Is Solar Worth It?
While we would like to say that solar is a worthwhile purchase, no matter who you are or what your situation is, facts beg to differ.
That's right. Not everyone is a good fit for solar.
Furthermore, not everyone qualifies for solar. While the standards for qualification vary from solar company to solar company, there are several factors that will matter to you as the consumer, no matter what.
Energy Usage (Not Square Footage) Determines the Size of Your Solar Array
The very first step for determining whether going solar is worth it is finding out what your energy usage is. If your energy usage is too low, purchasing solar panels is simply not cost-effective. You’ll be spending more money than you would if you stay connected to the grid. The baseline requirement for us being willing to install an array on your home is an average of 500 kWh per month in electricity consumption, which typically warrants a 12 to 15 solar panel system. This translates to 6,000 kWh annually. Homes with <500 kWh (kilowatt-hours) per month in electricity usage won't benefit as much.
However, there are exceptions to this rule: If your home is a new build with no electricity usage documented for the people who will be moving into it, we are happy to install a home solar panel system. We prefer to start you with a small residential solar system to gauge how the new home will affect your electricity consumption patterns. If more panels are needed to offset the power bill once you've moved in and logged some usage in the new home, we (and most companies) can install more panels as needed.
Beware of companies trying to sell you huge solar arrays based on the square footage of your home. Square footage is not an accurate determinant of how many panels the home needs. Have one of our inside solar consultants talk to your power company or electricity provider, so we can help you verify your usage history. This will help us create a free customized quote for your home.
Because of this, any solar company worth its salt will ask for your monthly energy bill and utility provider to determine whether it’s worth it to get a quote. Your utility should also be able to provide you with a more in-depth breakdown of your power bill. This is very useful for determining your overall energy usage.
You can also use an energy usage calculator if you're in a rush. The U.S. Department of Energy's home energy use calculator can help you find your home’s overall power usage and what factors contribute most to your usage. There are also numerous third-party calculators that you can use to help figure out how much power your home uses. Or, if you're interested in learning what solar can save you and already know your monthly power bills and usage, visit our market-specific solar savings calculator pages.
If You're Not Paying in Cash, a 650+Credit Score is Generally the Baseline Requirement
That leaves us two main options for purchasing panels: cash and loans. Cash provides the most savings since there is no interest to be paid, but most people don’t have enough cash lying around to pay for a solar installation outright. A loan can be spread over several years and puts you in control of your power right now. At Go Solar Group, we require a credit score of 650 or higher. Depending on your credit score, we may be able to help you go solar for zero down.
Homeownership is Necessary
If you don't own your home, neither Go Solar Group nor any other solar company can install modules on your roof or in your backyard. Given the fact solar is a 40+ year investment, homeownership is requisite for allotting control to the installation of the modules themselves.
Does Your Home Receive Enough Sunlight?
There are a number of solar calculators that claim to be able to give you an accurate quote, without physically meeting your home, by using Google Maps and similar tools. Unfortunately, determining how much sun your home receives isn’t that simple. Here are some of the factors that go into figuring out how much sunlight your home actually gets.
The Shade Factor
How much shade your home receives can impact the viability of solar. Go Solar Group's preferred residential solar inverter (SolarEdge) is optimal for homes that receive no shade or lots of shade. However, if your home is surrounded by too many trees, for example, your roof may not receive enough sunlight to make solar panels worth it. You can, of course, request we clear out some of the foliage in the trees that'd prevent the solar panels' absorption of sunlight.
Pitch and Azimuth
When it comes to solar, azimuth measures the angle of your roof in comparison to the sun. Having the right roof azimuth is immensely helpful for maximizing the potential gains from your solar modules. The best roofs are those which face south, as they receive the most direct sunlight throughout the day. East or west-facing roofs can also provide enough sunlight if other factors don’t obstruct the transduction process, but north-facing panels are often too shaded to make them worth it.
Pitch refers to how steep or shallow your roof is. Your roof can face east, west or south, but if the pitch isn’t right, then you aren’t getting the most out of solar panels. Roofs that are too steep lose out on valuable daylight hours when the sun is overhead, but roofs that are too shallow lose energy at almost all points, with midday being the exception. Determining whether your roof has a good pitch and azimuth is part of an in-person solar quote. These can be difficult to determine online if you're not an experienced solar installer, so having a potential installer analyze your home with the correct software and in-person is the best way to go.
Tax Credits and Other Solar Incentives
Once we’ve determined that your home is a solid structural fit for solar, we can move on to the incentives that are offered. These incentives are a big part of the savings associated with solar, so, if you don’t qualify for these incentives, it probably isn’t worth it to go solar unless your reasons for doing so aren't strictly financial.
