Installing rooftop solar panels—with or without battery storage—can amount to a significant investment for homeowners. However, if you're keen to boost the resilience of your home, gain greater control over your energy bills, and switch to a cleaner source of power, there are plenty of options available to help reduce or support you in meeting the costs. In this article, we'll discuss some of the programs and strategies that can help you ensure the cost-effectiveness of your solar installation.
How much does solar and battery storage cost?
A rooftop solar power system may cost anywhere between $15,000 and $25,000 before incentives and rebates are deducted, according to the Center for Sustainable Energy. Adding battery storage may cost an average of $6,000 and up to $15,000, according to data from HomeAdvisor. The final price depends on a range of factors, including the size of your system, the type and quality of equipment you use, the installer you hire and where you live.
How to Pay for Your Solar Installation
Federal Incentives
The federal government’s Investment Tax Credit (ITC) is one of the most generous incentives available to homeowners. Under the ITC, homeowners can deduct as much as 26 percent of the total cost of a rooftop solar and battery storage system from their federal taxes, provided the battery is exclusively charged from on-site renewables (such as solar panels). You can apply for the tax credits by completing form 5695 on your tax return. This deduction will drop to 22 percent starting in 2023, so investing in solar sooner rather than later does have notable tax implications.
State Incentives
Many states now offer their own incentives in addition to the federal ITC. When combined, these programs can shave thousands of dollars off the cost of a solar and battery storage system. These incentives can take the form of a tax credit, like the ITC, as well as up-front cash rebates or performance-based incentives.
California, for example, pays homeowners a one-dollar-per-kilowatt rebate for energy storage. Maryland offers storage specific tax credits to residents, covering 30 percent of the costs. And the Connecticut Public Utilities Regulatory Authority recently announced an energy storage support program starting next year.
Solar Loans
Some installers offer financing to help homeowners spread the costs of a solar system over a longer period of time, while ensuring you're still eligible for the federal ITC and other incentives. Many loans are unsecured so they don't require collateral, but this can mean that interest rates are higher. Be sure to scrutinize any terms and conditions before going forward.
By way of example, Panasonic and Service Finance Company offer home energy storage financing through the PowerOn program, which enables certified Panasonic EverVolt installers to offer 100 percent financing to homeowners who buy a complete energy storage system.
Lease Your Panels
Homeowners can avoid making a single large investment for installing solar panels with a solar lease or Power Purchase Agreement (PPA). Under a solar lease, you typically pay a fixed monthly amount to use the energy generated by your panels. With a PPA, you pay a fixed price per kilowatt-hour. With a lease, homeowners gain the advantage of the system being maintained by the leasing company. At the end of a lease contract, you can choose to renew it, remove the panels, or buy them outright (often for a discounted price).
Wrap Solar into Home Improvement
Some homeowners opt to pay for their solar panels with a home improvement loan or home equity line of credit. This option requires a good credit score, but often providers homeowners with the lowest interest rates and fair terms.
Some states, such as California, Missouri, and California, offer specialized home improvement loans for making energy-efficient improvements to your home. In lieu of a monthly payment, Property Assessed Clean Energy (PACE) loans get paid at tax time along with your property taxes. PACE loans have provided more than $7.7 billion in financing across roughly 323,000 home improvement projects.
Speak to Your Utility
Utility companies are increasingly incentivizing customers to install battery storage systems with solar panels, since it helps them to better manage electricity supply and demand. Rocky Mountain Power, for example, is incentivizing more than 50,000 residential and commercial solar power owners in Utah to install utility-managed batteries by paying a one-time incentive of $400 to $600 per kilowatt of energy output capacity.
The trade-off here is that the utility gets to use those batteries as part of a virtual power plant during winter grid emergencies and during the peak summer electricity demand period from March to October. If programs like these are successful at leveraging residential solar as a means to offset strain on the grid, there is little doubt other utilities will get on board in the near future.
Solar First, Storage Later
Even with incentives, rebates and financing options, installing solar-plus-storage at the same time might feel like too great a financial commitment. Given that your rooftop solar system should have a lifetime of at least 20 to 25 years, you could consider adding batteries at a later date to help you offset some of the cost of your system. Just be sure to let your solar panel installer know that this option is on the table, as it may affect how they install your panels.
What savings will I get from my solar investment?
Lower Energy Bills
Installing rooftop solar panels – with or without a battery – will help you to lower your energy bills by providing you with a source of power independent from your local utility provider. However, batteries allow you to maximize your investment by ensuring surplus solar power is stored for you to use at a later date, such as when the sun isn't shining or when grid electricity prices are high.
Increase Your Home Value
Homes with rooftop solar panels have been shown to sell for more than homes without. In fact, solar systems are estimated to boost the value of your home by an average of 4.1 percent, according to sales data from Zillow.
Avoid Rising Energy Costs
Energy prices are volatile and currently on a steep rise across the globe. Generating your own power can shield you from these price fluctuations, giving you more security and certainty over your household bills.
While the price of solar and battery storage might feel intimidating, there are plenty of incentives and funding options available to help homeowners meet the costs. In the medium-to-long term, a home energy system will help you to keep your monthly bills down and even add to the value of your home.
Do you want solar but aren't sure how to manage the cost? Request a quote from a trusted Panasonic installer today to discuss your options.
