It’s no secret that one of the primary reasons people decide to invest in solar is because they want to save money on their energy bills. But can you really save money with solar panels? After all, there is a cost associated with installing the panels and then there’s maintenance to consider. The answer is fairly simple (yes!), although there are a couple of gray areas that will impact the savings you’ll recognize.
These shades of gray are based on:
- Whether you purchase the panels outright or finance them.
- The method chosen to finance them.
- The amount of energy your home is able to produce versus how much you use on a monthly basis.
When considering these options, it’s important to remember that there are pros and cons to each scenario. In this blog, we’ll take a look at the major factors that will impact your return on investment and help you decide which is the right one for you.
Buying or Leasing Solar Panels
The biggest impact on your savings, initially, will be the financing option you choose. You can either:
- Purchase the solar panels outright
- Finance them with a loan
- Sign on to a Power Purchase Agreement (PPA)
Let’s look at each one.
If you opt to purchase your solar panels outright, there will obviously be an expense up front. The cost of purchasing your panels is completely dependent on the configuration and design that is pulled together. You’ll own the panels forever and you’ll take care of the minimal maintenance that’s required. This also means that you’ll start to see immediate savings on your energy bills. Your bill will only be for the amount of energy you use through the grid each month with no additional costs (which we’ll explain below).
Taking out a loan on your solar panels is a popular option because there’s no initial upfront cost. The $0 down loan option mean there’s no out of pocket cost, and you’re essentially replacing your variable utility bill with a fixed loan payment. This is especially impactful if you happen to have higher utility bills at one time of year. For example, it’s not uncommon to see people’s electric bills shoot up astronomically in the summer when they’re running their air conditioning frequently. It is important to remember that this loan payment is in addition to any energy costs you have to pay if your panels aren’t generating enough energy to cover all of your needs. At the end of the loan term, however, you’ll own your panels and see the same impact as those who purchase their panels outright (paying strictly for the overage in energy).
Finally, your loan payments won't go up each year in the way that your electric bill does, and now you are putting value into the house, instead of sending money out the door. Once the loan is paid off, you will have no payments for power.
Power Purchasing Agreement
Finally, the Power Purchasing Agreement (PPA) is another popular option. With this method, there’s zero upfront cost. However, you won’t ever own your system - you’ll essentially just be providing the space for it to exist. Since you won’t own the system you’ll also still have to purchase your power from somewhere, which means paying the solar provider for what’s generated and used and the grid for any excess. But you’ll likely see a significant savings on your energy bills due to the fact that solar energy is less expensive than what’s generated by the grid.
Impact On Energy Bills
Once you’ve decided which financing option to go with, the next factor is how much energy your system is able to generate. This is dependent on a number of factors including:
- The amount of available sunlight during the day
- The size of the system that’s installed
If your home has a large, pitched roof that’s south-facing with zero shade, it’s likely that you’ll be able to generate enough solar energy to power your entire home. However, smaller homes, or homes located in very shady areas, may not be able to generate quite as much. This, of course, will have a huge bearing on how much you’re able to save, since the savings come from the amount generated versus the amount used.
At the end of the day, regardless of which financing option you choose, mostly everyone will be able to see a savings on their monthly energy bills.
To learn more about going solar with Lumina Solar, contact us today!