Solar Panels (PT 3) – What does it REALLY cost? – Bringing a little Clarity to Homeownership

Series Introduction: This article is part of a 10-part series to shed some light on what your solar salesperson is NOT telling you. It is my hope this will help consumers to better understand the “small print” items when deciding if installing Solar panels is the right decision for you and your family.

Solar Panels have recently become more affordable and easier to obtain for homeowners. It is hard not to get sucked in by commercials with uplifting oldies blaring and people dancing and singing the praises of a Solar Life with the spokesperson declaring it is now an affordable option for homeowners. As a REALTOR® I have been asked by many past and present clients if they should do this? This series will cover the following issues of the solar home craze. You can also click topics below to jump to that particular topic.

What’s the catch?
Potential savings or smoke and mirrors
What’s the real cost?
Life expectancy and maintenance mortgage and appraisal pitfalls
How does this affect my homeowner’s insurance?
What sellers need to know?
What home buyers need to know?
Less expensive alternatives to solar panels.
Why I made the decision I made regarding Solar Panels.

What is the real cost of Solar Panels?

The new system we were offered would be financed for 30 years with payments of $252 – $264 per month. Now they did say there were some great incentives like a federal tax credit of $20,000.00 and that Ameren (The local supplier of electricity) would even give me a credit of $2,400.00, however, if we didn’t get those credits the payment would increase an additional $100 a month. Let me get this straight. If I don’t receive the federal tax credit or the Ameren credit, then my payoff is actually $73,180. Those credits are not a given and it is up to me to find out if I could receive them and to jump through the hoops to get them as well. It would feel a lot more honest if they would say the cost is $73,180 which would be between $352 and $365 a month but it could be less if you get the federal and Ameren credits. Instead of making it appear th system cost is $52,212

You can see that they estimated the 30-year savings to me was $28,000 however:

$52,000 for the system plus
$50,040 additional payment to the electric company @ $139.00 a month for 30 years*
$102,040.00 Total

Compared to the current $309.00 a month for the next 30 years = $111,240.00

The savings is actually $10,200.00 not $28,000.00

Ok, I understand that utility costs always go up, but I’m using the same example they used to show cost savings & lets not forget that the $139.00 a month in additional electricity I will need to buy from my utility company does NOT include taxes, fees and user charges AND will also increase over the next 30 year. And in case math isn’t your thing $139.00 a month is % of $309.00

But even the savings of $10,200 is deceptive. You’ll only save $10,200 if you pay for the system in cash. If you don’t then you will be financing the $52,000. They quoted a rate of 2.99%. Not a bad rate. Amortized over 30 years your payment will be $252.00 a month, or a total $90,720.

Also remember the system actually costs $73,180 unless you get the federal and Ameren credits. I’ll let you do the calculation for the payments with interest over 30 years on $73,180.

To be clear $139.00 a month means I am still paying 45% of my monthly electric costs so between the panels AND the Energy updates my electric costs have only dropped 55%

This is what they say in the fine print regarding financing…

Now here is a cleaner version of what this says.

In laymen’s terms You are financing the ENTIRE amount and you can use this money to pay down the principle when/if you receive some or all of it. SEEK THE COUNSEL OF A TAX PROFESSIONAL TO SEE IF/HOW and WHEN you might receive such a rebate.

COST FOR PUBLIC ELECTRICITY

I was perplexed how this was a good value for me. They quantify the value by saying, your current cost of electricity will go up, it always does. I was certain this was true, So I went and did some calculations on my own using this resource on Missouri Electrical costs (all states data can be found using this link) This source listed electric prices for 2003 – 2013 – I calculated the percentages of increase and averaged it out over 10 years coming to a price increase of 3.29% annually. They said overall if I continued for 30 years their calculations were that I would spend $207,969 paying my utility company as I do now. If I had the solar, however, I’d only be paying $179,140 right so that is where the $28,830 number comes from. They go on to say, ‘you’re paying off the system so after a period of time right you’re no longer paying your monthly payment you’re just paying the cost of your electricity’, because you do have to have some supplemental electricity. Well in that case – 30 years from now I won’t pay much at all.

Closing

Hopefully you found this to be a helpful series, I would love to see your comments and hear about your experiences so others can benefit from your stories as well. Direct links to each topic in this series. Also, I would love for you to subscribe to be notified when new posts are available or follow. Look on the top right to do that.

SOLAR PANELS – What’s the catch?

SOLAR PANELS – Potential savings or smoke and mirrors

SOLAR PANELS – What’s the real cost?

SOLAR PANELS – Life expectancy and maintenance

SOLAR PANELS – How does this affect my homeowner’s insurance?

SOLAR PANELS – What sellers need to know?

SOLAR PANELS – What home buyers need to know?

SOLAR PANELS – Mortgage and appraisal pitfalls

SOLAR PANELS – Less expensive alternatives to solar panels.

SOLAR PANELS – Why I made the decision I made regarding Solar Panels.

Have you thought about selling your home?

What if I told you I could sell it for more than it is worth?