Why you should probably not install solar panels on your home
There are many reasons you may be thinking about installing solar panels on your home. Is it right for you? Probably not. But it depends, and if you want to know why and learn more, do continue reading.
Also please note this post is about installing solar panels on your existing home. If your question is whether it's a good idea to buy a home with an existing solar system, my answer is "probably", particularly if you're asking about a home in a solar community (that is a community where most/all homes in the community were built and sold as new with solar pre-installed).
The first thing to know about adding solar panels to your home is that this can be a shady business. Beware of unscrupulous door-to-door salespeople who will promise you the world, because they will not be held responsible when they fail to deliver. That's certainly not to say that all of them will be that way, but many of them are. If you need assistance, consider doing your due diligence to find and work with a reputable business, rather than one that shows up on your doorstep begging for your business.
Solar panels can be desirable for homeowners for a variety of reasons. In this post, we will review some of those reasons, and help you decide whether or not solar panels are right for you. The first question to ask is why you want solar panels? There are 3 main reasons:
- To save money.
- For the environment (To produce clean and environmentally-friendly energy and decrease your "carbon footprint".)
- Energy independence/resilience/off-grid.
Your reasoning can also be any combination of the above.
To save money
If you're doing this with the primary intention of saving money, as I assume most people are, this is where my answer, "probably not", comes from. Because you probably won't. However this can vary greatly based on:
- Your roof size (smaller roof = lower potential for solar generation)
- Your energy use (higher energy use = higher costs and longer break-even period)
- Your home's efficiency (more efficient = less energy required = more sensible)
- How much sun your home gets/year (less sun = less energy generated)
- Your local government incentives (federal, state, city, and even some directly from your energy provider)
- Local net metering plans
- Whether you finance the install, and what the associated interest rate is.
- Whether you DIY install
- Many other factors
There are 2 very simple main reasons why you most likely won't save money:
- Most people only occupy their home for 5-7 years. This is most likely not long enough for you to recover the initial costs of installation. Stuff happens. You could lose your job, your business could go under, you may have an ill family member you want to be close to, you may get divorced, you may find new employment, there are any number of reasons you may need to move in the near future. For that reason, there's a good chance you will not reach the "break-even point" when the system has paid for itself, which may take 10-15 years. When you sell, you will most likely be asked to pay off any remaining balance on any financing because assuming existing financing, if even possible, is very difficult and complicated. This combines with #2:
- Solar panels add little to no value to your home. This is the biggest reason, and the misconception that a lot of salespeople are going to try to give you. There are several internet publications that suggest otherwise, but I can tell you, as someone who works in the industry, has sold homes with solar panels on them, and collaborates with other real estate professionals, that this is not true. If you don't believe me, call up your favorite real estate professional and ask them, they'll most likely give you the same answer, because we have "boots on the ground" and nothing is theoretical or estimated. We have real-world experience.
I can give you an anecdote: I worked with some buyers who moved from Waco in January 2019 to purchase a home in Pflugerville. They then reached out to me about a year later to tell me they were moving back to Waco. Now, being in a home for 1 year on it's own is a pretty big problem, as it does take time to gain equity in the home. Then when I arrived at the listing appointment I observed that they had installed solar panels in the interim. The one thing they had on their side was the market at the time, as their home had appreciated considerably. Despite selling for approximately $21k more than they had bought the home for, they still ended up having to bring ~$10k to the closing table to get out from under the home, because on top of being upside-down on their mortgage, they also had to pay off the solar installation.
Opportunity cost
Something that a lot of people don't consider is the "opportunity cost" of that purchase. That is to say, is there something else you could be doing with that money that you aren't, and are missing out on the opportunity because of it?
If you have the money to pay in cash, consider alternative investments (because that's what these both are; investments). If you had put that money instead into an ETF like VOO you would have doubled your money in just 5 years, where it may take you 10+ years just to break even on a solar install.
If you're financing the panels, this isn't so much a concern because you probably don't have money to invest in other things anyway, or you're already invested.
I'm going to recommend doing your own calculations for starters. This can be a complex equation. There are many calculators for this purpose, but you want to find one that is not made by a solar reseller, like this one from PVcalc:
Mayer Analytics
Net Metering
You'll also need to research your local utilities to find out what their "net metering" plan looks like. Your system will most likely produce more power than you need in the Summer, and less power than you will consume in the winter. The longer days and high arc of the sun in the Summer can have a dramatic affect on the power output of your installation. When you configure your system, you'll probably want to split the difference, for the most cost-effective approach. You can make this more cost-effective by essentially selling excess power back to the grid in the Summer and then redeeming credits in the winter. This is called net metering. What that sale looks like will vary from one utility to the next. However most of the time these won't be 1:1 credits. Typically they will give you less money for energy you give them than they will charge you for energy in return. Some of them will straight up just cut you a check. What that buy/sell ratio is can make or break a system.
For The Environment
Some people are okay with potentially taking a loss on their system, or having a very long payback period. Other people just think it's cool (It is!). If you can afford that, by all means, have at it, and I thank you on behalf of humans across the planet.
