Solar Energy – Can You Afford It?

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As a solar installer and as an outspoken advocate for solar energy, a lot of people have approached me over the years for advice about how to finance their solar project. They come from all backgrounds and all political viewpoints. Some are environmentalists looking to reduce their carbon footprint and reduce their dependence on fossil fuels. Some are libertarian-leaning individualists who want to reduce their dependence on corporate utilities or government. Some are simply looking to reduce their electric bill. All great reasons, but when the rubber meets the road, it all comes down to one question… “How the heck am I going to pay for this thing?” Even the noblest of intentions go by the wayside when it comes to the reality of cold, hard cash-ola.

Granted, the price of installing solar has plummeted in the last 10 years, and that helps a lot. I got into the field in 1998. At that time, solar was being installed for around $12 per watt of installed capacity. Today, the going rate is around $4. Still, without figuring in the increasing cost of power, depreciation, tax credits and rebates, that is going to give most people a simple payback somewhere out around 20 years for a grid-tied solar array.

So, how do people who are not independently wealthy afford to install many thousands of dollars worth of high tech photovoltaic electricity-generating solar equipment? As they say in real estate, there are three rules: location, location, location. Each state,each utility company and even individual communities have different policies that make installing solar more or less expensive.

Incentives and Rebates and Credits, Oh My!

When researching how to install solar at your home, the best place to start is at the website – the Database of State Incentives for Renewables and Efficiency. Catchy name, right? Okay, not so much, but what it lacks in zazz, it makes up for in comprehensive info. It provides a complete list of federal, state and local incentives for each state. For instance, the federal government is currently offering a 30% tax credit to bring down the cost of your system. Many states offer another tax credit, or a cash rebate. Some utility companies offer cash rebates as well. You will find that states like Massachusetts and New Jersey have payback rates below 8 years, while states like Missouri and Mississippi offer few if any incentives.


Now, if you are like me, paperwork is not your favorite part of any job, especially when it comes to taxes. But it may be worth consulting an accountant to look over the portfolio of incentives available for you. Those incentives, credits, etc. could make or break your project, and nobody, no matter how noble their motives, likes to leave money on the table.

Leasing Solar: Beat Solar Costs Like You Beat a Rental Car

So, even with the credits, rebates, etc., you just can’t make this solar thing cash flow. I can relate. Family members keep bugging you for trivialities like food, clothing and shelter. “But what about MY needs?!” Well, if you live in one of the 14 (sorry, only 14) states that allow leasing options, you may still be in the game. This handful of forward thinking states have embraced the crazy, radical idea that you should have a CHOICE of where you get your electricity.

Solar integrated into a standing-seam roof is almost invisible.
Solar integrated into a standing-seam roof is almost invisible.

In these lease agreements, the solar provider installs the panels on your home, and you sign a contract to pay them for the power produced, rather than the installation of the system. The company utilizes the tax incentives, etc, and all you have to do is pay for the power you receive, at a rate locked in below your current rates. You save cash, you use less electricity, you lower your carbon footprint, and you don’t have to worry about system maintenance. You aren’t gaining the full value of the solar system, but you aren’t paying the big upfront bill, either.

Going Off Grid: Cutting the Cord is a Cash Killer

“Hey!” you say. “I’m sick of my utility company! I want to go off the grid, and give the finger to those big money bums!” Yes, I think we all harbor a bit of the Thoreau spirit. But doggone it, real life just keeps getting in the way.

Taking your home off the grid just doesn’t make economic sense, I’ll state that clearly and definitively right now. Housing a battery bank and system big enough to run a conventional home is not now, nor will it soon be (unless the world goes all Mad Max on us) practical for the average homeowner. Battery technology or fuel cells may change that down the road, but not in the foreseeable future.

Off-Grid systems require high-maintenance batteries.
Off-Grid systems require high-maintenance batteries.

However, if you are building a hunting cabin, retirement home, weekend getaway or prepper compound more than about ¼ of a mile from the power lines, it may actually be an option with a lower upfront cost than having utility power installed. Don’t expect big incentives, though – most rebates and tax credits are only for grid-tied solar.

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About Rich

Rich Dana loves to build things, to tinker on things, and to grow things. After more than a decade as a historic building remodeler in Brooklyn, New York, he and his wife Ericka moved to their back-to-the-land dream home (and fixer-uper nightmare), an 1870s farmhouse on 15 acres in eastern Iowa that they call “Catnip Farm.” For the last 18 years, Rich has specialized in super-efficient historical renovations and solar PV installation. He is working to convert much of the farm into perennial food crops like nut trees and berries, and he helps Ericka out with her heirloom seed project. His latest passion is learning to sew.

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6 thoughts on “Solar Energy – Can You Afford It?”

  1. Great article…I’ve been interested in solar for my home for a while, but can’t make the numbers work out in any reasonable way yet (there are limitations to the amount of roof and available property that mean I can only get about 1/3 of my electrical needs covered, and the costs just don’t make sense.)

    I do have a few more questions though, that may also be helpful to others interested in the topic: Do you have any info about how readily banks are willing to loan money for solar installs? Are people generally using a HELOC to finance, paying cash or securing separate financing? What’s the typical ROI, or Return On Investment as a percentage of dollars spent? How about in terms of Property Value Increase at sale of the property?


      • Hi Matt! Sorry for the slow reply, your comment slipped past me! Bankers have a wide range of opinions about lending for solar. A lot depends on the incentives in your area. Check out that DSIRE site I mentioned above. Also, the rate your utility company is willing to give you for the electricity you procuce. You certainly could use heloc, but you still want to make sure that the system is going to cash-flow for you, and that may be best discussed with your accountant.


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