Most people are fully aware that a solar array on their home can reduce their monthly energy bills. However, the financial consideration is often limited to how much do I save on my monthly energy bill vs. how much does the system cost. This cost-benefit analysis alone comes out in favour of solar in most locations that have utilities that offer net-metering. Net-metering allows customers with solar arrays to bank any energy in the form of credits when they overproduce and use those credits during cloudy or winter months. Even in the long Canadian winters, residential solar arrays will always pay for themselves over their lifetime, and typically much sooner.
Consider an example case in Windsor, Ontario, with a moderately sized system consisting of 5 kW of solar panels with a total price tag of $14,000. The break-even point for the system is around 14 years for an outright purchase, with a lifetime return on investment of $14,240 after 25 years. Perhaps even more attractive is if the system is purchased using a home-equity line-of-credit (HELOC). In the case of financing with a HELOC, the savings are immediate (Chart below) but the lifetime savings will be less than an outright purchase.
Solar Photovoltaic Systems (or PV systems) are quickly becoming a huge consideration for homeowners looking to cut energy bills and help them live a greener life. However, it is often not well understood that the large price tag on solar panels and inverters also comes with a major upside: increased home resale value. A recent study by Zillow Research shows that homes in the USA with solar panels installed sell for a premium over similar homes without. This premium varies by location from a low of 2.7% in California to a high of 5.4% in New York with a national average of 4.1%.[1]
An older study done at UC Berkeley in 2015 had similar findings when they examined the sale of 22,000 homes across the United States with 4,000 of those homes having solar panels installed. The study determined that at the time, the premium for having solar panels on a home was $4 per watt of capacity.[2] This means for our example system of 5 kW, the premium would have been $20,000 in 2015. Since the price of solar panels has drastically reduced, this is likely around half that value today.
These studies support the assertion that installing solar panels on your home is a sound investment. Not only does the PV system save you money each month on energy bills and protect you from rising energy costs in the future, but the increased home resale value is often more than half of the system’s initial cost. As far as home investments go, adding solar panels to your home is a major opportunity for a safe and secure return.
[1]Sarah Mikhitarian, 2019. Homes with Solar Panels Sell for 4.1% More. Retrieved January 29, 2021 from https://www.zillow.com/research/solar-panels-house-sell-more-23798/
[2] Hoen, Ben, et al., 2015. Selling Into the Sun: Price Premium Analysis of a Multi-State Dataset of Solar Homes. Retrieved January 29, 2021, from https://emp.lbl.gov/publications/selling-sun-price-premium-analysis