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If you’re living where there’s no access to electricity, then it’s a no-brainer. Solar panels are great! (And if you’re living in a windy area, you might want to look at getting a wind turbine (Amazon) as well.)
But what if you have easy access to electricity? Are solar panels still worth it?
Do You Really Save Money With Solar Panels?
Whether solar panels are worth it has a lot to do with:
- the number of hours of sunshine in the year,
- and the cost of utilities.
You really have to look at both of those things to get your return on investment.
For example, if you look at California, the utility costs are very high and there’s a lot of sunlight. So, it totally makes sense to get a solar system in an area like that if trees or other buildings won’t be blocking direct sunlight from reaching your solar panels.
But in Tennesse, they have this thing called TVA (the Tennessee Valley Authority) that has worked very well to keep people’s utility costs way lower than most of the rest of the country. It could still make sense to do solar but you would have to run the numbers on it. (Solar companies can typically give you some really solid data so you can make an informed decision).
The good news is that solar power technology has come a long way in the last decade in terms of cost and efficiency.
I’m (obviously) a big fan of solar power. But mathematically, some areas have an excellent return on investment with solar systems, while it might take you many years to just break even in other areas.
Solar Panels vs Power Purchase Agreements
A solar power system has a high upfront cost, so a solar power purchase agreement (PPA) might sound like a great idea. A power purchase agreement is a financial agreement where a developer arranges for the design, permitting, financing, and installation of a solar energy system on a customer’s property.
Usually, power purchase agreements are a bad idea.
One reason I don’t like power purchase agreements is that, for example, if 3 years later you decide that you need to move you might end up paying for all of the solar system yourself, instead of the new homeowners.
What typically happens is someone wanting a solar system will be told that their 25-year lease agreement would easily just transfer over automatically to the next homeowner.
But, what ends up happening is the real estate agents get involved they tell the new buyer something like, “We’re going to make the seller pay that whole system off because they made the mistake of getting a PPA and we don’t want you to be punished for their mistakes. So, now we’re going to use it as a negotiating tool to not buy the house for as much or make them pay it off.”
Solar Panels & Selling A House
You also want to think about breaking even on your solar system before you sell the house because solar systems don’t always increase the value of a house in most areas.
Actually, solar panels can be an obstacle when trying to sell your home because not everyone likes how solar panels look. And sometimes people are a little confused by the technology and they’re not sure what they’re getting themselves into.
So, if you’re going to break even on your solar system in 3 or 4 years, but you think you might be moving in 2 years, then don’t bother buying them. (That’s just my opinion, but you can always contact a real estate agent and see what they think about solar panels and the housing market in your area.)
Solar Panels & Making Money
A great thing about getting solar panels is if your house is on the grid, your solar power system can potentially earn you money!
Net Energy Metering: This is a system in which a customer’s solar panels (or other energy generators like wind turbines) are connected to the grid. If there’s a surplus of power being made (power that won’t be used by the customer), this power will be transferred onto the grid. This allows customers to make money by supplying power to the grid.
Let’s say you have some solar panels on your roof already, and it’s supplying unused power to the grid…
If you look at the amount of energy you’ve used up all year and then you look at the amount of energy that you’ve produced all year, either you produced more than you used or you used more than you produce.
So, at the very end of the year, if you used more than you produced, you pay for it. And if you produced more than you used, you get paid for it.
A solar power system could pay for itself within a few years if you fed unused power back to the power company.
Solar Panels & Reducing Your Carbon Footprint
If you want to help the planet out by reducing your carbon footprint, then solar panels are worth it.
By installing a solar power system, you’re not relying on a coal-powered plant to send electricity to your house.
Lithium Batteries, The Environment & Humanitarian Concerns
A solar power system will usually include lithium deep-cycle batteries. I recommend you get lithium iron phosphate batteries.
Lithium-ion batteries, which are also widely popular, require special recycling or disposal procedures and can be dangerous if they end up in landfills.
Also, the mining that’s done for the materials needed to build lithium-ion batteries has both humanitarian and environmental issues.
On the other hand, lithium iron phosphate batteries are non-toxic and are made from more common materials without these humanitarian concerns.