If you’re considering installing solar panels on your home, it’s important to know both the pros and cons of solar energy before taking any steps. Rooftop solar is a safe, long-term investment that both helps the environment as well as your wallet. But it’s not right for everyone.
Quick Look at Solar Pros and Cons
Pros of Solar Energy Cons of Solar Energy
Lower Your Energy Bills High Upfront Cost
Avoid Rising Utility Costs Long-term Investment
Increase Your Home Value Need Enough Roof Space
Reduce Your Environmental Impact Solar Savings Dependent on Utility Costs
Start a Solar Revolution
Here, we’ll lay out both the pros and cons of solar energy, then dive in a bit deeper to better understand each consideration.
Pros of Solar Energy
Let’s start with the benefits of solar energy and installing solar panels on your own roof.
Lower Your Energy Bills
If you’re interested in rooftop solar, you probably already know that solar can drastically cut your energy bills. Generally speaking, solar can typically shave about 30% to 60% off the cost of your energy bills.
Your own energy savings depends on your energy use, the size of your installation, your state’s net metering regulations, and your utility’s electricity rates.
In Nevada, for example, solar costs about $3 per watt. If you installed a 7 kW installation, you’d then spend $21,000 – yikes! But, over the next 25 years, that 7 kW installation will produce 267,000 kilowatt-hours of electricity. Your $/kWh cost for solar energy then works out to $0.08 per kWh. In Nevada, the average utility charges $0.12 per kWh for electricity, so your solar electricity costs a third lower than the utility.
And while utility prices continue to increase (+1.7% each year in Nevada), you’ve already paid for your solar set-up and all the electricity is free!
In states with even higher electricity prices, the difference between utility costs and solar costs are even more apparent. In Massachusetts, for example, the average utility cost is $0.22 per kWh. A 7 kW installation in Massachusetts will produce about 260,000 kWh over 25 years, so your solar costs work out to just less than $0.09 per kWh – about 60% less than utility prices.
Solar doesn’t just help you live a cleaner, more environmentally-friendly life. It also helps you drastically reduce your energy bills. That’s a win-win!
Avoid Rising Utility Costs
Just like any industry, utility prices rise. From 2001 to 2016, utilities in the US raised rates an average of 2.6% each year. That might not sound like a big deal, but decade after decade it adds up! For example, the average US utility charges $0.13 per kWh for electricity in 2019. At 2.6% increase each year, by 2039 that price will have increased to $0.21 per kWh.
By installing solar though, you’re effectively avoiding those rising costs. When you install solar panels, you’re paying for the technology. The actual fuel (ie sunlight) is 100% free. As such, once you’ve installed solar, you don’t have any on-going expenditures – just 100% clean, renewable energy.
Some homeowners already suffer from utility rates that are far higher than the national average. As mentioned, in Massachusetts the average cost is $0.22 per kWh. Rhode Island, New Hampshire, and Connecticut are similar. California’s average rate falls at $0.21 per kWh, while Hawaii homeowners suffer from the highest electricity prices in the country, at $0.31 per kWh.
Homeowners in the island state actually suffer from a double whammy. Not only do they pay the highest prices in the country, but their prices are actually rising faster than any other state – at 4.6% a year.
Installing solar allows you to avoid those rate increases, ‘locking’ your energy bills into the price you paid at the time of your installation.
Increase Your Home Value
Adding solar on your roof allows you to avoid your utility’s rising electricity rates, but it also adds value to your home as well. In 2015, the Lawrence Berkeley National Lab compared the value of 22,000 solar and non-solar homes across 8 states. The report found that:
“home buyers are consistently willing to pay PV home premiums across various states, housing and PV markets, and home types; average premiums across the full sample equate to approximately $4/W or $15,000 for an average-sized 3.6-kW PV system”
Researchers found that the installation’s age, more than any other factor, determined the exact value of the home. Systems that were 2.5 years old or less added $5.90 per watt in value, while the older systems (6 to 14 years) added $2.60 per watt. That’s a large variation, but even this lower amount almost fully covers the cost of the installation itself.
An important caveat to these findings: this premium value only comes from solar installations owned by the homeowner herself. Solar installations financed through a lease or PPA add no additional value to homes, according to a separate study from LBNL.
Your local area’s real estate market could vary from the areas LBNL focused on, which includes California, Connecticut, Florida, Massachusetts, Maryland, North Carolina, New York, and Pennsylvania. If your utility prices are higher than the national average and your state offers net metering, then a rooftop solar installation can likely help future homeowners save money on energy bills, and therefore will probably add quite a bit of value to your home.
You might be worried about higher property taxes after your installation is complete. After all, you just added $28,000 in value to your home! Don’t worry though. Many states offer property tax exemptions for the additional value solar brings. In fact, 36 states currently offer property tax exemptions for solar installations.
Colorado, for example, offers a 100% exemption on property taxes for solar installations. Your installer will know what incentives are available in your state.
Reduce Your Environmental Impact
Solar energy is both 100% renewable as well as 100% clean. In other words, we’ll never run out of the fuel (sunlight) and solar panels do not produce any emissions.
