Is investing in a solar energy system for my home financially prudent, even if it means taking on a 30-year debt?
Solar energy is an excellent investment due to its potential to offset the energy costs charged by utility companies. Regardless of life’s circumstances, we all incur monthly energy bills. These bills have been increasing annually, often by 3% or more.
For instance, in 2003, the cost for 1000Kwh was $83.71, which amounted to $115.00 after taxes and fees. By 2014, the same amount of energy cost $124.30, or $160.00 after taxes and fees.
Duke Energy has requested state approval in February 2024 to increase rates to collect an additional 596 million from its customers over the next three years through electric bills. It is projected that 2027 1000Kwh will cost $154.30, or $194.00 after taxes and fees. However, this is speculative until approved.
It’s important to note that very few homes use 1000 KWH or less. The average consumption is 1500 KWH per month or 18000 per year. In the coming year, 1500 KWH per month will cost an average of $240.00 after taxes and fees, up from $204.00 for 1500KWh.
You can verify these rates in the articles found here and here.
With solar energy, you generate and utilize your energy, thereby avoiding inflated costs. A battery system allows you to store this energy during the night and power outages. It’s akin to owning a farm, growing your food, raising your livestock, and eliminating the need to shop at grocery stores like Publix.
While solar energy presents numerous benefits, the question remains: Is it worth going into debt for 30 years?
The answer lies in understanding that you are already in debt. Currently, you rent energy from a utility company without control over the rates, which can feel like an unfair relationship.
Solar energy systems and batteries offer an escape from this predicament by giving you control over your energy production.
Consider this: You have a budgeted monthly cost for electricity, and you want to maximize the value you get for that budget.
Suppose you consume 1500KWh per month and could choose between different power options.
Option A – your current choice
Duke Energy offers a monthly cost of $240.00. They will do their best to restore power during outages, but your priority for electricity depends on your proximity to essential services like hospitals or government buildings. We will increase your rates annually by 2-3%, and in 15 years, your electric cost will be more than $331.00 per month.
Option B – A new option
On the other hand, the solar and battery option offers a monthly cost of $204.50. You will have 6 to 12 hours of backup energy stored for your use exclusively. There will be no loss of air conditioning or refrigeration. You can charge your battery with a portable generator and solar panels. With a portable generator as a backup source to charge your battery, you will never suffer an hour without power. Even in 30 years, your monthly payment will remain at $204.50.
Option B saves you $36.00 per month from day one, or ($36.00*12 months *15 years) =$6480.00, PLUS you have backup power in case of a power outage due to storms. Now, you have a choice.
What is the best option for your family’s needs?
Here is a video of a home that went solar and battery. The owner speaks of the advantages he clearly has by firing the power company. It takes 5 minutes to watch, but it will help you understand your options.
Do the math on your electric bill. Take the total paid to the power company and divide that by the kwh you used. It should be around 16 Cents per KWh. You then take that 16 cents and times it by 1500Kwh to get to a current Duke Energy bill of $240.00 per month or $2880 per year.
If you have TECO or Florida Power, you pay less than 16 cents per KWH but not much less.
Other benefits to going solar:
Lower Taxes & Access to Other Incentives
One of the most substantial solar tax incentives is the federal solar investment tax credit (ITC), which is 30% of the total price of your entire system credited to your federal income tax liability. In Florida, the ITC averages out to $10,488.
Other solar incentives available in Florida include a tremendous net metering policy, a sales tax exemption on photovoltaic (PV) equipment, a property tax exemption on the value your solar PV system adds to your property, and some local incentives offered by utility companies.
Home Resale Value Increase
Many homeowners don’t realize that solar panels increase property value quite substantially.
According to research by Zillow, the average home value will jump by around 4.1% after solar panel installation. In Florida, where the typical home value is $391,213, that’s an average jump in the value by approximately $16,039! Your bump in value could be even higher in more pricey areas like Orlando and Tampa.
To add to this benefit, Florida has a statewide property tax exemption, which means your property taxes won’t go up after solar installation, even though your assessed value will.
Clean, Renewable Energy
Of course, going solar provides benefits beyond saving money. Converting to clean energy reduces your reliance on fossil fuels, contributing to a cleaner environment and less pollution, and helps counteract global warming. You will also be less dependent on your electric company and won’t be subject to future electricity rate spikes.