HOW MUCH MONEY DO SOLAR PANELS SAVE?
The most common question we get asked is, “How much money do solar panels save?” Although the answer may seem straightforward, solar savings go well beyond the financial savings of lower electricity costs. Today we will examine three aspects of solar energy savings:
- Electricity bills
- Tax credits
- The environment
How Much Money Can You Save on Electricity Bills With Solar Panels?
The most common reason that people choose to “go solar” is to save money on monthly electricity and power bills. How much money do you save on these bills thanks to solar power? Well, a lot depends on how much solar energy your system is generating.
You will save more money with solar panels the more your system generates. The amount of power your solar panels save will depend largely on the size of solar panel system you have, the type of solar installation you have, and weather and shade conditions in your area – this all will impact how much power is generated, and therefore how much your solar panels save. The average home solar installation typically generates 350–850 kilowatt hours (kWh) per month. According to the U.S. Energy Information Administration, the typical house consumes 909 kWh of energy every month, thus having solar may reduce your electricity costs by up to 90%.
At Watt Masters, we are dedicated to assisting our customers in beginning to save the most amount of money by designing and installing home solar the right away. We offer many options for financing your new solar panels. Homeowners who may not be otherwise able to buy solar can install a system on their house with no money out of pocket thanks to our solar financing options with $0 down! Customers will only be responsible for a small monthly payment to finance their system and a minor fee of around $10 to keep their solar panels linked to the grid for those times when you need a little extra beyond what you were able to produce. But if you additionally build a home solar battery backup system along with your system, you probably won’t ever need to use the grid again! This is how you save the most amount of money and safegaurd yourself from unexpected and rising utility rates.
Overall, it is our goal to assist our clients in saving thousands on their residential solar panel installations.
How much money Can You Save With Solar Tax Incentives?
You are entitled to government tax deductions if you install a solar panel system on your home or business. With the recent passing of the Inflation Reduction Act solar panels installed from 2022 to 2032 are eligible to deduct 30% of the cost from federal income taxes, as well as the cost of any required remodeling or retrofitting work connected with the solar installation. As a result, if you spend $10,000 on your system, you will be eligible for a $3,000 tax credit. Additionally, several local state jurisdictions let families who use solar panels be eligible for a state income tax deduction.
The U.S. federal solar tax credit is available to all Watt Masters Solar customers that pay federal taxes. Because understanding these tax deductions may be complicated, we provide our clients with straightforward, step-by-step guidance to make the process of getting these savings simpler than ever.
How Much Will the Environment Be Saved by Your Solar Panels?
When deciding whether to go solar, you may be excited to hear about the massive amount of positive environmental benefits your solar panel system can have.
Photovoltaic cells benefit our environment in a variety of ways, by producing power in an alternative way that avoids detrimental impacts that more traditional power sources have. Many electric utilities still use coal as a fuel source, which produces carbon dioxide as a byproduct. The typical household solar system will compensate for the energy generated for its lifespan by preventing the burning of more than 80 tons of coal which would otherwise emit 175 tons of carbon dioxide into the Earth’s atmosphere. With each solar panel system that is installed, we are able to eliminate the equivalent detrimental effects of two gas-powered automobiles that each drove 200,000 miles.
Nuclear energy and hydropower are two other traditional power-producing options, although they also need enormous quantities of water. In contrast to costly dams, solar panels utilize no water, therefore there is no danger of environmental disruption or radiation contamination. In certain areas, reducing wasteful water use could make a significant difference in water shortage issues.
The more solar panels that are installed, the less coal is used by power plants, which results in cleaner air. According to the US Office of Energy Efficiency & Renewable Energy, pollution reduction might save more than 25,000 lives.
The amount of energy produced and resources saved equates to 4,000 trees being planted. Installing solar panels contributes to a bigger effort to decrease pollution and protect our environment, in addition to saving money on your utility bill, owning your electricity, and contributing back to the power grid. You are the difference-maker.
Saving the planet is admirable, but what exactly are you saving?
How Will Those Solar Savings Affect You in Real Life?
There are many ways to save money with solar energy, but most of them boil down to the same fundamental point: who owns your power?
Your energy is currently owned by the power company. And they get to pick whether the price goes up or how much you receive. You can choose a smaller system to offset part of your electricity usage, or become completely energy independent and gain full control over your electricity rates and power production by installing a larger solar system on your home along with solar backup batteries (some customers prefer to get systems that reduce their electricity need but not outright eliminate the need for the public power grid).
However, the way you install your solar system and which solar installer you use could significantly alter the amount of money you save now and in the future.
Part of what impacts your savings is how you purchase your system. At first glance, each option seems rather simple and self-explanatory, however some options are not very beneficial at all.
- Power Purchase Agreements (PPAs)
- Solar Leasing
- Solar Purchase
Depending on which one you choose, each of these buying possibilities has a significant difference and some can actually negatively influence your financial savings.
The most straightforward is a solar purchase: once you buy anything, you own it. But we’ll discuss how valuable this straightforward transaction becomes later.
