It’s starting to look like a technological revolution. If you haven’t been interested in this transition up to this point, you should be. The world’s reliance on fossil fuels has become increasingly questionable, both in regard to continuing supply and environmental impact. Solar energy is a remedy for both problems and more.
Why Solar Energy?
Solar energy has only recently become relatively cost effective. As it has, there are several compelling reasons for installing it.
The US Energy Information Administration shows that the average cost of electricity was just 2.2 cents per kilowatt hour in 1970. By 2011, it reached 11.8 cents. In 2018, the cost now stands at 12.89 cents. The direction of electricity costs has become clear.
But the prospects for solar energy are going in the opposite direction. It’s now projected that it will soon cost less than electricity from coal and even natural gas.
As convenient and formerly inexpensive as fossil fuel generated electricity has been, it’s been a disaster for the environment. Solar power by contrast is completely clean, producing no air or water pollution, and no greenhouse gas effects.
Energy supply disruptions
The US was once energy self-sufficient. But as demand for energy has steadily grown, we’ve been forced to import increasing amounts. Imported energy isn’t as reliable as domestic sources. Solar energy eliminates that problem. Generated at home, energy supply is a non-problem.
Solar energy gives homeowners an opportunity to become more self-reliant. The ability to produce energy at home decreases reliance on utility companies.
Increased use of hybrid and electric vehicles
Electric cars, which currently make up less than 1% of the total auto fleet, are expected to grow to 14% by 2030. Electricity will become the “new gasoline”. Those with homegrown power sources, like solar panels, will have a big advantage over those who don’t.
Each of the above factors is growing in importance. As they do, having solar energy production installed on your home will put you in a better position to welcome an increasingly different future.
As a homeowner, you can join the solar revolution by having solar panels installed on your home. This is happening all over the country, even in states like Massachusetts and New Jersey that aren’t known for perpetual sunshine. The installation of solar panels can be supplemented with energy from traditional utility companies during times of low sunshine. It’s a common arrangement across the country.
The primary cost consideration with solar panels is installation. It costs an average of $18,880 to install a 6 kilowatt hour system, which would be sufficient for a standard home. However, that cost can be reduced by thousands of dollars by federal tax credits. That’s what the next section of this article will discuss.
But the payoff will be virtual zero cost in the production of solar energy from that point forward.
The US Government has a program in place to encourage the gradual transition of power and heating sources from fossil fuels to renewables, like solar and wind. They’re doing this through a special tax credit designed to reduce the cost of the transition to residential homeowners.
Money Under 30 has a dedicated webpage where you can see how much you qualify for under the Federal Residential Renewable Energy Tax Credit. Check it out.
Under the credit, homeowners who install solar panels are eligible for the following tax credits:
- 30% for systems placed in service by 12/31/2019
- 26% for systems placed in service after 12/31/2019 and before 01/01/2021
- 22% for systems placed in service after 12/31/2020 and before 01/01/2022
The credit applies to the installation of solar-electric property, solar water-heating property, fuel cell property, small wind-energy property and geothermal heat pumps. Costs includable in calculating the credit are:
- labor costs for on-site preparation
- assembly or original system installation
- piping or wiring to interconnect the system to the home
The credit can be claimed in the year in which the installation is completed. If the home is newly constructed, the “placed in service date” is the date of occupancy by the homeowner.
As a tax credit, the Federal Residential Renewable Energy Tax Credit serves as a reduction in your tax liability for the year in which the credit is claimed. If the credit exceeds your tax liability for that particular year, the unused portion can be carried forward to reduce your tax bill in subsequent years.
Welcoming the Future
The cost of installing a solar system in your home is admittedly high. An average system at $18,840 will be $13,188 even after the application of the 30% federal tax credit. But if you’re currently paying $200 per month for electricity, you’ll save $2,400 per year after installing a solar system. That means the system would pay for itself in about 5 ½ years ($13,188 divided by $2,400).
As a nation, we are clearly transitioning from heavy reliance on fossil fuel energy sources, to electricity produced by renewables. The upfront cost may be on the high side, but the long-term payoff will be permanent. It’s likely that eventually most homes will be either built with solar installations, or they’ll be added later.
You don’t have to wait for later, and you probably shouldn’t. The upfront cost of solar installations is easily justified by the long-term savings. If you have high electric bills, and you’re living in an area with abundant sunshine, the payoff can come even sooner.
The cost of solar energy has fallen to a level where it’s worth some investigation. Have you checked it out yet?
- 7 Tips To Help You Save This Winter
- Can Utility Bills Help Build Your Credit?—How Late And On-Time Payments Affect Your Credit Score