Are solar panels worth it in Indiana?

7 factors to consider before getting solar panels in Indiana

ConsumerAffairs has heard from thousands of solar customers who have already gone through the installation process, including dozens from Indiana. Here’s what to consider before making the switch. 

1. Solar panel installation costs
2. How you pay
3. How much you can save
4. Indiana solar incentives
5. Net metering changes
6. How long you stay in your house
7. The solar company you hire

1. Solar panel installation costs: $10,000 to $30,000

A typical solar installation in Indiana costs $34,131. Depending on the size of your system and what incentives you’re eligible able, you could pay anywhere from $10,850 to $31,000 or more.

A typical Indiana household needs a system with a capacity of 11.01 kW to offset its electricity needs with solar energy. You might need a larger or smaller system, depending on your current energy consumption. 

Average solar installation cost by system size in Indiana

2. How you pay

It’s great if you can pay for the whole thing upfront. Loans and leases make sense as long as your monthly payment is less than what you would be paying the utility company anyway.

• Loans: Solar loans have relatively low fixed interest rates. Once you pay it off, you own your system outright. Assuming a cash purchase, it takes solar panels approximately 12 years to pay for themselves in Indiana.
• Leases: A solar lease works like a car lease — you get to use the panels but don’t own them. Leased solar systems are not eligible for the 30% federal solar tax credit.

» SOLAR PANELS: Lease vs. buy

3. How much you can save

Hoosiers can typically cut their monthly bills with a quality solar array. However, savings go further if you already have an energy-efficient home. Take advantage of the utility company AES Indiana’s free virtual home energy assessment to see how to reduce your energy usage before going solar.

Homeowners with solar panels typically save $20,000 to $90,000 over 25 years.

Once you know your current energy consumption, you can calculate your potential savings and how long it should take for the solar installation to pay for itself. On average, Indiana homeowners with solar panels avoid $56,472 in total utility costs over 25 years.

4. Indiana solar incentives: federal and state 

The federal solar investment tax credit (ITC) is the best incentive for a lot of homeowners. The ITC is a 30% tax credit on your total system costs, including equipment, labor and permits.

The ITC drops to 26% in 2033 and then 22% in 2034.

The ITC is a nonrefundable credit, meaning you can only claim up to the amount of taxes you owe. For example, let’s say you spend $10,000 going solar. The ITC would be worth $3,000. If you owe $5,000 in federal taxes the year your system becomes operational, the ITC would cut that down to $2,000.

» MORE: Solar incentives in Indiana, tax credits and rebates

5. Net metering in Indiana: EDG system

In most states, net metering lets you earn credits for sending any excess solar energy to the local grid. Indiana discontinued its net metering program in 2022. Most systems installed before 2022 were “grandfathered” into the old system, but new systems earn credits at a much lower rate with the “excess distributed generation” (EDG) rate. Now, credits are around two to three cents per kilowatt-hour, compared with closer to 15 cents before.

Solar panels can still lower your electricity bills by offsetting the energy you use, but the financial benefit is smaller. For some, this doubles the payback period.

6. How long you plan to stay in your house

It takes years for electric bill savings to make up for the initial cost — about 12 years on average in Indiana. If you sell your house and move before then, you might not fully realize the financial benefits of your solar investment.

A Zillow study found that, on average, houses with solar panels sell for 4.1% more. Let’s say you spend $25,000 putting solar panels on a house that costs $400,000. It might sell for $16,400 more in a few years, but you miss out on some of that $56,472 in total avoided utility costs over 25 years.

Solar panels are designed to last 25 to 30 years.

In other words, don't get solar panels just because you want to sell your house soon. Consider a home improvement project with a better return on investment, like remodeling the bathroom or kitchen, instead.

7. The solar company you hire

We’ve heard from thousands of verified solar customers since 2018, including dozens in Indiana. A couple of things we know for sure: People like powering their homes with a reliable source of cheap, clean energy. They don’t like getting into solar contracts that don’t meet their expectations.

In the worst-case scenario, you end up paying thousands for mid-tier solar equipment from a company with no follow-up or support, like Rob in Fort Wayne.

“At the end of the day I was charged $62,000 for a system that under performs my expectations and requests,” Rob told us. “Now I have an electric bill that has not dropped in any significance and a monthly payment on this system for the next 15 years.”

In the best-case scenario, it’s easy to make the switch, and you’re happy with your system’s performance. That’s why it’s so important to thoroughly research and verify claims made by sales teams before making a decision.

Is my house a good candidate for solar panels?

Solar panels need regular exposure to sunlight to produce the most energy possible. Use Project Sunroof to calculate your potential solar savings; the National Renewable Energy Laboratory’s PVWatts Calculator estimates how much electricity a solar panel can generate on your house. Here’s what else to think about before you commit:

• How much sunlight do I get? Indiana averages 2.5 to 4 peak sun hours each day. However, lots of shading — like trees or tall buildings above your roof — could make your solar system less efficient.
• What is the size and angle of my roof? Indiana (and the rest of the United States) is in the Northern Hemisphere, so solar panels perform best on south-facing roofs. The worst place to install would be on north-facing roofs, especially if those roofs have a high pitch.
• What is the condition of my roof? If you have to replace your roof, do that before you install solar panels. Otherwise, it could cost thousands to remove the panels, fix your roof and reinstall the panels.

Pros and cons of solar panels in Indiana

Solar panels can still lower your electricity bills by offsetting the energy you use, but the financial benefit of sending excess energy back to the grid is much smaller with the EDG rate. For many homeowners, this extends the time it takes to recover the upfront cost of solar installation. In some cases, the payback period has more than doubled.

Benefits of solar panels in Indiana

• Cheaper energy bills: Going solar now means that your monthly energy expenses will be more predictable (and very often significantly lower). Solar panels also protect you from future energy cost increases.
• Better for the environment: Installing solar panels on your roof helps the environment primarily by reducing greenhouse gas emissions and dependence on fossil fuels.
• More energy independence: Embracing solar paves the path toward true energy independence. It especially works out for people in areas susceptible to power outages.
• Higher home resale value: Installing solar panels can significantly increase a home's value. The exact increase in value varies by location, with homes in active solar markets sometimes seeing even higher boosts.

Drawbacks of solar panels in Indiana

• Solar equipment is expensive: Even with rebates and other financial incentives, the price typically starts between $10,000 and $30,000. It’s even more expensive if you want a solar battery for energy storage. Solar battery costs are generally between $7,000 and $18,000. Getting a solar battery might be strategic if net billing rates continue to decline in Indiana.
• Potential roof leaks: The installation process involves drilling holes into the roof to anchor the panel mounting systems. If not done correctly, this can lead to leaks or structural damage.
• Energy production varies: Solar panels are dependent on weather conditions and seasonality. Solar panels still work on cloudy days, but less available sunlight does affect how efficiently they produce energy. Snow cover may also temporarily reduce efficiency until it's removed or melts off.

» MORE: Solar energy pros and cons

Find solar companies in Indiana

A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for Indiana’s top solar companies to learn more.

Bottom line: Is going solar in Indiana worth it for you?

Going solar in Indiana might be easier than you think. The main obstacle to going solar is the high upfront cost of purchasing and installing solar panels, inverters and other equipment. For a lot of homeowners, it ends up being worth it as long as their cost savings over time outweigh the initial investment.

Solar costs vs. savings: Indiana and nearby states