Solar Panels: A Solid Investment or Shiny Mistake?

solar panels roof branches

Solar energy and installing solar panels to capitalize on it is a growing alternative energy trend in residential settings. Is it worth it? Begin here.


Solar power has been around for years, but lately there has been a new surge of interest from homeowners. In addition to possible tax incentives on the federal, state and local levels, higher energy costs have driven many to look into ways to decrease their dependency on the “grid” and instead create their own power sources. Enter the bright and shiny solar panels on the roof, which promise to not only provide potential energy for a home, but offer the warm and fuzzy feeling of doing something good for the environment.

But as with any other serious home improvement project, the up-front costs and return on investment matter. Here are some questions to consider before you launch into solar panel installation.

Are solar panels a good idea?

Let’s start by considering your roof. In order to get the best benefit, your roof must be entirely unshaded and able to capture the majority of sunlight that shines down throughout the day. Where you live makes a difference too, as based on the Geostellar Solar Index. This futuristic-sounding name gives you an idea of how much money is generated by capturing the sun’s rays in any given state.

As you might imagine, states with a reputation for sunshine are likely to be the highest on the list — so if you live in places like Hawaii or California, your rate of return could be pretty high. But the Index also takes into account tax incentives and other programs that make solar more affordable, which is why Connecticut, New York and New Jersey are also tops on the list.

Local power grids and solar panels

To make the most of your new panels, you should also look into your local power utility and how well they work with those who own solar panels. There was a time just a few years ago when you could sell back your extra power to the company; today, many utility companies are phasing out those programs. Definitely get the most current information about buy-backs of power before you make a move toward installation.

rooftop solar panels lowrise buildings residential

What about the upfront expense?

Speaking of installation, let’s talk about bottom lines. Solar panels were expensive several years ago — in fact, most homeowners balked at the idea, despite incentives, because the bottom line was still too high. Today, solar panels are more common and as with any other product, the more common they become, the more affordable they tend to get. Solar panels that might have cost $20,000 for a modest-sized home in 2010 might now cost $15,000 or even less.

But what does that mean when it comes to return on investment?

Solar panel ROI?

When it comes to solar panels, it pays to consider them as an investment, rather than a way to make money quickly. That’s because no matter how good your incentives are, you will be paying more for the solar panels in the short-term than you are actually making or saving from them.

But over time, the investment begins to make sense. Some homeowners find that they get a better return on investment from their solar panels than they do from the S&P 500, treasury bonds, or certificates of deposit. The only catch? They might not up the resale value of your home, so if you do get solar panels, make sure it is on a home you intend to live in for many decades to come.

Additional costs and considerations

Let’s assume that you get plenty of incentives, your local utility will accept the extra power generated and you have a roof that is flat-out awesome for solar panel installation. Let’s further assume that you get a great deal on the panels, leading to a very sound investment. What reasons might sway you away from solar panels?

Consider the maintenance of solar panels. Your roof needs regular maintenance, of course, but solar panels require a bit more. This is especially true in the wake of storms that might result in damage. Hiring someone to handle that yearly inspection and maintenance might be pricey, considering that working on a roof is a rather dangerous job. In addition, look closely at the warranties for solar panels; some cover for only a decade, which isn’t long at all when you are trying to make a good return on investment.

Homeowners and solar energy

What about batteries?

Many homeowners use their solar panels only when the sun shines, and when it goes down, there is no more juice flowing. That’s when they switch back to the traditional grid. Choosing batteries to hold all that energy can be a much more expensive proposition.

You might also be in an area where installing the panels on an axis is the only way to make the most of the angles of sunlight; fixed panels might not bring in nearly as much energy as you were promised before installation.

Solar panels over time

Also consider the unusual things that might happen over the course of your investment. What if circumstances force you to sell the house? Remember, you might not get your money’s worth from an increased home value.

Consider as well the implications if your utility company changes their policies (which they might do without warning), or if the approach to solar incentives shifts in such a way that you don’t get back as much money as you had planned.

A new set of issues

Finally, remember that solar panels can lead to unexpected surprises, such as the increased risk for ice damming in areas where snowfall is heavy, dangers for firefighters if you ever have a fire, and potential damage to your roof during installation.

So are solar panels a good idea or a shiny way to throw away your cash? It all depends — but hopefully you now have plenty of starting points for research that can help you decide, one way or the other, on the potential investment.




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