Are solar panels worth it?

Experts in the solar energy industry say the return on investment for a solar panel array depends on a handful of factors, including the original cost of your system, the cost of electricity in your area and how much energy your household consumes, plus any costs you incur for maintenance.

The consensus, though: Over time, the investment tends to pay off.

Key insights

• Solar panels do eventually pay for themselves, experts say.
• How long it takes your solar array to pay for itself depends on your system’s efficiency and other factors.
• The efficiency of your solar array is determined by how much sunlight your home is exposed to, the size of your system and how much power it produces.

Solar panel return on investment

Investing in solar energy allows property owners to "lock in the cost of their energy and avoid ever-increasing utility costs," said Tim Deters, content manager at Green Ridge Solar, a solar company based near Portland, Oregon. With the energy inflation rate at approximately 5% per year, this savings adds up even greater over time, he noted.

Even homeowners who finance the purchase of their solar array will one day see a return on investment, since the cost of the solar array will eventually be paid off. For homeowners who never invest in solar power, the cost of utilities is unlikely to ever go away. Once the cost of your solar investment is paid off, you'll enjoy free energy for your home.

Do solar panels pay for themselves?

While solar panels do eventually pay for themselves, how long this takes depends on several factors, including your local energy costs and how much sunlight you get.

• Cost of energy in your area: If you live in an area where utility rates for electricity tend to be high, it's likely you'll see more savings by switching to using a residential solar energy system.
• Exposure to sunlight: The more sunlight your solar panels are exposed to, the more energy your panels will produce. The more energy produced by your panels, the faster your panels will pay for themselves.

If you use financing to purchase your solar array and then choose a lengthy repayment period, the interest you pay over time will add to the total cost. This draws out the time it takes for your solar array to pay for itself. Paying in cash for your system will help you recoup your costs more quickly, but this option isn’t in reach for every homeowner.

>> LEARN MORE: Solar financing guide

Should you get solar panels?

Whether solar is right for you depends on various factors, such as where you live, your current utility costs and your budget. Not every household will benefit from solar panels in the same way. Some questions to ask yourself when you're considering solar panels for your home include the following:

Do you get enough sun?

Solar panels work when photons from sunlight are absorbed by panel cells. This creates an electric field that is converted into electricity and directed through your home. Solar panels need regular exposure to sunlight to produce the most energy possible.

Living in a sunny area isn't the only factor that affects your sun exposure, though. Some sides of a home get more sunlight than others. When you start contacting solar installers for quotes, some may show you satellite images of your home at different times of day. They'll use these pictures to demonstrate which sides of your home get the most sunlight. If the shorter side of your roof happens to be the side that gets the most sun, you may require a larger solar array.

You’ll also need to consider obstructions that create shade. Nearby trees, buildings, telephone poles and other structures can create shade over the solar array, reducing the overall efficiency of your system. If you live in a forest or in a densely populated urban area surrounded by taller buildings, your solar panels that are cast in the shadows will produce less energy.

What will it cost you to go solar?

Solar panels vary in price, depending on multiple factors, such as the number of panels you purchase, the type of installation and the ease of installation. Buyers also shouldn't forget about tax credits and incentives, like the 30% federal solar tax credit, according to Scott Laskey, president of Sandbar Solar & Electric, a solar installation company in Santa Cruz, California.

To find out how much you can expect to spend on your home’s solar array, contact multiple solar installers in your area, get bids and compare. It's important to get quotes from more than one company. You want to compare not only the costs but also the efficiency of the panels and the product warranty.

While a better system made from higher-quality materials may cost more, it may also last longer, have more efficient panels and require fewer repairs over time — which could make the higher cost worthwhile.

How much is your current electric bill?

In addition to your home’s sun exposure throughout the day, your installer may also ask to see a year's worth of electrical bills to determine how much energy your household uses throughout the year.

The amount of energy that your household consumes in a month or a year will determine how large an array your home requires and how much you can expect to spend on that array. For some people, this calculation is ultimately the deciding factor on whether they choose to install solar panels on their home.

Can you get incentives for going solar?

Some states and local governments provide incentives to homeowners to encourage solar power usage. While these incentives may not make solar panels free, they can dramatically reduce the cost of a new solar array installation.

As a homeowner, you can find out more information about incentives available to you by calling local solar installers in your area. Solar installers are often up to date on the incentives available to homeowners they serve.

In addition, you can look up solar incentives on the Database of State Incentives for Renewables & Efficiency (DSIRE). This website is kept up to date with all the latest changes to solar incentives around the country. Just plug your ZIP code into the online form to find the incentives in your area.

There's also the federal solar tax credit, which allows homeowners who install solar on their homes to claim a federal tax credit of 30% on systems installed through 2032.

» LEARN: How does the federal solar tax credit work?

Do you have the space to go solar?

The size of your roof can play a big role in the effectiveness of your solar array. If you don't have room on your roof for enough solar panels to generate the amount of electricity your household uses, you'll never be free from your local utility company’s electrical grid, and that can dramatically decrease the benefits of installation.

If you’re going to want solar battery storage or backup, having space in your home for that will also be a consideration.

What material is your solar array made of?

Quality plays a big role in the effectiveness of your solar array. Not all solar panels are created equal. While purchasing a lower-quality solar panel may seem to save money in the short run, solar panels are a long-term investment.  

ConsumerAffairs reviewers often mention the importance of discussing product quality with installers before agreeing to solar installation for your property. A reviewer from Hollister, California, said his installer representative from Zenernet "went above and beyond" to keep him informed about solar quality and different brands of solar panels. Another reviewer from Los Angeles also gave high marks to that company for the way her representative "explained the differences between panel quality and degradation and inverters versus microinverters."

These distinctions in solar panel quality and materials are important to fully understand. There are three types of solar panels you can purchase for your home:

• Monocrystalline: Monocrystalline solar panels are made with a single silicon crystal. Though more expensive, they tend to be more efficient. The solar cells are black. Consumers who can afford these panels may find them worthwhile overall.
• Polycrystalline: Polycrystalline panels are not as efficient as monocrystalline panels, but they are more affordable. They are made by melting many silicon fragments together and tend to have a blue hue.
• Thin-film: Thin-film solar panels are constructed using noncrystalline silicon or nonsilicon materials. They are flexible and lightweight and can look black or blue. Thin-film panels have a short life span but are the cheapest of the three types and have the fastest payback time.

>> READ MORE: Types of solar panels

What's your commitment to the environment?

For some homeowners, whether it's worth it to install solar panels comes down to their commitment to the environment. They view monetary savings as a nice feature, but it's the reduction of the home's carbon footprint that drives their decision.