The US’ two most common fuel sources for electricity – natural gas and coal – are neither renewable nor clean. As we continue generating electricity via coal and natural gas, we are simultaneously using up these finite resources and further contributing to our own emissions. In fact, electricity generation accounts for a third of all greenhouse gas emissions in the US.
When you install solar, you’re replacing your utility’s fuels with your own 100% renewable fuel, sunlight. Exactly how much emissions you’re avoiding depends on your installation size and your utility’s generation mix. About 30% of the US’ electricity comes from coal, with another 30% from natural gas. Some utilities though use far more coal and/or natural gas than other utilities, so the emissions reduction from solar installations in those states will be larger than states with lots of large, utility-scale solar and wind.
For example, a 6 kW installation in Colorado – where coal accounts for about 50% of all generation, well above the national average – will save about 15,500 pounds of CO2 emissions in the first year alone. Over 10 years, that’s over 150,000 pounds of CO2!
Other states that also heavily rely on fossil fuels – like Hawaii, Florida, and Georgia – see similar emissions. However, homeowners in states that rely on renewable energy – like California, Washington, and Idaho – already enjoy low emissions. While rooftop solar doesn’t necessarily make the local grid any cleaner in those states, it can still help homeowners save money.
Start a Solar Revolution
When you install solar panels on your roof, research shows that your neighbors are then more likely to install solar as well. In other words, as Vox says, solar power is contagious.
In 2014, researchers from Yale and the University of Connecticut looked at the growth of solar in Connecticut over the previous 8 years. They looked at average income and population to understand how solar grows and spreads, but eventually found that the pre-existing solar was the biggest factor to growth of rooftop solar – what they called the ‘neighbor effect’.
Exactly why this phenomenon exists isn’t exactly known, but it’s likely a mix of keeping-up-with-the-Joneses and neighbors simply disseminating information on their solar experiences. Basically, typical neighbor stuff we all do every day.
So if you want to start a solar revolution in your neighborhood, the best thing you can do is to first install solar on your own roof!
Cons of Solar Energy
Nothing in this world is perfect, including solar energy. Let’s move on to the cons of solar energy, which generally revolve around the high cost to purchase and install your rooftop solar.
High Upfront Cost
Solar installation costs have fallen drastically over the last decade. In 2010, installing solar panels on your roof cost over $7 per watt. Today, that cost has dropped to about $3 per watt – a 60% decrease in just 9 years.
However, even at this low price, installing rooftop solar is still a pretty major financial investment, similar to purchasing a new car. At $3 per watt, here’s what you’d spend on a few common installation sizes:
Size $/watt Cost Total Cost Total Cost (after 30% federal tax credit)
Small Installation 4,000 watts $3/watt $12,000 $8,400
Average Installation 7,000 watts $3/watt $21,000 $14,700
Large Installation 12,000 watts $3/watt $36,000 $25,200
Simply put, solar is a major investment! Of course, we think the benefits – the long-term savings, increased home value, and zero-emission energy – is completely worth that high investment.
If the cost seems completely insurmountable, don’t worry. There are resources to help you enjoy the benefits solar can bring. Consider the following:
Shop Around for the Best Deal
While the average solar installation costs about $3/watt, in reality that price can go up or down depending on your area, installation size, and installer. The easiest way to ensure you get the absolute best deal is to talk with multiple installers through our trusted marketplace.
All solar companies will provide no-cost estimates that lay out costs and savings, so it’s easy to compare prices across many companies.
The federally-funded Lawrence Berkeley National Lab, which analyzes the solar industry, has studied installation costs and found that smaller, local installers can typically offer prices at 10% less than big, nationwide companies. These smaller installers typically enjoy lower overhead as well as sales and marketing costs, so they can offer lower prices.
So even if your sister just raves about their solar installer, take a week or two and talk to a few different companies. You might end up going with your sister’s recommendation, but at least you’ll know you’ve got the best deal you can find.
Solar Loans allow you to avoid that high initial cost, but still reap the financial and environmental benefits of going solar. Banks, credit unions, solar loan companies, and even local governments can all offer loans for solar installations.
Generally, these are special, low-interest loans designed to help you squeeze the most financial savings from your installation. Alternatively, you can also take out a HELOC or Home Equity Loan to pay for your solar installation.
The only downside to a solar loan is that you’ll be paying interest, which cuts into your savings. Shop around for the absolute lowest interest rate and shortest loan length you can handle. The faster you pay it off, the more savings you can see from your installation!
PACE Financing is similar to a loan, but offers a few additional benefits. Under PACE (Property Assessed Clean Energy), your city or county pays for your solar installation. You then pay them back for the installation as an additional expense on your annual property taxes.
PACE financing has a few major benefits over solar loans. Interest rates are usually very low and the loan is connected to the property, not the homeowner. If you sell your home, the new owner simply takes over those solar payments via the annual property taxes.
Unfortunately, only California, Florida, and Missouri boast active PACE programs for homeowners. If you’re in one of these states, ask your installer about this awesome financing option!
Solar Leases also allow you to avoid the high initial purchase price that rooftop solar can require.
