Solar panels are environmentally friendly, of course, but they can also help you save some money on your electric bill. Installing solar panels can be a costly investment, but it will actually pay for itself in savings over the years. Adding solar panels to your home does typically increase the value of your home. As with any real estate investment, though, time is a big factor. If you think you might sell the home within a few years, it is important to determine whether the increased value you will realize through having solar panels is great enough to offset the initial cost, which can be steep.
About Solar Panels
A solar panel is an assembly of connected photovoltaic cells that use the sun to create power. A single panel only produces a limited amount of power, but when used as part of a larger system, solar panels can generate and supply enough energy to power a home or commercial building, particularly -- of course -- if you live in a sunny area. Solar panels typically have a lifespan of 20 to 25 years.
Solar Panels' Value
The National Bureau of Economic Research released an analysis that found solar panels can add about 3.5 percent to a home's value. This amount can be even higher in communities with a high number of college graduates and hybrid vehicle owners. The Appraisal Journal states that a home's value increases roughly $20 for every $1 decrease in energy costs. So if the solar panels save you $600 a year, the home's value may increase by $12,000.
Cost of Solar Panels
The cost of solar panels involves more than just the sticker price on the panels. In addition to the material, you will need to pay for installation and maintenance. Solar energy costs approximately $4 to $9 per watt, with the average price at $7 per watt. The size of your home doesn't matter. You will need to look at your monthly energy consumption to determine the amount you need. According to CostHelper, hiring a contractor to install a system large enough to power several rooms or an entire house ranges from $25,000 to $100,000. If the house is older and not energy-efficient, the installation costs can top $100,000.
Discounts and Credits
Your local utility company may offer discounts for installing solar panels. Some states, such as California, also offer property tax exemptions. In addition to the local and state assistance, you can claim the federal Solar Tax Credit. As of 2011, the federal incentive is 30 percent of the total system and installation costs. To qualify, the home must be your primary residence. The credit does not apply to new construction.
Jeannine Mancini, a Florida native, has been writing business and personal finance articles since 2003. Her articles have been published in the Florida Today and Orlando Sentinel. She earned a Bachelor of Science in Interdisciplinary Studies from the University of Central Florida.