Lots of solar marketing boasts of helping you save on your electric bills with 0 money down. In some situations, this can definitely be true. When we sell solar equipment, we always want to make that we leave customer’s better off financially than when they started. In the long run, solar projects can help most homeowners and businesses save on their utility bills, but in the short term, it’s not always the case. Here’s an honest look at the situations where solar will help you save on your electric bill.
If you want to finance a solar panel system, having great credit is a must. Most solar loans are have at least a 20 year term. To qualify for an unsecured loan, a score for 680 or higher is definitely a plus.
This ties in to the previous point. Being able to borrow at interest rates close to or less than the current inflation rate of electricity is what makes borrowing for solar work. So if you can finance the project at 5.5% and electricity is going up at 6%, you will most likely save money in the early years of the project.
Lenders are much likelier to lend if you can use your property as leverage somehow. This means having a decent amount of equity in your home, enough to cover the cost of the project and still have some left over, is really helpful for being able to capture those low interest rates. Financing your home in with your solar project is the cheapest way to borrow, and this can be accomplished through a Fannie Mae HomeStyle Energy mortgage or an FHA 203k loan. Both of these loans allow you to borrow above than the value of the home for energy improvements.
There are lots of fixed costs in solar installation. Permitting and engineering cost roughly the same for a 5kW system as for a 10kW system. It costs the same in labor to hang a 5kW inverter as it does a 10kW inverter. So the larger system you buy, the less your system costs per unit of power. So though it costs more, a larger system will pay for itself faster than a smaller system.
When we ask people, “Is your main goal to save power on your electric bill or have backup power for emergencies?” a lot of people enthusiastically say, “Both!” However, at this point in battery technology development, you can’t have your cake and eat it too on this one. Hybrid solar systems with battery backup cost quite a bit more than regular systems. We love selling them and installing them. But we like to let people know that they are usually for people want the feeling of energy independence and security no matter what it costs. If saving money is your main goal, stick with a standard solar panel system that hooks up to the grid and add the batteries later.
To save in the early years on your electric bill in the Kansas City area at today’s rates, it’s critical that your roof have very little to no shade. One tree in the yard can have a huge effect on solar output. There are ways to overcome these shading problems, but having no trees is ideal. South facing roofs are ideal. Roofs that are not super steep are ideal. Ground mounted panels are even more ideal. These are the situations where you can save right away on your bill.
Lastly, not all electric companies are created equal in their billing structures. We’ve found that utility companies high electric rates but a low monthly connection fee are great for solar. KCPL is one such example. Some electric cooperatives have higher customer connection fees, but low energy rates. Solar can work in these areas, but it’s important to note that solar is designed to reduce your electric bill, but it can’t eliminate it. You’ll still have to pay the monthly connection fee (unless you want to go totally off grid). Ask one of our experts if your utility company is a good one for solar savings.
There are so many factors to consider when going solar, and it’s not just a simple formula. When we use state of the art software to make a free solar quote for you, we go into great deal on all of these points to give you an honest, accurate idea of how much you’ll save with solar. Fill out the form on the right to get a free design now.