Pros and Cons of Solar Panels

Home with solar panels on roof

More and more homeowners are switching to solar panels to reduce their energy bills, as well as their carbon footprint. Still, solar energy isn’t for everyone. Let’s examine the pros and cons of solar panels so you can decide if they’re right for you.

Advantages of Solar Panels

Sunlight is by far the earth’s most plentiful source of energy. When that energy is converted to heat and electricity, it can provide clean energy to homes and businesses. One way that we can harvest the sun’s energy is through solar panels—either on rooftops or within large solar farms in rural areas.

Here are some reasons why you might want to add solar panels to your home.

Advantages
  • Reduced electric bills
  • Energy independence
  • Cleaner energy source
  • Improved home value
  • Federal and state tax credits
  • Longevity and low maintenance

Reduced Electric Bills

Perhaps the main advantage of switching to solar energy is to save money on your home’s monthly electric bill. This is because solar panels generate their own energy instead of relying on energy from a public-utility power grid. How much you save depends on the following factors:

  • How much power you use
  • The size of your solar panel system
  • Whether you buy or rent the solar panels
  • How much sun your roof gets
  • Your local electricity rates

Energy Independence

If you have a solar panel system with batteries, you can make your home completely independent from the power grid. Solar batteries store the energy that’s generated by your panels so you can use the energy whenever you need it—not just during sunny hours. For example, a battery lets you run your lights and appliances at night, on cloudy days and during power outages. Solar batteries are typically sold separately from residential solar panel systems.

Cleaner Energy Source

Electric power generation is a significant emitter of carbon dioxide. By installing solar panels on your home, you would be part of the solution to this problem, as solar energy systems do not emit carbon dioxide or contribute to air pollution.

The manufacturing of solar panels does produce some greenhouse gas emissions. However, it is estimated that the environmental impact of manufacturing solar panels is offset in about one to four years, depending on the system.

Improved Home Value

Just like a renovated kitchen, solar panels can be a desirable upgrade for a lot of home buyers. As a result, solar panels tend to increase the value of your home. They can also help your home sell quicker than homes without solar energy.

Federal and State Tax Credits

The federal government offers a 30% tax credit on the total cost of solar panels that are installed on your home between 2022 and 2032. This tax incentive, which is called the federal solar Investment Tax Credit (ITC), is part of the Inflation Reduction Act passed by Congress in 2022.

In addition, certain states offer additional tax credits for solar energy purchases. These work similarly to the ITC, except the tax credit gets deducted from any state taxes owed. The amount of tax credit varies by state.

Longevity and Low Maintenance

Another advantage of solar panels is the lack of maintenance they require. The only maintenance most solar panels need is a light cleaning each year to ensure that leaves and other debris don’t block the sun’s rays. If they stay clean, solar panels are capable of operating for decades with minimal loss of efficiency. Fortunately, solar panels don’t require many ongoing costs, as they usually come with a full warranty for 20 to 25 years.

Disadvantages of Solar Panels

Installing solar panels comes with significant benefits, but there are some downsides too. Here are some potential disadvantages.

Disadvantages
  • Expensive to install
  • Doesn’t work for every roof
  • Could raise property taxes
  • Long payback period

Expensive to Install

While installation costs have decreased over the years, it can still cost you a pretty penny. Generally speaking, a solar panel installation can range anywhere from $10,000 to $50,000. The final figure depends on several factors, including:

  • The size and type of the panels
  • The complexity of your roof
  • Local labor costs
  • Permitting costs
  • Any financial incentives available in your state

The main components of a solar panel system include the panels themselves, the inverter (which converts the sun’s power into usable electricity) and batteries for storing power. To get the best possible price on the system and the installation, make sure you compare costs from multiple solar companies and installers.

Doesn’t Work for Every Roof

Certain aspects of your roof can affect the efficiency of your solar panels. If your roof includes some of the unfavorable conditions listed below, it doesn’t mean you’re completely out of luck, though. It just means that your solar panels might generate less energy.

Favorable Roof ConditionsUnfavorable Roof Conditions
Unobstructed by trees or other structuresA well-shaded roof
Made up of asphalt shinglesMade up of cedar shakes or slate tiles
A slope between 15 and 40 degreesA very steep roof
Receives direct sunlight; south-facingDoesn’t receive a lot of direct sunlight

Could Raise Property Taxes

Another disadvantage is that homeowners with solar panels may end up paying more in property taxes. This is because solar panels typically increase home values. The good news is that some states have tax codes that allow homes with solar panels to avoid paying the additional property tax.

Long Payback Period

Because installation costs can be expensive, it may take several years for you to recoup your initial investment. If possible, try to calculate the length of this payback period before buying solar panels. For example, if the payback period is eight years, and you happen to sell your home before that, you may not see a return on your investment.

Who Should Use Solar Energy

Going solar is a major decision that requires research and due diligence. As previously discussed, there are many potential advantages and disadvantages to solar energy.

On the plus side, solar panels can cut your utility bills and carbon footprint. On the downside, it can cost you money if you decide to move before you recoup your initial investment. Before you decide to go solar, make sure you consider all the possible pros and cons of solar panels.

Solar Panels Are Right for You If …

Your energy usage and electric bill are high
You're not planning to move for many years
Your home receives a lot of direct sunlight
You can afford the upfront costs
You qualify for state and federal tax incentives and rebates
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Impact on Homeowners Insurance

Some standard home insurance policies cover solar panels, some do not. If your policy does cover solar panels, it may pay to repair or replace the panels if they’re damaged by a covered loss. How much coverage you have depends on where the solar panels are installed on your property.

  • Solar panels attached to the roof are usually protected under your home policy’s Dwelling coverage.
  • Solar panels that are mounted on top of a detached garage are covered under your home policy’s Other Structures coverage.

Before you install solar panels, ask your agent if you need to increase your coverage limits.

Adding solar panels to your home can affect your home insurance premium. The reason is fairly straightforward. Because roof-mounted solar panels are considered part of your dwelling, you may need to raise the limit on your Dwelling or Other Structures coverage to make sure the panels are covered. As a result, your annual home insurance premium may go up.

To ensure proper insurance coverage for your solar panels, follow these steps:
  • Check your existing home insurance policy – Carefully review your current home insurance policy to determine if it already includes coverage for solar panels. Read through any specific terms and conditions related to solar panel coverage.
  • Assess the value of your solar panels – Determine the current value of your solar panels, including the cost of installation, equipment and any related components. This information will help you determine the appropriate coverage amount that you need.
  • Contact your insurance provider – Tell your insurance carrier or agent about your solar panel installation. Ask if your panels are adequately covered by your current policy. If they aren’t, ask your carrier about any available endorsements, riders or add-ons to enhance your coverage for solar panels.
  • Find out about possible exclusions – Ask your insurance carrier or agent about any policy exclusions related to solar panels. An exclusion is a specific type of damage that isn’t covered by your home insurance policy. Common exclusions to solar panels may include wear and tear, malfunctions and potentially wind and hail.
  • Update your insurance policy as needed – If you make any changes to your solar panel system, like adding more panels or upgrading equipment, inform your insurance carrier and update your policy accordingly. Failure to update your policy may result in insufficient coverage.

*Instant quote not available for all applicants. Restrictions apply.

The above content is for general informational purposes only and does not replace or modify any provisions, limitations or exclusions contained in any insurance policy.

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The above content is for general informational purposes only and does not replace or modify any provisions, limitations or exclusions contained in any insurance policy.

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