4 Ways to Determine If Solar is Right For You

by Andy Schell

April 27, 2021

Solar energy is a great investment for many. In addition to producing clean, sustainable energy, solar offers you a tool to save your hard-earned money.

But, that doesn’t mean everyone should invest in solar. There are situations where the economics behind the investment simply don’t make sense.

There are a few factors that every home and business owner should consider before diving into a solar investment. The four ways outlined below will help guide you in determining if solar is a good financial investment for you. 

Here are four signs solar might be a good investment for you:

You’re Looking to Shield Your Budget

Inflation. After a walk around the grocery store or a quick stroll through your local lumberyard, you’ll see prices for almost everything are on the rise. Most people are digging a bit deeper into their monthly budget than they were just a few months ago.

We’re looking for a little more savings these days and to protect our budgets from these increasing costs. Solar gives you that shield by eliminating or reducing your electric bill for the next 30+ years. Never worry about a rate increase again.

You’re Looking for Tax Savings

One of the great benefits of owning a solar system is the tax savings that come with it. Through 2022 there is a 26% federal tax credit available that can be used to offset your owed federal taxes. A nice benefit of this credit is that it doesn’t need to be used in full the year your system is energized. Homeowners can carry it forward for five years until it’s used up. Businesses can carry it forward for 20 years and even go back to recoup taxes paid during the prior year.

Solar energy is a great investment for many. In addition to producing clean, sustainable energy, solar offers you a tool to save your hard-earned money.

But, that doesn’t mean everyone should invest in solar. There are situations where the economics behind the investment simply don’t make sense.

There are a few factors that every home and business owner should consider before diving into a solar investment. The four ways outlined below will help guide you in determining if solar is a good financial investment for you. 

Here are four signs solar might be a good investment for you:

You’re Looking to Shield Your Budget

Inflation. After a walk around the grocery store or a quick stroll through your local lumberyard, you’ll see prices for almost everything are on the rise. Most people are digging a bit deeper into their monthly budget than they were just a few months ago.

We’re looking for a little more savings these days and to protect our budgets from these increasing costs. Solar gives you that shield by eliminating or reducing your electric bill for the next 30+ years. Never worry about a rate increase again.

You’re Looking for Tax Savings

One of the great benefits of owning a solar system is the tax savings that come with it. Through 2022 there is a 26% federal tax credit available that can be used to offset your owed federal taxes. A nice benefit of this credit is that it doesn’t need to be used in full the year your system is energized. Homeowners can carry it forward for five years until it’s used up. Businesses can carry it forward for 20 years and even go back to recoup taxes paid during the prior year.

In addition to the federal tax credit, businesses and farmers can take advantage of accelerated depreciation. This would allow you to use 100% of the federal tax savings from depreciation the year the system is energized. State depreciation benefits would be spread over the 5-year MACRS schedule.

You Have a Suitable Spot for Solar Panels

The next thing to consider is where you will install the solar panels. Panels can be installed on your roof or on the ground as a ground mount.

Roof-mounted systems tend to be the most popular installation method, but both roof and ground-mounted systems have pros and cons.

To determine which installation method is best for you, ask yourself the following:

• Is your roof relatively new and in good condition?
• Which way does your roof face (south is ideal, but panels can also do well facing east or west)?
• Is your roof’s pitch adequate (ideally it will have a 30-40° tilt)?
• Is their shade that would impact the panels?

Ground mounts can be a great alternative if you don’t have adequate space on your roof or you just don’t want to install panels on your roof. However, ground mounts do typically come with a higher price tag than roof mounts, and that land will be tied up for the next 30+ years.

You Have Access to Funding

Solar does require a significant upfront investment to cover the installation cost. Homeowners can expect to pay $20,000 to $45,000 before utilizing any tax incentives. Businesses could be looking at $100,000+ before incentives and grants. You’ll earn that money back over the next several years by eliminating your electricity bill and the tax savings; however, you’ll still need to have the funds to cover the upfront costs.

There are options available for those that don’t want to cover the upfront costs. These come in the form of community solar, operating leases, or power purchase agreements (mostly commercial or non-profits). Although these methods won’t eliminate your electric bill or provide the same tax savings, they will provide you with a clean energy solution. 

Is Solar Energy A Wise Investment For You?

If you are looking for a shield from your ongoing electricity bills, a solar system can provide you with those savings. If you pay taxes and live in an area that offers additional incentives, it’ll be even easier to make that upfront investment. However, you also need to consider whether or not you have the space needed to install the solar panels, and that you have access to cash or financing to cover the initial cost.

If you find that your scenario meets many of the criteria talked about above, the next step would be to speak with 2-3 solar companies to compare your options.

Maybe you want to do more research before contacting solar companies. There are many great online solar resources available, including this educational solar buying guide, that can help guide you through the process of learning the ins and outs of a solar investment.

by Andy Schell, Marketing Manager for Paradise Energy Solutions.

Paradise Energy Solutions is a family-owned, full-service solar installation company with over 1,400 solar installations throughout the mid-Atlantic region for businesses, farmers, and homeowners.