Let’s say you’ve spent $15,000 on a solar system. In 10 years, a system will pay you back in bills alone. But that’s not the only way going solar can be profitable. In this article, we’ll learn how solar panels save you money.
The main purpose of solar panels for home is to lower your electric bills. Instead of buying electricity from the grid during the day, you use your own. The average electric bill in the US in 2023 was about $140-$150. If a solar system fully covers your home consumption and you manage to bring the bill close to zero, then panels make you about $1,500 a year.
7-8 years
average payback time of a solar system in US
The more expensive the electricity is in your state, the more money you save and the faster a solar system pays for itself. The weather in your state matters much less than the electric rates in your area, especially with modern panels working better in low-light conditions. That’s why solar pays off great even in cloudy places like New York and Connecticut: high electric bills are the main factor in how much money can solar panels save you.
Solar is a profitable choice for off-grid and mobile solar systems as an alternative to generators. The panels are silent, last longer, don’t smell and you save money on fuel.
>25 years
lifespan of solar panels
The upfront cost of a generator is lower than a full off-grid solar system with batteries for the home, but a PV system provides better savings in the long run. For boat and RV owners, having a couple of solar panels is a better investment cost- and space-wise than a generator. Camper and sailors that use flexible PV modules don’t have to rely as much on trailer parks or shore power so solar panels save a lot of money on gasoline this way.
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A home with a PV system on average costs about 4% more on the market than a house without it, claims Zillow real estate agency. Besides, homes with solar panels sell out a bit quicker.
How much exactly is it? The average cost of a house in the US in 2024 is $500,000. Thus a solar system adds about $20,000 on top. For $20,000, you can get yourself a great solar panel system in any part of the country, so a PV system pays off the moment you sell a house. Of course, a lot is going to depend on the conditions of your panels and the roof.
$7,000-$12,000
average cost of a 7 kW solar system in US after ITC
If solar panels make your house more valuable, does it mean that you have to pay more taxes? Not necessarily. In many states, solar panels are excluded from property tax assessment so you pay the same with or without a solar system. Find an article about solar policies in your state in “Solar incentives” section of our magazine.
A home with a solar system may be an attractive option but not if you lease a system. A lease contract should clarify what exactly happens to a system when the house owner changes, but in general, buyers don’t want a house that comes with a baggage of extra payments.
Net metering is a policy that regulates selling solar energy to your utility. The credits you earn lower the remains of your bill.
20-40%
of a home solar system’s production goes into the grid on average
A good net metering policy heavily impacts how much money solar panels save you. In an ideal scenario, you get paid for your solar kilowatts-hours just as much as you pay for electricity from the grid. It’s called classic net metering. Electricity providers fight this type of deal very hard. That’s why in many places like California it is replaced by net billing where you sell solar energy at an avoided cost rate. In many places, the cost of solar energy changes with time: it rises when demand is high and drops when demand is low. Learn more in our article on net metering.
Avoided cost rate is based on the savings utility gains by buying your solar energy instead of relying on fossil fuels
What if the value of the electricity you sold exceeds your electric bill? The extra kilowatt-hours you exported are called net excess generation (NEG). Some utilities carry over the NEG to the next month and lower your next bill. Some providers set a limit on how much energy they are willing to buy from you and don’t credit you for surplus.
In some states, utilities specify the maximum size of solar systems that are eligible for net metering. Usually, the limit is set at 15-20 kilowatts and larger systems may be treated as commercial installations.
What are Renewable Energy Credits (RECs)? As you may know, America is trying to switch to clean energy. For that, the government has set up goals for states that indicate how much of their electricity production should be clean. When you produce a certain amount of clean energy, you get a renewable energy certificate — REC — that confirms this fact. You can then sell these certificates to other companies that haven’t yet met their clean energy quote. Learn more in our article about Portfolio Energy Credits.
A 10-kilowatt solar system earns around 12 SRECs in a year
One solar renewable energy certificate (SREC) is issued for one megawatt-hour of generated electricity. There are only a handful of states where these SRECS can be sold — all in the northeast. The value of SRECs is dynamic and it is determined by supply and demand, making them similar to stocks. For example in New Jersey, one SREC is valued at a little above $200 in 2024. This means that an owner of a 10-kilowatt solar system in NJ could make $2,400 just from SRECs alone. While it sounds good, in most states SRECS cannot be traded or aren’t worth much.
Some utilities require you to hand over your SRECs to join their net metering program
To start earning SRECs, you should register your system at the public utility commission of your state. However, not every state has ironed out the process so it might be easier to contact a broker service like SRECTrade or SolSystems.
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Andrey had been a news editor and freelance writer for a number of medias before joining A1SolarStore team. Climate change and its impact on people's lives has always been among his interests and it partially explains his degree in Philosophy and Ethics.
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