The Homeowner’s Guide To Solar Power

Solar panels offer potential solutions to many homeowners’ growing concerns about rising electricity rates and climate change. Demand for home solar power is increasing rapidly. In fact, the number of homes with solar power more than doubled in the U.S. between 2017 and 2021.

Let’s get acquainted with the basics of solar power, including the history of solar energy, how it functions, how it impacts home values, and possible incentives for installing a clean energy source on your home.

A Brief History Of Solar Energy

People have used solar energy since ancient times, mostly by utilizing shiny objects or mirrors to focus sunlight as a fire-starting method. The first real photovoltaic (PV) cell, though, dates to 19th-century France, when a young French physicist noticed that a cell he made produced more power when he exposed it to light. Simply put, a photovoltaic cell is made of semiconductor materials that absorb the photons emitted by the sun and generate a flow of electrons.

The first real solar cells may have been produced in 1954 at Bell Labs, where a team of researchers developed the first photovoltaic cells that could use solar energy to power electrical equipment.

The U.S. took an early lead in photovoltaic energy technologies, initially producing most of the world’s solar panels. In 1979, the presidential administration installed solar panels on the White House roof, but the next administration removed them in 1981. The presidential administrations in 2003 and 2011 ordered ground-mounted solar panels and roof-mounted solar modules to be installed, respectively.

The Future Of Solar Technology

Today, the energy solar panels generate is among the cheapest for utilities to produce. It’s also used in a wide variety of ways, from camping lanterns to spacecraft. Some master-planned communities are even using rooftop solar panels and energy storage to turn their homes into virtual power plants.

Many future solar technology advancements are on the way for homeowners. Costs are likely to drop while the panels become more efficient.

How Does Solar Energy Work For Homes?

If you’re considering solar panels for your home, it can help to know how solar works as you’re choosing between various solar systems.

Here’s the short version of how solar works:

1. Solar radiation hits the solar panels, which convert the sunlight into Direct Current (DC) electricity.
2. Because homes use Alternating Current (AC), solar energy systems have a component called an inverter that converts the electricity from DC to AC.
3. Once the power is converted to AC, it’s ready for your home to use or to be fed into the utility grid. This depends on whether your home is off the grid or grid tied.

Off-grid homes must produce all the electricity they consume. Grid-tied homes can feed excess energy into the grid when they produce excess electricity, while also pulling from the grid at night or under other conditions when they produce less energy.

What You Need To Know Before You Go Solar

Installing a home solar array is a major project. If you’re going to invest that much into a home improvement project, you probably want to know what kind of return you’ll get on your investment. Below are some factors to consider:

The Average Cost Of Solar Power For Homes

One of the first questions homeowners ask is how much solar panels cost. In recent years, the cost of installing solar panels has fallen, with home solar prices down 64% compared to prices in 2010.

The cost of installing solar panels is now about $3 per watt. Using the average PV system size of 6 kilowatts, the cost is around $18,000. This price would typically include hardware, labor and permitting.

Tax Credits And Other Home Solar Incentives

While $18,000 is still a substantial price, government agencies and utilities offer rebates and incentive programs to make installing solar panels more affordable. Taking advantage of the federal solar tax credit is one of the easiest ways for eligible taxpayers to reduce the cost of installing home solar panels.

Homeowners who install solar panels through 2032, in 2033 or in 2034 and are eligible, can claim the tax credit on their taxes of up to 30%, 26% or 22%, respectively, of the system cost. Using the $18,000 system cost as an example, the homeowner could qualify for up to $5,400 tax credit at tax time, depending on their tax liability.

State And Local Solar Incentives

Some state governments and utility companies also offer credits and rebates. For example, Arizona’s state government offers the Residential Solar Energy Tax Credit, which may give eligible homeowners a 25% tax credit – up to $1,000 per home – on the total cost of a photovoltaic system. It also reduces personal income taxes. If the amount of the credit is greater than the taxpayer’s liability, they can save it for up to 5 years.

How Much Money You Can Save With A Solar Power System

The amount you’ll save by installing solar panels depends on multiple factors—the price you pay (a larger, better quality solar array will cost more but also produces more power), available tax rebates in your state and your eligibility, the cost of energy from your utility company and the utility company’s policies for customers who produce their own renewable energy. The cost of electricity varies widely from state to state—the higher the cost, the more you can save. For instance, one study comparing 20-year cost savings from home solar power was just under $10,000 in Washington state but more than $32,000 in California.

Utility companies that offer net metering may allow homeowners with solar panels to save the most. In short, net metering allows utility companies to compensate homeowners who produce solar energy and use the grid to store excess electricity. In essence, their excess clean energy goes into the grid and the homeowner can pull energy from the grid at night or at times when they’re not generating enough power to run their home.

The ‘Payback Period’ Of Solar

Not all net metering programs are equally generous. Some utility companies pay solar homeowners a lower rate for their electricity generation than others. They may also charge for connection fees and electricity consumed during peak hours.

That said, solar panels are a solid long-term investment. Solar panels often pay for themselves in 10 – 20 years, which is known as their “payback period.”

To create an accurate estimate of your potential payback period, track your electric bills. Once you know your numbers, you can divide the total cost of the home solar system by the yearly benefit you’ll receive once you install your solar panels.

How Solar Technology Can Impact Home Values

One of the overlooked benefits of installing solar panels is the potential increase in home value. According to Rocket Homes data, homes with solar power are 24.7% more likely to sell over asking price. They also spend 13.3% less time on the market. This data suggests that buyers view solar panels as a beneficial feature, making homes with them easier to sell.

Beyond PV Panels: Other Ways To Go Solar

Even if installing solar panels isn’t right for you right now, adding the money-saving, carbon footprint-shrinking power of clean solar power to your home is still possible. Below are some ways to get energy from the sun without a full PV array.

Solar hot water heater: With a solar hot water heater, you can save 50 – 80% on your hot water costs while only taking up a small amount of space on your roof. 

Solar yard and security lights: It’s possible to have security and yard lights entirely removed from the grid. Highly efficient LED bulbs pair well with solar power to provide the light you need without the need to wire them directly to your home.

The Bottom Line: More Homeowners Are Adopting Solar Energy Systems

Adding solar panels to a home can benefit your bank account and help you potentially reduce emissions. These reasons top a list of what’s motivating homeowners to go solar, according to a survey of more than 2,000 people.

Want to know more about installing solar panels? Our articles about Solar Basics cover many important solar topics, from energy storage to solar carports.

Rocket Solar does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.