If you drive through any neighborhood in Phoenix, Arizona you will see a few homes with solar panels on the roof. Your first thought may be “why doesn’t every home here have them?” After all, this is a place that averages over 330 days of sunshine per year. If any region could show the world how renewable solar energy can work it would be the American southwest.
This won’t shock you. It’s the cost. At least that’s what everybody thinks. A household could get all of its electricity from solar cell panels (photovoltaic panels), but the average homeowner is usually reluctant to pay for the initial outlay.
Another reason we are lagging behind in jumping on the bandwagon for solar energy solutions is that the solar market took a financial hit just like the rest of the economy in the recent downturn. Most companies and individuals watched their ability to invest in new solar initiatives dry up with the bad economy or the credit crunch. Innovation and implementation of the dream of cheap renewable energy has taken a hit in recent years.
But we may be getting to a place where the economic incentives can now meet the technology.
The Federal Government is giving back in tax credits to homeowners up to 30 percent of the cost of installing solar or geothermal energy in their homes. States also add incentives above and beyond the Federal breaks. You can find them here.
A tax credit for installing solar panels can save hundreds of dollars on energy costs. A $50,000 investment can be paid off in five years and can save $1,600 a year in electricity bills. The tax subsidies last through 2016 and are eligible for a tax credit equal to 30% of costs, with no cap. You will need to file IRS Form 5696 with your taxes, and keep receipts for the installment.
You can still go green without the cash by leasing panels. All it takes is a company willing to lease and install the panels with no money down (the solar leasing company gets the tax breaks and incentives). As an example, a company called SolarCity installed panels on a house that was used to paying an average of $269 per month for electricity and leased the panels generating 100% of the electricity to the homeowner for $107 per month. That’s a pretty good savings that also reduces the carbon footprint of the homeowner.
You may want to consider going with solar if you are selling a home or re-financing. It could help a sale since utilities are a big consideration when buying and it modernizes the property. If you match a lower rate and the tax incentives together by re-financing, you could lower your rate and your bills in one shot and it reduce the costs of the solar panels 30-50%. You could break even in just one year.
If you’re still not convinced that going solar is a good move, Google has just sealed a deal to invest $168 million in a Mojave Desert solar energy plant. How smart are they?