Can I Really Save Money With Solar Panels?

The rising cost of electricity from traditional sources, paired with the declining cost of solar panels and systems over the last several years, makes solar installation seem like a no-brainer for many homeowners.
But the true cost of solar panels, and whether they’ll help you save money, depends on a few key factors. Before you make the leap, learn how your electric bill, location and incentives can impact your wallet over time.
Review your electric bill
Solar panels generate their own power and can therefore greatly, if not entirely, offset your monthly electricity bill. The higher your bill, the more likely you’ll benefit from switching. But you should note that electricity rates and usage — the main charges on your statement — are volatile.
“If a utility’s electricity prices fluctuate, so could the amount of savings,” says Garrett Nilsen, a program manager at the U.S. Department of Energy’s solar energy technologies office. “Similarly, if energy consumption changes, the amount of savings can also vary.”
Location largely affects electricity rates. The national average is 12.95 cents per kilowatt-hour, according to 2017 data from the U.S. Energy Information Administration.
Look for incentives
The government offers homeowners significant incentives for installing solar panels as an alternate energy source. For example, a residential federal tax credit allows taxpayers to claim 30% of installation costs for systems placed in service by Dec. 31, 2019. The credit dwindles to 26% in 2020 and 22% in 2021, and expires Dec. 31, 2021.
Additional credits vary by location. If your state has a high solar ranking, you may receive extra incentives like cash back, property tax exemption, waived fees and expedited permits. In some states, homeowners with solar panels can sell excess power to their local utility companies. Look up credits available in your state by reviewing the database of state incentives for renewables and efficiency.
Incentives may actually go away and it may not actually pay to wait for too long.
Vikram Aggarwal, CEO of EnergySage
But benefits aren’t guaranteed to last. “As solar is becoming cheaper, state and city governments and utilities continue to reduce the kind of incentives that are available,” Aggarwal says. “Incentives may actually go away and it may not actually pay to wait for too long.”