Solar leasing is similar to leasing a vehicle in that you effectively can use everything, but you’re paying to rent rather than buy.
With a power purchase agreement, you may transfer the cost of your electricity to a solar developer. You pay them for electricity rather than the power provider, and they pay the bill and install the machinery.
You may lease either electricity or equipment using those latter two choices. These techniques are often sold at a cheap buy-in which can ease your transition into a contract. That said, with the right solar company, you may also be able to get $0 down solar financing which also enables you to easily get solar.
The downside of solar leasing and power purchase agreements however, is that you will forfeit the majority of your solar power savings.
Own Your Electricity
You cannot take advantage of the tax benefits or even completely benefit from the power savings if you do not directly own your equipment and electricity. This may significantly affect how much money your solar panels save you.
But all that is avoided when you buy anything. That’s your power, whether you fund it gradually over time (with solar financing) or buy it outright all at once. You will pay whatever flat sum you decided upon at the beginning throughout the years of saving. The only time you pay extra for electricity is when you use more than your system can handle (and there are ways to fix that).
In Phoenix, the average time it takes to break even on your solar system is around 7 years. So you will have many years of free electricity. Solar is a no-brainer in Phoenix and the surrounding cities.
Take Advantage of Tax Breaks
Your tax deductions have a significant role in your savings as well. Most laws state that you lose all rights to your system if you don’t own it. Instead, your developer or electricity supplier gets to use it to cover their expenses. In this case, your solar provider receives the deductions for billing you instead of you getting the deductions for establishing a green, renewable energy system.
Avoid Price Increases
You’re playing a shell game with your electricity bill if you don’t own your solar. You pay a developer or make payments on your lease each month instead of making payments to the electricity provider. Additionally, the contract you sign may include price escalators or other provisions that takeover the money that you expected a solar system to save you.
In the previous 20 years, the cost of power has climbed by more than 60%, as we examine in our article Are Solar Panels Worth It in Arizona? It would be naive to believe that the world won’t rely on electricity again within the next 20 years, given how heavily it now does. Anyone using solar power on a lease basis or who hasn’t invested in it at all will be subject to the whims of the person who owns their electricity.
What are the Real Numbers, then?
Watt Masters is committed to giving you the most accurate representation of your potential savings. We don’t intend to misdirect you. In actuality, leasing deprives you of a large number of advantages.
From beginning to end, we can guide you through the procedure. Let’s summarize what we’ve discovered so far:
- PPAs let third parties build their designs onto your home and charge you for your electricity at their rates. If you are paying less for solar panels than you were for your electricity bill, you may still save some money. They are also the ones who gain from tax deductions.
- You may rent a company’s solar power system under a leasing agreement. Solar saves money IF a less expensive lease option is available. They also profit from the tax deductions.
- With Solar Financing, your money goes toward purchasing the solar system but also depending on your circumstances, it may be ALL you pay for in the coming years. Owning gives you control over your solar system. As soon as you pay it off, you effectively don’t have a utility payment and anything you own helps to create a greener world.
- Another major benefit to owning your solar panel system is the increase in home value and demand should you ever decide to sell your home.
Let's discuss what you would be looking at for solar panel installation if you were thinking about buying outright or by financing the system.
Watt Masters provides upfront no-obligation solar quotes so that you know exactly what to expect, what type of system would work best for your property, and how much it will cost.
We will come out to your home to evaluate your particular housing situation and design a solar panel system that optimizes your exposure to sunshine and lowers your electricity costs, however much you choose. We will discuss your current electricity usage, review past utility bills, and even discuss future electrical needs such as EV charging station installation. If you are interested in learning about the financing choices that are available to you, then we will also discuss be asked some basic questions about your financial condition so that we can get you the best possible financing options available to you. We will let you know if we don’t believe installing solar would be a smart option. We’re not here to add unnecessary expenses or complexity to your life. We do what is right, that’s why we have maintained such a trustworthy reputation after 20 years of installing solar in the greater Phoenix, AZ area.
If everything checks out well and it’s obvious that a solar panel system will save you enough money to justify your investment, then we can typically get started right away. Our expert solar team will design your system, assist you in obtaining the required local government permits, we will source all of the equipment and install everything for you. On average, from the time of signing to a completed installation, the procedure takes two to eight weeks.
After installation, it must pass another city inspection. If the installation is permitted by the city and utility inspectors, we turn on the switch, and you start generating power from the sun immediately.
We’ll be there for you every step of the way, and if you get stuck or confused, we can provide you with advice. Once installed, all your attention should go into reducing the cost of your solar system payment. Solar energy reduces both your current electric bill and the growing cost of energy in the future. Depending on where you live, you may even be able to sell your excess electricity back to the grid (we can help you figure that out too!).
Although it may seem difficult to predict precisely how much money solar panels save since several things will affect it, it is clearly evident that in Phoenix, the savings are huge and are well worth the investment.
Fortunately, Watt Masters Solar is here to make sure you’re maximizing your savings. With our free estimate, we can assist you in starting to save. With Watt Masters Solar, you can start saving right now on your monthly expenses, federal income taxes, and even the environment!