Solar Can Still Save You Money – Even with Federal Tax Credits Reduced
With 2019 winding down, and along with it the 30% federal tax credit stepping down to 26%, now is a good time to consider whether solar will help you save money on your utility bills.
Home energy innovator Sense analyzed solar home data from 1800 homes across the US, in states with high solar adoption, and found their average savings is $1075 annually.
Those savings are high enough to offset 67% of these homes’ electric bill.
The study revealed that because of the mismatch between timing of energy usage and solar production, more than half of the electricity generated by solar panels goes back to the utility grid, on average, and less than half is used to directly power the home’s day-to-day needs.
This surprising insight points to the need for homeowners to know how much their utility will pay them for power returning to the grid to get the most from their investment.
Also, solar homeowners should shift more of their energy usage to times of day when solar power production is high.
Key insights from Sense’s data:
- Most homeowners use less than half of their solar power directly and need to feed the rest back to the grid or invest in battery storage.
- Sense’s research found surprising variations in solar payoff from state to state.
- Since many states allow utilities to buy back solar power at a lower rate than they charge for electricity, where you live can make a big difference in the payoff from your solar investment.
- How people use energy in their home matters, too; homes that use most of their energy during peak solar hours can maximize their solar investment.
- Only a fifth of all solar residents produce more solar energy than they consume, reaching the goal of matching household energy consumption to solar production.
Here are some tips for investing in a solar system and getting the most savings once it’s installed:
Do your homework before installing a new system. Assume that you won’t use all your solar production and research your utility’s payback rate on unused solar power (see map of state policies here), as well as both federal and state incentives. The Solar Energy Industry Association’s website is a good place to start.
Pay attention to deadlines as tax incentives change. The federal solar tax credit allows you to deduct 30 percent of the cost of installing a solar energy system from your federal taxes through the end of 2019. It decreases to 26% in 2020 and 22% in 2021, winding down to 10% in subsequent years.
Understand your home’s energy usage patterns and adjust them to match your solar production. Solar homeowners whose utilities don’t offer net metering can reduce their electrical bills by scheduling energy intensive activities during peak solar hours.
HVAC systems account for nearly half of the average electricity bill in summer months according to the EIA — depending on where you live. Solar homeowners can run their HVAC systems to cool their home during sunny times of the day, then adjust settings toward evening to reduce electricity usage and take advantage of cooler outdoor temperatures. Smart thermostats can help homeowners schedule cooling to coincide with peak solar production time periods.
- Some appliances can be scheduled more frequently during peak solar hours including your washing machine, dryer, oven, dishwasher, and stove.
- Charging electric vehicles (EVs) consumes a lot of power, so solar homeowners should make it a priority to charge their EVs during the day using their solar power.
Find out more at www.sense.com.
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