The Federal Solar Tax Credit (ITC) and Taxable Income
Why does taxable income matter? Because if you earn taxable income, you can save up to 26 percent off the total cost of your installed solar array through 2021 (some social security qualifies as taxable income and so does the money earned from investments, even if you're not working). However, on average, the typical residential solar customer is still working and qualifying for the taxable income portion of the solar screening process via their place of employment.
The solar ITC was set to start phasing out this year, but at the end of 2020, Congress renewed an extension. Under the Biden Administration's extension, homeowners who install solar by 2022 are eligible for a dollar-to-dollar tax credit worth 26 percent of the total system cost. Those who install solar in 2023 are eligible for a 22 percent credit. While four percent may not seem like much, it can add up a lot if your home's energy usage is high enough to warrant more solar panels than the standard 12-15-module roof-mounted system.
Because the solar ITC represents a large amount of savings for those interested in solar, we at Go Solar Group discourage those who don’t owe federal taxes from going solar. Solar becomes much less affordable without these incentives.
State-Level Solar Incentives
On top of the potential savings that come from the federal government, state governments also offer their own incentives. These incentives are an integral part of ensuring that you get as many savings out of your solar installation as possible. Let’s go over some of these state-level incentives, which can help you get a better grasp of the potential savings in your area.
Nevada Solar Incentives
Nevada has been at the forefront of solar energy efforts in the United States for years now. The Nevada state government offers many incentives for potential solar homeowners, and given that NV Energy offers net metering practices as the state's official and regulated power-giving entity, solar is extra beneficial for Nevada homeowners who add whole-house battery backup like the Tesla Powerwall to their homes. The most important state-level offering for Nevadans is the solar battery backup storage incentive. By installing battery backup that’s charged purely through solar, Nevada homeowners can save thousands of dollars on their purchase.
New Mexico Solar Incentives
New Mexico is full of potential solar savings for homeowners. Firstly, on top of the federal ITC, New Mexico passed a state-level solar tax credit. This credit is worth 10 percent of your system or $6,000, whichever is lower. Like the federal solar ITC, this is a dollar-for-dollar tax credit that can completely wipe out the taxes you owe to New Mexico. Additionally, New Mexico offers 100 percent property tax exemptions for solar installations. While not as large as the potential savings from the New Mexico state solar tax credit, this exemption still puts money in your pocket.
Leasing Panels Makes Them Less 'Worth It'
Solar may seem like an expensive long-term investment if you're researching the benefits of buying panels up-front. However, leasing doesn't make solar cheaper or more cost-effective. Leasing solar panels is a process with many hidden downsides for the consumer. For this reason, Go Solar Group does not lease solar panels.
Net Metering (Not All Utilities Offer This)
Solar panels produce excess energy during the day, which is then lost unless the home has enough battery backup units installed to store this excess power for use at later date, or the homeowner enters into a net metering agreement with their local utility.
Net metering is when you send the extra power generated during the day back onto the power grid in exchange for a credit on your power bill from your utility company. Sometimes net metering can even involve payment to the homeowner, should their power generation be high enough. Your local utility’s net metering policies can make or break for installing solar on your home. Knowing your local net metering policies is essential.
New Mexico Net Metering Policies
Net metering in New Mexico is good and getting better. In practice, most New Mexico residents get a full retail exchange for their credits. This 1:1 ratio is one of the best that you can get.
Nevada Net Metering Policies
Nevada residents, on the other hand, often only receive a 75 percent retail rate exchange. This makes net metering still useful, but not as good as it could be. The fewer net metering returns you get from your utility company, the more you'll want to install a battery backup system for your home along with your solar modules.
So, Is Solar Worth it For You?
When we take all these factors together, a picture of your home's solar viability begins to emerge. In summary, solar is worth it when the homeowner:
- Uses enough electricity to make solar generation useful.
- Has a good credit rating (or is able to pay in cash)
- Has a roof with the proper pitch and azimuth, which isn’t shaded by too many trees.
- Will owe federal taxes in the fiscal year of the solar array's installation
- Can benefit from state-level incentives.
- Has favorable net metering policies.
That seems like a lot! However, most people will fulfill #1, #2, #4, and possibly #5. A good credit rating and favorable net metering policies will vary from person to person, but both are attainable to most who are interested in solar! Should you choose to go solar, our solar incentives page can give you an excellent idea of what to expect in Albuquerque, New Mexico; Reno, Nevada; and Salt Lake City, Utah.