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  • Allison Ruedig

How Much Do Solar Panels Save? Average Cost And Energy Savings



Let's be honest. While customers are delighted to reduce their carbon footprint by replacing fossil fuel power with clean energy, they generally go solar to reduce something else: their power bill.


So when your prospects consider a solar power system, they're pretty focused on its potential to lower costs and increase their nest egg. Which means that they have one question above all: How much will solar panels save me?


Since the answer can vary among customers, each deserves a clear, accurate, thorough financial estimate. Here, we'll look through national and state averages before detailing which factors will affect your customers' individual solar savings.


Average Cost Of Solar Panels And Installation

To give a customer an accurate savings estimate, first discover how much it costs for them to install solar. While the cost of each solar system depends on many factors, in the U.S. it’s usually $13,000 – $17,000.

However, most solar owners pay far less.


Due to the current Federal Tax Credit for renewable energy systems (26% of total system and installation costs) most customers will save over $3,000 if they go solar in 2021 or 2022. So the actual customer cost of installing solar is (depending on state) $10,000-$14,000 – a national average of $12,000.


For a breakdown of state-by-state average prices and the corresponding tax breaks, Consumer Affairs compiled data from EnergySage and SolarReviews:


Table from Consumer Affairs, based on data from EnergySage and Solar Reviews

*Before tax credits, according to EnergySage and Solar Reviews

**From Solar Reviews


How To Estimate Cost And Solar Energy Savings

Of course, national and state averages don’t give you or your customers an exact answer for how much their individual system will cost, or whether going solar is worth it for them in the long run. And that's exactly what they want to know!


To satisfy them with a clear and trustworthy estimate, take these factors into account in your solar proposals:


Local Average Solar Energy Prices

Both grid and solar energy prices affect how much your customers will save. Some areas have cheap grid electricity (the cost of electricity in Arkansas and Georgia hovers between $8 – $9/kilowatt hour). Utilities in other locations charge twice as much for the same amount of electricity. For example, average electric rates in Connecticut are over $18/kilowatt hour, while Hawaii’s have risen above $28/kilowatt hour!


In general, higher grid rates mean ratepayers find more value in going solar. However, this also depends on how solar installation costs compare to that state’s electric rates.


Grid and solar energy costs vary not only by state, but also within each state. So double-check utility rates in your customer’s particular jurisdiction before estimating their savings.


Roof Size

This is relatively straightforward: the more roof your customer has, the more solar panels you can install and the more solar savings they get.


But make sure to carefully calculate the amount of solar-available roof. A roof may have space limits due to chimneys, air conditioners, generators, or other appliances. A good designer will use solar-specific software to plan each solar system size according to these variables.

Location

Solar panels have become so efficient that even notoriously cloudy Oregon and Washington, are experiencing a solar boom. And the cold certainly doesn't bother solar panels; this is a common and debunked solar myth. In fact, solar panels can even produce more efficiently in cold weather!

But location still makes a difference; while customers in all climates can now enjoy solar savings, comparable solar panel systems still receive more daylight in sunny southern locations than in northern or cloudy ones.


In addition to latitude and weather, an individual roof’s solar energy potential also depends on its particular location. Nearby trees and tall buildings often shade part of a roof during part of the day, limiting solar production in those areas. So when calculating each customer’s possible savings, take both their general location and their particular surroundings into account.


Energy Usage

A family of five, one of whom owns a Tesla and all of whom love a toasty house in winter, will have different energy needs than a Toyota-owning couple who prefer to bundle up rather than turn the heat up. The family of five may see more savings from a larger solar system that can charge their Tesla, while the couple might find better value in a smaller, less expensive system. Every household and business has unique energy requirements, which is why solar installers must review customers’ electric bills for the past year before giving them a proposal.


Meticulous calculation of these four factors brings solar designers closer to an accurate proposal for each client. But there’s one more major factor:


Solar Incentives And Tax Breaks

This is the fun part. In addition to the previously mentioned federal tax credit, many states and utilities boost solar customers’ return-on-investment with renewable energy policies.


Net Metering

Most solar systems produce excess solar energy and automatically feed it into the grid. With net metering policies, many states and utilities credit ratepayers for this energy. The utility lowers solar customers’ monthly electricity bill according to how much energy their solar system gave the grid.


This incentive to go solar varies by state, and sometimes even by utilities within the state. Some states’ net metering policies require utilities to credit customers at retail rates, with a kilowatt hour of grid energy for each kilowatt hour their solar system provides to the grid. Other states only require utilities to credit solar customers with lower wholesale energy prices. Still, any net metering policy lowers your customers’ remaining utility bill.


Rebates

Several utility companies essentially pay customers to go solar. For example, Ameren Missouri offers customers $0.25/watt upfront for their solar panel installation. For the average 5 – 8 kilowatt system, that’s a tempting $1,000 – $2,000.


To find renewable energy policies in your area, check out the Database of State Incentives for Renewables & Efficiency.


Federal Solar Tax Credit

Yes, we mentioned this before, but it’s so lucrative – and urgent – that it deserves its own section. All U.S. solar customers are eligible for a tax credit for 26% off their solar system ... but only if it’s installed before the end of 2022.


Depending on where customers are located, that could mean a savings of over $3,000.


Is Solar Worth It?

With the current federal tax credit and other incentives, most Americans’ solar panels now pay for themselves in only 7 years. Under most solar panels’ 25-year warranty, this payback period leaves at least 18 more years for solar customers to rack up savings.


For example, a customer might pay $14,000 (the national average price after incentives are applied) for a solar system that saves $2,000 on their energy bills per year (about $165 per month.) The system will pay itself off the seventh year. After that, 18 years of $2,000 saved per year creates a $36,000 return on investment – and a very pleased homeowner.


Moreover, owners in areas with lots of sunshine, high electric rates, and solar incentives will see far more savings. California owners, for instance, may save up to $90,000 in those 25 years.


Also, solar systems don’t turn into pumpkins once the clock strikes 25 years. Most panels still produce at 80% or more. Even if homeowners sell their house, they can still benefit from the increase in property value that solar panels provide – a national median of $9,274.


So assuming a reasonably sunny roof, yes – solar is more than worth it.


How Much Will Solar Panels Save On Your Customers' Electric Bills?

On average, U.S. customers save about $1,500 a year by going solar – $37,500 over the course of 25 years. But for individual solar energy systems, these savings can vary from $10,000 – $90,000 depending on roof size, sunlight exposure, local energy rates and solar incentives.


The many factors that influence solar savings require solar companies to meticulously calculate each prospect's estimate. But if you and your team are swamped with the needs of current installations and new leads, figuring out exactly how every detail of every roof affects its financial potential takes time you don't have.


In addition to solar proposals, GreenLancer’s platform offers fast, seamless design and engineering for your solar installation needs. Whether you’re looking for a permit-ready drawing, feasibility study, or need project management consultation, our marketplace connects you with a network of certified vendors, designers, and professional engineers.


Sign up is free, and our team is dedicated to the success of your business. If you’re interested in learning more, fill out the form below to get in touch with a GreenLancer rep.