Like many Americans, you've probably considered installing solar panels on your home or business in the past few years. Maybe you've even started looking into prices or talking to neighbors who have switched. Whatever your reasons are for considering a solar energy system, now is a great time to take action as prices continue to come down and electricity rates continue to go up.
Apart from the more obvious benefits, such as lowering electricity bills or helping the environment, there are other lesser-known but equally impactful reasons to get your electricity from the sun. Solar is a new financial product in many ways and should be viewed as a long-term investment. And as with all long-term investment opportunities, talking to your financial advisor is a great place to start.
Even if your advisor is not familiar with solar, they'll quickly understand the economics of the decision and know if installing solar makes sense for you.
With all that in mind, here are 5 reasons why you should talk to your financial advisor about installing solar panels.
Financial motivations are now the primary factors driving increased interest in solar panels. A solar energy system can generate annual returns ranging from 10% to more than 30%, depending on whether or not you own the system outright. The average solar homeowner breaks even on their investment in just seven years and saves tens of thousands of dollars on their electricity costs over the 25+ year lifespan of the system.
Solar panels provide a low-risk mix of cost savings and steady, increasing returns that can rival the returns of more traditional investments like stocks aren't and bonds. There aren't many other investment options capable of producing consistent, safe returns of 10% or more for 25+ years while insulating you from unpredictable fluctuations in public markets. As a bonus, most of your returns come from savings, not income. This means your solar returns aren't subject to federal or state income taxes.
A diversified portfolio that includes solar can not only outperform a standard investment portfolio; it'll also free up capital. Those annual savings can be reinvested at regular installments back into the market, creating a compounding effect and amplifying the value of your solar installation. Combining your solar savings with incremental ROI could yield more than $115,000 over 20 years.
For retirees or those living on fixed incomes, installing a solar panel system can go a long way in establishing a secure financial future. By generating your electricity, rather than buying it from your utility, you can protect yourself from unpredictable rate increases. Plus, solar has been proven to increase property values, and in some states, your panels can even produce income in the form of solar renewable energy certificates (SREC for short).
The federal government offers a tax credit of 30% of the cost of purchasing your solar energy system. If you expect a high tax bill this year, installing solar is a great way to reduce some of your expected liability. However, this tax credit (which disappears altogether for homeowners in 2022) is only available if you own your system. You're not eligible if you sign a lease or power purchase agreement (PPA) with a solar installer. Talk to your financial advisor for help deciding which financing solution is right for you.
Hopefully, these five reasons will give you new subjects to cover the next time you sit down with your financial advisor. For help understanding if solar panels make sense for your unique situation, try a Solar Calculator to get a quick snapshot of upfront costs and long-term savings. When you're ready to begin looking at solar quotes, EnergySage makes it easy to receive and compare multiple offers online from pre-screened solar installers in your area.