Investing in solar panels can be a significant step for homeowners. Often, their questions boil down to the following:
· How much is it going to cost me?
· How much will it save me?
· How will it increase my home’s value?
Overall, when you make this type of investment, you want to make sure that it provides some type of long-term return. Here’s how you can do that.
Should I Purchase My Solar Panels with Cash?
If you’re looking to significantly lower the price of your solar panels, your best option is to pay with cash in full. Initially, this was the only way to install solar panels on your house. Today, it’s the least popular method of purchase.
Cash solar deals allow homeowners to capture more savings than any other solar financing option. It instantly adds value to your home and allows you to take advantage of the 2021 26% US federal tax incentive (see more on that below).
If you select a cash solar deal, make sure you buy your panels at a fair price. If your home requires a simple install and no upgrades, then a cash deal should not cost more than $3,400.00/kilowatt. Avoid working with a company that is charging more than that for a home with a straightforward roof-mounted solar panel system.
Are there any downsides to using cash? Only that you’ll need to have significant cash savings to put toward this investment, and you won’t be able to use these funds for other expenses in the meantime.
What is the US Federal Tax Incentive?
The investment tax credit (ITC) allows you to deduct 26% of the cost of installing a solar energy system from your federal taxes. This applies to both residential and commercial systems and has no cap on its value. According to EnergySage, the ITC helps the average shopper save around $9,000 on the cost of going solar.
Can I Obtain Solar Panels Through a Loan or Lease?
If you don’t have all the cash on hand, does that mean you can’t install a solar system? No, there are a few other options- most of which allow you to go solar with $0 down —a loan, lease, or solar power purchase agreement (PPA) — that still allow you to make this investment. That said, the return on these options isn’t generally as good as those on a regular cash deal.