For quite a while, I’ve been interested in solar. Fifteen
years ago, when I began investigating, there was no one in Mississippi selling
or installing solar systems. It seemed just a pipe dream.
Lately, more and more companies are popping up to provide
this service. So I decided it was time to get serious. The other thing that
pushed me to pursue this option was the lucrative tax credit offered on a solar
installation and the fact that this credit was disappearing at the end of the
year.
I had to convince my husband to go down this path. Wouldn’t
the panels on the roof of our house detract from its appearance? Would future
buyers really care about having solar panels? Did this really make financial
sense?https://www.nerdwallet.com/blog/finance/save-money-putting-solar-panels-roof/
We met with two different companies. The first was all
sales. There was no schematic showing where the panels would be located. No
spreadsheets showing usage and payback period. Just a promise that the sun
would provide ALL our electricity, and we would only pay a small connection fee
each month. Wow! That sounded great.
Of course, if you install solar panels on your roof, you
need to consider the age of the roof. Solar panels are designed to last about
25 years, which matches the age of a new roof. If you put on a new roof 10
years ago, this changes the calculation. Most installers prefer to put their
panels on a new roof. So now you’re not just paying for solar panels, you’re
paying for a new roof.
Of course, we were told if you couple the two, you may be
able to get the tax credit applied to BOTH the panels and the roof. That
sounded appealing. What is the tax credit, and when does it expire? It’s 30% of
the cost, and it IS a credit, not a deduction. That means a dollar for dollar
savings on about a third of the project. To qualify for the year-ending tax
credit, I would need to sign up quickly (or so I was told).
A few qualifiers…
You are only supposed to take the credit on roofing for the portion
of the roof actually under the panels. And in order to get the full advantage
of that credit, you need the income (and the tax associated with it) that is
big enough to offset that 30% break. Many retired people don’t have enough tax
to pay now to take full advantage. Again, a change in calculus.
The second guy showed up with a laptop full of charts and
graphs. He pointed out the direction the house was pointing, how the sun
changes during the year, and the many shade trees surrounding our roof. He
climbed on the roof with his many gadgets to verify his estimates. Full
electricity? Not so much. He expects we could supply about half of our
electricity with solar, and this would take many more panels than the first
group suggested.
And now we’re confused. I really wanted to go solar. It
seems like a great idea. We would be using a renewable resource. If the power
company keeps getting rate increases, won’t that eventually pay off?
Turns out our payback period would be about 12 years, under
a generous set of estimates. Also, we would have to load up our roof to get the
most of the system. My husband is shaking his head now. Ultimately, the overall
cost of panels and a new roof was now hitting the $40,000 to $50,000 range.
Even with a generous tax credit, the dollars made my head spin.
One caution—many solar companies sell customers on a system
by offering financing that matches what you were paying on an electric bill.
Sounds good, right? But the rate on those financings is in the 7-8% range—not cheap!
Also, what happens if you sell the house before you pay off the loan? Maybe you
move, but you still have to pay that monthly bill.
We planned to pay the full bill up front to make this a
purely economic decision. The problem we encountered is that our electricity is
pretty cheap. The price per kilowatt in our area makes going solar
unreasonable. I tried. I really tried, but in the end, it just didn’t make
sense.
So we’re not going to spend $40,000 to $50,000 on an
environmentally friendly and sustainable source of energy. We’re not going to
be the progressive family in the neighborhood doing our part on climate issues.
I had to give up my pipe dream.
Instead, I’m going to redo the kitchen.
