Add Solar To Your Home In 2020
Guest Blog By: Nadia Benaouis
Making the decision to add solar to your home can be tough and overwhelming. With the changes to tax incentives, solar costs, and technology advancements over the past decade, you might be asking yourself, is it still worth the investment?
To help you learn more about solar and if its right for you, we’ll dive in and provide you with key information to help you understand the process a little better.
Solar is less expensive today
Ten years ago, the cost of a solar panel installation was roughly $8.50 per watt. Today, the solar industry is drastically different. Solar panel efficiency has dramatically increased, and manufacturers have improved their processes. As a result, the average price has fallen by almost 65% and down to roughly $2.99 per watt, varying by state.
In New Mexico specifically, the average solar panel cost is $3.26 per watt. A typical 6000-watt solar system that covers a 2400 sq ft home will cost you approximately $19,600. However, you can net a Federal Investment Tax Credit (ITC) equal to 30% of the system costs bringing your investment down to around $13,700.
A growing market
The number of homes using solar panel systems across the United States has increased over the years. From 30,000 in 2006, to 1.3 million in 2016, to now an estimated 3.8 million homes in 2020, it’s clear that solar continues to trend upwards.
In 2019, New Mexico passed a new legislation to be 100% renewable energy independent by 2045. This makes The Land of Enchantment 1 of 4 states to set a 100% renewable energy goal. With this kind of commitment, the outlook for solar power in New Mexico is great.
With an abundance of solar energy in New Mexico, a rooftop solar system can often generate more electricity than you can consume during daylight hours. That electricity that gets stored on the grid as credits.
You draw those credits when you come home and turn on the lights and over time, you generate more credits than you can use. Net metering allows you to sell those credits to the power company. The rules and rates for selling electricity to the grid vary from state to state, as well as by utility company. The net-metering laws in New Mexico are some of the best in the country.
Storing energy is essentially the exact opposite of net metering. Instead of selling your excess energy to the power companies, you keep it for yourself. This is possible with the implementation of solar batteries. Solar batteries work by storing energy produced by your solar setup for a later use. The higher the battery’s capacity, the more solar energy it can store.
By storing your energy, you become self-reliant and are essentially living “off the grid.” A good example of when a solar battery would come in handy is during a power outage. While everyone else is without power and in darkness, you will still have yours.
Adding value to your home
A Zillow analysis found that across to US, solar equipped homes are valued and sold at prices above similar non-solar homes in their area. On average, solar panels increase home value by 4.1%. Since the average system costs between $10,000 to $18,000 in materials, homeowners can recoup some of the upfront cost in equity or when they choose to sell their home.
Property Tax Exemption
Even though solar increases the value of your home, that extra value is exempt from property taxes in New Mexico. That is great news for New Mexico homeowners who go solar – you get the financial benefits of generating your own power, without having to worry about a higher tax bill.
How to finance your solar investment
Despite the decreasing prices, going solar is still quite expensive for most Americans. Thankfully, with the current strong economy you have a few options when it comes to time to finance your solar investment.
Taking a loan for solar in New Mexico results in a slight decrease in overall savings, but the details make the difference. You’re still eligible for the 30% solar federal tax credit and in the first year of your loan, you would actually see a return.
The average solar loan holder will be break even with payments over 15 years. Once paid off, your solar home will save you close to $2000 a year and you will be doing your part to make the world a cleaner place for generations to come!
Power Purchase Agreement
A power purchase agreement (PPA) is another way to go solar without draining your savings account. A PPA is a contract between you and the solar company where they install the solar panels on your roof and then sell you the electricity produced by the panels.
With PPA, you are not eligible for the solar tax credit. Instead, you get solar electricity for slightly cheaper than paying the utility company. It’s much more cost efficient to own or loan your solar system but PPA creates an opportunity for those in lower income brackets to save a little and be part of the movement to go green.
If you choose to pay for your solar system upfront, that means you are willing to dish out more money now to save a lot more money in the future. Your savings will pay back the initial investment cost in just 10 years!
The Sunny Side
Overall, the future of solar here in New Mexico looks sunny. Part of that is due to our 300+ days of sunshine, making our potential for solar power production one of the top in the nation.
All of the right foundations are in place. New Mexico’s strong net metering and solar friendly tax policies lead the way. The future is very bright for homeowner’s who want to protect the environment and make an excellent investment in their home’s value.
With New Mexico aiming for 100% renewable energy by 2045, the future for residents in the state is undeniably headed in the solar direction. Hopefully with that goal in place, the market will produce more affordable options for the residents of New Mexico to go solar.
A Cleaner Planet
Renewable energy plays a key role in the global efforts toward sustainable living and a cleaner planet. We must look at technologies like solar as more than just a way to save a few bucks, but a way to better preserve our environment for generations to come.
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