especially on a whole-home solar panel system. According to Solar Action Alliance, any money you might save could be offset entirely if you have to pay retail prices for each panel.
Pros and Cons of Going Solar
Solar Energy is More Affordable Than Ever
Some advantages of solar energy include access to the 30%, one-time federal investment tax credit that’s available for residential solar PV systems. That and other incentives, such as those for low- and moderate-income areas, mean a bump in the already strong returns you can expect on your investment in solar energy.
Solar Panels are A Good Investment
Are solar panels worth it? According to EnergySage, you can lower your monthly energy bills and increase your home value with a solar panel system. Some states and cities in the U.S. also offer additional savings in the form of solar renewable energy certificates (SERCs) when you generate energy with your home solar installation and send it to your municipal grid.
Solar Panels Help the Environment
Solar energy is the ultimate renewable resource. Want to make an impact on the planet? Installing solar panels on your roof can help push progress in the right direction by potentially offsetting the environmental impact of driving over 900,000 miles in an average car.
What About the Payback Period?
The average solar panel payback period—the time it takes to break even after your initial investment—is about 8 to 9 years. Whether you decide to live in your home long-term will make a difference in how much money you save by going solar.
Solar Financing Solutions
While there can be benefits to paying cash upfront for a solar panel installation, more and more homeowners are opting to finance their solar project. Why? Because they’ll get added financial stability and community from a bank-backed, FDIC insured partner like Lumifi.
Our Solar Purchase Loan Products
Homeowners who opt to buy solar panels can finance up to $100,000 through Lumifi. Our loan product lets customers choose between two term options, both with an interest-only period for incentives or principle paydowns. Loans include a single amortization that takes place in the 18th month without any obligatory minimum incentive paydown. These loans are perfect for those who want to take advantage of tax credits and local incentives.
Our Solar Lease Products
Homeowners who opt to lease their solar panels through Lumifi can simplify their experience with our two term options, both offering fixed monthly payments and a performance guarantee of 85% of annual production (adjusted for degradation and shading). You can lease with peace of mind knowing we have buyout, transfer, and purchase options to meet your changing home ownership needs. This option is a great match for homeowners without the ability to utilize available tax credits.
The Bottom Line
Residential solar energy systems are an investment into your financial future and the future of our planet. While many factors affect initial costs, one thing is certain: they are investments with solid returns.
Purchasing panels upfront with cash is the most cost-effective way to add a solar energy system to your home, but the expense of solar energy systems makes paying in cash a non-option for most homeowners. Financing your solar panels with Lumifi allows you to begin using your solar panels quickly, without the financial stress of a large payment.
Ready to invest in your financial future by going solar? Contact Lumifi today!
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