Going solar: Why it doesn’t pay to wait
If you’ve been following solar even just a little bit, you know how dramatically the cost of going solar has dropped. In 2007, the cost to install a residential solar array was more than $8 per watt. Since then, solar technology has improved, the market has grown considerably, and costs have continued to fall. According to the most recent data, from 2017, the average cost of going solar for homeowners is less than $2.90 per watt. This cost varies a lot depending on your location. Many installers, when they give you a proposal do not tell you the cost per watt. For some reason they give you the total cost and the total number of panels. Don’t worry, you can easily calculate the cost /watt by taking the total cost (that should include the panels, the labor and all of the permits and installation) and divided by the total number of watts or kilowatts listed on the proposal. It may seem logical to wait for an even lower price, but changing policies (e.g. the 30% federal income tax credit) and the opportunity costs of offsetting rising utility costs make now the most compelling time to go solar.
Tax credit step-downs
In addition to the money you’ll save on your utility bill, your initial investment in solar is eligible for a 30% federal income tax credit. The 30% tax credit is based on the system’s gross cost and is only available for a limited time. You can only claim the credit if you purchase the system and pay federal income tax. If you lease your system, the lessor will take the tax credit. The tax credit will be phased out in the coming years, dropping to 26% in 2020, 22% in 2021, and to zero in 2022. 2019 is your last opportunity to take full advantage of the 30% credit.
Solar can help you save more if you act sooner
Beyond the tax benefits to going solar now, you also have to factor in the increasing cost of electricity from your utility. It doesn’t pay to wait. The Energy Information Administration, the federal agency responsible for providing data about the energy market, reports that utility costs have increased on average 1.6% per year between 2006 and 2016. The sooner you go solar the sooner you start saving on your electric bill. Plus, you have the added benefit that the money you save with solar isn’t taxed. Your earnings are savings. So, if you were to consider the value of investing in solar compared to other investment options, solar becomes even more attractive
You should also consider the value that solar adds to your home. A 2015 study conducted by the Berkeley Lab Group found that solar does increase the value of a home. The study encompassed 22,000 home sales. On average, the systems added $15,000 dollars to the value of the home.