Solar School for Homeowners: Lesson 4: How Much Does Transitioning to Solar for My Home Cost?
Welcome back to Solar School! If you've missed our previous lessons on solar energy basics for your home, you catch up here. Throughout this series, we've been diving deep into the world of solar power, offering valuable insights to support your journey toward renewable energy. In today's lesson, we'll tackle one of the most crucial aspects of going solar: understanding the costs involved.
Cost is a major factor when considering solar energy. This lesson is for you if you've asked yourself:
What are the expenses to consider when switching to solar energy for my home?
How much will it cost to install solar panels on my house?
What financial incentives should I be aware of when transitioning to solar power for my home?
So, let's jump right in! And if you still need to check out our previous lessons, be sure to do so for a comprehensive understanding of solar energy.
What are the expenses to consider when switching to solar energy for my home?
When considering the costs of transitioning to solar energy, it's essential to factor in several key expenses including but not limited to:
Solar Panel System: The cost of the solar panel system itself will vary depending on factors such as system size, brand, and quality of components. Generally, you can expect to pay between $15,000 to $40,000 for a residential solar panel system before incentives.
Installation Costs: Installation costs typically include labor, permits, and equipment necessary for mounting the solar panels on your roof or property. These costs can vary based on your location and the complexity of the installation. At Sugar Hollow our installation costs are included in our quote to you, keeping you informed of the total expense of transitioning to solar from the start.
Battery Backup: If you opt for a battery backup system to store excess energy generated by your solar panels, you'll need to budget for the cost of the batteries and installation.
Maintenance and Monitoring: While solar panel maintenance costs are relatively low, it's essential to budget for occasional cleaning and inspections to ensure optimal performance.
Financing Options: There are various financing options available for solar installations, including cash purchases, solar loans, etc. Each option has its pros and cons, so it's essential to explore which option best fits your financial situation and goals and how that may impact your total transition costs.
How much will it cost to install solar panels on my house?
Providing a precise cost for installing solar panels on your house is challenging due to the many variables involved and that is exactly why we provide custom quotes for every solar project. However, here are some tips to help estimate the cost:
Determine Your Energy Needs: Start by assessing your average monthly electricity consumption and desired energy production from solar panels. This will help you determine the size of the solar panel system you need.
Get Multiple Quotes: It's essential to obtain quotes from multiple solar installers to compare pricing, equipment options, warranties, and financing terms. This will help you find the best value for your investment.
Consider Incentives and Rebates: Don't forget to factor in any available incentives and rebates, such as the Federal Solar Tax Credit, state and local rebates, and utility incentives. These incentives can significantly reduce the upfront cost of installing solar panels.
Evaluate Financing Options: Explore various financing options, such as solar loans, to determine which option best suits your budget and financial goals.
What financial incentives should I be aware of when transitioning to solar power for my home?
We’ll be wrapping up this school semester by learning abour renewable energy incentives. We’ll be discussing tax credits quite a lot in this piece, so here is some helpful information:
A tax credit is a one-to-one reduction in the amount of federal income tax you would owe. To illustrate; if you claimed a $1,200 federal tax credit, you would reduce your owed federal income tax by $1,200.
The Inflation Reduction Act and the ITC:
To start, let’s discuss the Inflation Reduction Act, also known as the IRA. The IRA was signed into law on August 16, 2022. This bill has significant provisions and incentives for installing renewable energy production for homes, businesses, nonprofits, and agricultural producers.
The most well-known section of the IRA in the solar world is the Investment Tax Credit (ITC). (It should be noted here that the ITC for homeowners is different from the ITC available for businesses.)
How the federal tax credit for solar applies to homes:
The ITC offers 30% of the cost for installing solar systems, battery backup, and solar systems with battery backup.
How the federal tax credit for solar applies to businesses, nonprofits, and agricultural producers:
REAP: 50%
Investment tax credit (ITC): 30%
MACRS: 25%
Bonus credits: 10%-30%
The ITC allows homeowners to claim 30% of the cost of installing a solar system or a battery backup unit. This 30% applies to all systems and battery backup units that are installed before 2032.
Expenses that qualify for the 30% tax credit:
Solar Panels
Contractor costs
Wiring, inverters, and mounting equipment
Battery Backup Units (rated for a minimum of 3 Kilowatt-hours storage capacity)
Claiming the tax credit:
Talk to a tax professional to ensure that your investments are eligible for the tax credit, once confirmed, complete IRS form 5695 and attach it to your federal tax return.
Other Solar Incentives for Homeowners:
There are always federal, local, and state, like the South Carolina 25% tax credit, or the NC property tax exemption available for solar, you never know what opportunities may exist to help you cut your costs. We’ve been fortunate to see some of our clients have up to 80% of their costs covered and are always staying up to date to keep the transition costs as low as possible for you.
Lesson 4 Wrap Up
This concludes our first session of Solar School. We hope you’ve found yourself with a solid understanding of some of the basics of going solar in WNC and Upstate South Carolina.
We’ll be returning with further articles, videos, and general explanations soon. If you have lingering questions or reading through has sparked interest, you can contact us at (828) 776-9161, email us through the Contact Us form, or reach out for a quote or out other Solar School Lessons at our blog.