Energy Independence
One of the common misconceptions about solar installations is that they give you power when the grid goes down. Many Texans were traumatized in the 2021 Valentine's Day "snowpocalypse" where vast swathes of the state lost power for several days and sometimes weeks. The reality is that in a typical solar installation, when the grid goes down, so does your solar system. Yes, even if the sun is still up and your solar system is functioning properly.
That is, unless you install a battery backup. But batteries are expensive and will probably double the cost of your installation, with no realized monetary gains. However, it does give you complete independence from the grid. It also does give you added resilience since your power source is not dependent on power lines that are often knocked out by trees during severe weather events.
You can have either an off-grid battery installation or a grid-tie installation. The off-grid, as the name suggests, gives you complete independence from the local, state and national power grid systems. That does mean you are also completely on your own if/when you have issues, so you'd better know damn well what you're doing, and also it's probably best to DIY this sort of installation, in order to intimately familiarize yourself with the system's operations (as well as saving buckets of cash). If you're utilizing a truly off-grid system, I would recommend having a gasoline/propane generator handy as well. These are (relatively) cheap insurance in the case that your power production is reduced and/or your consumption increases for a prolonged period, or there's some sort of fault in the system.
The grid-tie systems involve a lot of additional safety systems and permits (and money) because, if done incorrectly, you can cause huge problems for the grid. You really don't want to be energizing power lines while they're damaged and lineworkers are actively trying to restore their connection to the rest of the grid.
My advice is, if you want emergency power, buy a generator. They are super cost-effective. The downside is that you'll need to maintain them periodically to ensure they're in good working order at any particular time, but especially before an anticipated severe weather event. And also that they can be very noisy. You'll probably run it overnight and it will disturb your sleep. All you need to install it is a power inlet box, and add a transfer switch or interlock kit to your existing electrical panel. Or you can just plug in an extension cord and run it into your house, if you can't be bothered with any of that.
Hybrid Power
A third consideration for emergency situations might be a combination of both. That is, you can have a typical non-solar energy system, but also an additional small off-grid solar system that is intended to power some emergency necessities like modem/wifi, refrigerator, microwave, emergency radios, maybe a water heater, laptops and phones and, crucially, a window/portable/mini-split/space heater connected to the primary bedroom, off-grid, 24/7/365 (close the vents to the main HVAC system). That way you have at least 1 comfortable room in the home when you lose power, and it has at least 1 bed. This gives you the benefits of both systems. Running the solar part year-round makes it more cost-effective, as well as gives you the confidence it will work in the case there is an outage. They're also typically much much easier to DIY and simply cost less because they're smaller. And you won't have to deal with the noise, maintenance, or noxious fumes that come with a generator.
Brooks Lawson
Future Support
Also be aware that if/when you have problems post-installation, most of the time no one will touch the system except for the original installer, for liability reasons. So if the company you used to install your system is no longer in business, or has a backlog (any repairs, but especially warranty repairs, will likely be a low priority) you're going to have a very bad time.
Roof Service/Replacement
Obviously, the solar installation is going to be attached to your roof most of the time. The installers may want to replace your roof, even if it still has several years of life in it. That's because it's going to be way easier to do it before installing the panels, and you don't want to wait 3 years, and then have to remove all of the panels, as this will greatly complicate the process, and add expenses. So you can add the premature replacement as an additional cost.
Also if there are any roof leaks or other deficiencies, you'll likely have to call the solar installer to come out and look at them, and NOT your favorite roofer, because as I mentioned, roofers will not touch your solar system.
If you have the space (like, a lot of space), I would highly recommend a ground-mounted array. You can even mount them up off the ground to make a sort of solar pergola.
This greatly simplifies the process of installation and service and without compromising the integrity of your roof or the complications of interconnecting the two, and is accordingly more cost-effective.
It also makes it easier and safer to service and clean, since no one has to risk their lives to climb on top of a roof, which is actually exceptionally dangerous, on a scale of "everyday risks".
You can make use of bifacial panels, which will actually generate power from the light bouncing off of their background, such as some white gravel.
They can be oriented in the exact correct direction and angle, which improves their efficiency, as opposed to being pointed in whatever direction your roof is, which means you'll need fewer panels for the same power.
Solar + EVs
Electric vehicles are a great way to realize the gains from your solar system. Most EVs can be programmed with a charging schedule so that you can capture more of that solar energy from the day to prevent sending it back to the grid for net metering.
In the future, EVs will hopefully support bidirectional charging, meaning they can actually be used themselves as a battery backup to power your home at night.
In an unrelated tangent, they can also be used to solve the very problem they're creating with larger loads on our grids, by redistributing that power back to the grid as necessary.
Unfortunately, to my knowledge, the only vehicle that currently supports bidirectional charging is the F150 Lightning, and even then only with the $1310 Charge Station Pro, which is notoriously unreliable.
When does it make sense?
If you're building a new home that doesn't have power already run to the lot, you may want to weigh the costs of installation vs. just installing your own power system. Depending on how far away the existing power infrastructure is, it can be very expensive to run all the way to the home. Possibly even more expensive than solar + batteries + generator. And you probably need power in your home so the whole opportunity cost argument goes out the window.
Certain countries and US states can have huge financial incentives.