Under a solar lease, a solar company installs panels on your roof. Just like a car lease, the company owns the panels, and you pay a monthly fee to use the system and all the electricity it produces.
And just like car leases, solar leases offer some major benefits. You can go solar for zero down. You don’t have to worry about maintenance or warranties. And clean energy is clean energy, no matter how you finance it.
However, there are some major downsides as well: Your lifetime financial savings will be lower with a solar lease than with cash or loan. And since you don’t own the installation, you can’t take advantage of the federal tax credit. Lastly, a solar installation that is leased adds no additional value to your property – though it doesn’t detract either.
Since the cost to install solar panels on your roof can be quite high, it can take a while to recoup that steep investment. The payback period can last between 5 and 15 years, though for most homeowners it generally falls between 7 and 12 years. At that point, you’ve paid off the entire cost of your installation by producing your own clean energy and avoiding high utility prices.
No one is arguing that that’s a pretty long time. However, solar panels can last 25 year or more. So once you’ve paid off the installation, you’ve got years left of 100% no-cost clean energy to enjoy. And during that decade, that’s when your solar savings really start to add up. Consider this example:
Let’s say you paid $36,000 for a 12 kW installation in Florida. How long would it take to see a return on the investment, and what’s your total savings?
A 12 kW installation in Florida can produce about 18,500 kilowatt-hours of electricity each year. The average Florida utility charges $0.12 per kWh, so you’re avoiding paying $2,240 to the utility in that first year alone.
The second year, you’ve said another $2,220. By Year 13, you’ve saved $22,400 in total – completely paying off your entire installation.
For the next 12 years, you’re racking up about $1,600 a year in savings. By Year 25, you’ve avoided paying the utility for 287,900 kWh – a total worth of $43,700 – making your total net solar savings $22,700 ($43,700 – $36,000 solar install cost = total net savings).
In this example, you spent $36,000 to see a net savings of $22,700 over the 25-year lifespan of your installation. That’s enough to buy a new car! But as we said, it takes time to see these savings.
In states with higher electricity prices like California and in the northeast, homeowners enjoy much faster payback periods as well as far higher returns. California homeowners, for example, pay utility rates of $0.21 per kWh on average – 50% higher than Florida utility prices. So that 12-year payback period cuts down to just 8 years!
Solar Savings Dependent on Utility Costs
We touched on this in the above section, but your solar savings are directly linked to you utility costs. If your utility prices are higher, you stand to save more money. If they’re lower, you’ll need a longer time to recoup that investment.
In states with high electricity costs, like California, New York, and most of the northeast states, saving money by installing solar is easy. You can take out a loan from your credit union and still see high savings, even with all the interest adding to your total expenses.
In other states with lower electricity prices – like Idaho and Washington in the northwest and Florida and Georgia in the south – solar is still worthwhile, but it can take longer to recoup that investment. And because savings are lower, you’ll need to carefully weigh whether a loan is a wise decision, as the interest really can cut into your total savings.
For example, let’s compare the lifetime savings and payback period for a 7 kW solar installation in two solar-friendly (but very different) states: North Carolina and Massachusetts:
State Total Solar Cost (7 kW installation at $3/watt) Total Lifetime Solar Generation Average Utility Price Years to Payback Total Savings After 25 Years
North Carolina $21,000 261,900 kWh $0.12 per kWh 15 years $19,600
Massachusetts $21,000 259,800 kWh $0.22 per kWh 9 years $65,000
You can see that, even though the installation in North Carolina actually produces more electricity (since NC is closer to the equator and therefore enjoys more intense sunlight), Massachusetts homeowners enjoy a much faster return and over twice as much savings – all thanks to Massachusetts’ higher utility prices.
Of course, that doesn’t mean installing solar in North Carolina and similar states isn’t worthwhile. In the above example, the North Carolina homeowner would still enjoy a net savings of about $20k over the life of the installation. That’s certainly still worthwhile!
You Need Enough Roof Space
Solar panels produce the most electricity when they face directly south towards the sun, so when it’s time to install your solar system, your installer will try to squeeze all the solar panels on the south-facing portions of your roof.
The problem though is that solar panels are quite big. Solar panels for residential use are about 3 feet wide by 5 feet tall. And since the average home needs about 25 of them, that means you’ll need about 375 square feet of unobstructed, unshaded, south-facing space on your roof.
If you live in a small house or your roof is very complex, finding that much open space can be difficult. Vents and bathroom pipes, chimneys, and shade from nearby trees can all affect where your solar company can install panels.
If there’s not enough south-facing roof space, your installer will probably just move a portion of the panels to east- or west-facing sections of your roof. The panels on those sections won’t produce as much, but you can add an extra panel or two to bump energy production back up to where you want.
Occasionally there’s simply not enough roof space for all the solar panels a homeowner wants. In that case, they’ll either need to decrease the system size, purchase more expensive high-efficiency solar panels, or consider a ground-mounted system. All of these are common solutions, but you’ll need to work with your installer to find the most cost-effective option.
In the end, when weighing the pros and cons of solar energy, we find that the positives – the financial savings, increased home value, and lack of emissions – vastly outweigh the negatives.