There’s no getting around it — it’s expensive to slice silicon into really thin pieces and slap them on your roof in such a way to ensure you’ll be generating electricity for decades to come. Solar technology is still fresh and although it’s getting cheaper every day, it’s just not as mature as steam turbines and combustion engines. However, two significant forces are making solar arrays more affordable for Americans: time and federal rebates.
Above, you can see that the price of a Watt of solar energy is decreasing every year. The paper-thin slices of silicon are becoming more efficient in converting sunlight to electricity, and we are finding more easier, safer ways to secure them on your roof. This is definitely a good sign — the longer you wait, the less a solar panel will cost. However, you don’t want to wait too long.
The longer you wait, the closer you get close to the end date of the Residential Renewable Energy Tax Credit, which is December 31, 2016. This tax credit, available to all folks investing in solar, will give you a 30% tax rebate equal to the total cost of your solar array — including materials, labor, permits, etc. Let’s analyze two simple scenarios to show how big of a splash this tax credit makes.
Scenario 1 features Sammy Slowpoke. Sammy hears that solar is great — it’s a significant initial investment, but it pays off in the long run, netting money in his pocket. Around June of 2016, he decides to contact a solar company to install a system, but, because they are so busy with the tax credit ending, they can’t develop his system until January 2017. They finally get around to installing his system in January and Sammy pays $10,000.
Sally Sunshine is our more eager protagonist in Scenario 2. She reads this article, realizes she needs to make moves now, contacts Independent Power Systems and has her solar system installed by December of 2016. She initially pays $10,000 as well but then gets $3,000 back from the federal government, so her net payment is $7,000 instead.
Let’s say that Sammy and Sally are both generating enough energy to sell $100 worth of electricity back to their utility company every year. This means that it will take Sammy more than 8 years to pay off his initial system cost, whereas Sally’s will be paid off and generating profit more than two years sooner.
The solar sweet spot is right now. The price per Watt for solar is low and you can still take advantage of the Residential Renewable Energy Tax Credit that expires at the end of 2016. Take a look at this credit and many others at DSIRE and connect with us so we can start planning and building your solar array to make you profitable as soon as possible.