What You Need to Know About Going Solar

It’s a good time to invest in solar energy for your home. The cost of a home solar system has dropped dramatically, and there are even more options available to pay for one. Here’s what you need to know.

Number 1: Solar Systems Are Getting Cheaper. The cost to buy a solar power system has fallen by about 50% since 2007, to an average upfront cost of $4,590 per kilowatt. It’ll likely take you between seven and 15 years to recoup your upfront cost. The higher the electric rate you currently pay, the more sunshine your location receives, and the financial incentives that are available to you can all positively affect your return on solar.

Number 2: You’ll Need Shade-Free Space. For each kilowatt of capacity, you’ll need 100 square feet of mostly unshaded, south-facing space. Solar panels may be mounted on a flat or sloped roof or in your yard. Besides the panels, you’ll need an inverter to convert a direct current to an alternating current, a tie-in to the local utility grid and, possibly, a monitoring system that tells the installer how much power you’re producing.

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Number 3: Uncle Sam Wants to Help. Through 2016, you can take advantage of a federal tax credit that lets you write off up to 30% of the cost of buying and installing a solar system. Trim your cost further with incentives such as rebates, sales-tax exemptions or property-tax exemptions from your state or local government, or from your electric utility.

Number 4: You Can Rent Instead of Buying. Let an installer pay for and maintain your solar system, and then pay the installer for the electricity that your system produces each month—typically at a rate that’s less than your local utility charges. With a solar lease, you’ll pay a fixed monthly amount that smooths out seasonal variations. With a so-called power purchase agreement, available in some states, your bill may vary. For example, with a lease you might pay $50 a month year-round; with a PPA, you might pay $25 a month in winter and $75 in summer.

Number 5: You Can Profit From Your Surplus Power. Unless you live in a remote area, your system will be tied into the local utility grid. If it produces more electricity than you use, the excess is fed into the grid. This so-called net metering, available in most states, can earn you a credit rather than a bill.