Are solar panels the best investment you can make for your home?

by Amy on March 23, 2018

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When it comes to home improvements, there are lots of options. Depending on your home’s construction, you might be able to add a deck or a room. You could make aesthetic upgrades by replacing the carpets or installing new kitchen cabinets. Or you could install a residential solar energy system, turning your home into an energy production center.

As I see it, there are three ways to measure any investment you can make in your home. You can measure its financial impact, its practical impact, or the sense of satisfaction it gives you.

Measuring the direct financial impact of solar panels - the amount of value they add to your home - is one way to determine whether they’re the best investment you could make for your home.

A luxury kitchen remodel yields a 60 percent payback when comparing initial costs to added value. Even replacing windows and doors typically yields only an 80 percent return on investment. Of course, there’s some variation within each improvement category; adding a new steel door, for instance, could add 102 percent of its value to your home.

But a 2011 study found that adding solar panels to a home boosts its value by about $20,000, allowing homeowners to recover 97 percent of their investment. A more recent study found that a 3.6-kilowatt home solar system will add about $15,000 to your home’s value. According to PowerScout, a California-based solar startup, most homes will need a system slightly larger than this to meet all their energy needs, but the home’s value should increase proportionally relative to the size of the system installed.

But these evaluations don’t include the money you can recoup through savings on your energy bill, which, depending on where you live, could help you save hundreds of dollars each year. The practical impact of investing in solar panels yields a far greater return on investment over the long term.

The precise amount you stand to save varies considerably depending on where you live. Fortunately, there are a number of great resources to help you calculate both the estimated cost of installing a residential solar system and the savings you could see as a result. The PVWatts Calculator developed by the National Renewable Energy Laboratory, for instance, helped me determine that if I installed a five-kilowatt solar system on my Pennsylvania home, I could save about $540 each year on my energy bill. That means that I’ll save about $13,500 in energy costs over the system’s 25-year lifespan. That’s a lot of money!

And if you live in an area that offers net metering like I do, you might be able to not only save money by consuming only the energy that you produce, but earn money by selling excess energy back to your local electric utility.

Other home improvement projects like installing new energy efficient appliances (a new central heating or cooling system, for instance) or double-paned windows can also add value to your home while helping you save money on your energy bills. But reducing your home’s energy consumption will never yield the same level of savings that going
solar will. Only by installing solar panels will you ever be able reduce your energy bill all the way down to zero.

But there’s another important way to measure the value of your investment, and that’s the feeling of satisfaction it gives you. For me, going solar isn’t just about the amount of money I save each month or the amount of value the system adds to my home. Just as important to me is the positive impact my home solar system is having on the environment.

Electricity consumption accounts for one-third of all greenhouse gas emissions in the U.S., and clean energy generation is a crucial piece of the fight against climate change and air pollution. By choosing to go solar, I know I’m reducing my carbon footprint and doing my part to bring about a more sustainable world for my family, friends, and community. I feel a deep sense of pride every time I see the gleaming solar panels atop my home. And in that way, the investment I’ve made in home solar has paid off in ways that can’t be measured in dollars or cents.

Guest Post by Kyle Pennel

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