7 factors to consider before getting solar panels in New York

Solar panels are generally worth it if you like the idea of lowering your monthly utility bills, helping the environment and gaining more energy independence. But it doesn’t work out for everyone. Here’s what to consider before you make the switch.

1. Solar panel installation costs
2. Your energy consumption
3. New York solar incentives
4. Net metering buyback rates
5. How long you live in your house
6. The solar company you hire
7. How you pay

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

With professional installation, a typical 9-kilowatt residential solar panel system in New York costs $26,640. That price drops to $18,648 after using the full federal solar investment tax credit (ITC). You might need a smaller or larger system depending on your household energy use. A typical New York household needs a 9.22 kW system to offset enough energy costs to make solar viable.

Most installers set the price according to the system's wattage, with a typical cost between $2.50 and $5 per watt. “Cost per watt” is a little like looking at the price per square foot when you buy a house. It helps you compare the value of solar energy systems in different sizes. In New York, the average cost per watt is only $2.96.

Average solar panel installation cost by system size in New York

2. Your current energy consumption

Look at your most recent utility bills to see how much electricity your house needs each month. This tells you what size and capacity your solar system needs to be. A typical New York household needs a 9.22 kW system to offset its electricity needs with solar energy. You might need a larger or smaller system, depending on your current energy consumption.

Once you know your current energy consumption, you can calculate your potential savings and the time it should take for your solar installation to pay for itself. In New York, solar panels usually pay for themselves within 6 years.

3. New York solar incentives: tax breaks and rebates

The federal solar investment tax credit (ITC) is a major incentive that reduces the upfront cost of going solar in New York. The ITC provides a 30% tax credit on your total system costs, including equipment, labor and permits. It will drop to 26% in 2033 and 22% in 2034.

Don’t get confused: the ITC is a credit, meaning it directly decreases the amount of taxes you owe. This is different from a deduction, which reduces your taxable income. It isn’t a rebate or a refund. It only offsets your tax liability; you can't take advantage of the ITC if you don’t owe taxes in the first place. However, the credit rolls over to the next tax year if you don’t use the full amount.

You can combine the ITC with additional solar incentives in New York, including a state sales tax exemption or local property tax exemptions. Many solar companies also offer rebates to further incentivize making the switch.

4. Net metering rates in New York: retail rates

Net metering lets you sell extra energy generated by solar panels back to the local power grid. In New York, residential solar systems up to 25 kilowatts (kW) qualify for net metering. The credit is applied to the next month’s bill.

It’s a good deal, but don’t expect your bill to ever be $0. In the best-case scenario, you only pay relatively small utility charges, like Joseph in Amagansett, New York, who went solar a couple of years ago. “My electric utility bill is now just fees and taxes, no grid consumption,” he told us.

Currently, New York is transitioning away from net metering to the Value of Distributed Energy Resources system, sometimes called the Value Stack or VDER. Residents can still enroll in net metering and get the full retail wait. However, they also have to pay a Customer Benefit Contribution Charge, or CBC, which depends on how big your system is and your utility company.

5. How long you plan to stay in your house

Solar panel installations are expensive, and it takes years for electric bill savings to make up for the initial cost. Solar panels typically pay for themselves within 6 years in New York. 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, according to Zillow. But, you miss out on some of that $75,242 in total avoided utility costs over 25 years.

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

6. The solar company you hire

We’ve heard from more than 500 solar energy customers in New York. Many are satisfied with the installation process and the savings they see on their electric bills. However, there are also negative reviews that mention installation delays, issues with permits and problems with the panels or system equipment.

In the best-case scenario, it’s easy to make the switch and you’re happy with the system’s performance. In the worst-case scenario, you end up paying thousands for mid-tier solar equipment from a company with poor customer service and no follow-up or support.

That’s why it’s so important to thoroughly research and verify claims made by sales teams before making a decision. Use NREL’s PVWatts Calculator to estimate how much electricity a solar panel can produce over a year on your house — just type in your address. Project Sunroof is a free solar savings estimator powered by Google Earth imagery.

7. How you pay

If you can, it’s often financially strategic to pay for the whole thing upfront. You own the system from day one and receive the benefits of available tax credits; plus, you don’t have to pay interest on a loan. Of course, paying cash is not always an option. That’s when loans, leases and other agreements come into play.

• Solar loan: Solar loans work like any other type of loan. They have relatively low fixed interest rates. Once you pay it off, you own your system outright.
• Leasing options: Leasing panels is one way to get the benefits of solar energy without the high upfront cost. A solar lease works like a car lease — you get to use the panels but don’t own them. Leasing can be good if you have limited savings. Solar lease agreements typically last 20 to 25 years.
• Power purchase agreement: Similar to leasing, a power purchase agreement (PPA) lets homeowners install solar panels without the upfront costs. You sign a long-term contract with a solar services provider to purchase the electricity generated by the panels at a predetermined rate. The provider owns and maintains the panels throughout the agreement, which usually lasts 10 to 25 years.
• Home equity loans or lines of credit (HELOC): These let eligible homeowners borrow against equity in their house to finance a solar panel system. They often have variable interest rates, meaning monthly payments can increase over time.

Monthly costs: solar payments vs. savings

Think of going solar in terms of your monthly costs. Given rising energy costs in New York and elsewhere, financing solar panels makes sense as long as your monthly loan payment is less than what you would be paying the utility company anyway. Once the initial installation costs are paid, solar panels essentially generate free electricity.

Is my house a good candidate for solar panels?

Going solar ends up being worth it for many homeowners as long as their house is a good candidate to support a solar panel installation. Here’s what to think about before you commit:

• How much sunlight do you get? Solar panels need regular exposure to sunlight to produce the most energy possible. The state only gets 3 to 3.5 peak sun hours daily. 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 your roof? New York (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. For example, if the only place you can install is a north-facing roof with a 30-degree pitch, your costs will likely go up by 30% to 40%.
• What is the condition of your roof? If you have to replace your roof, do that before you install solar panels. Solar panels are designed to last 25 to 30 years, so you want your roof to last just as long. Otherwise, it could cost thousands to remove the panels, fix your roof and reinstall the panels again.
• How old are your appliances? The first step is to ensure that your electrical loads are as small as possible. For instance, if you have an older refrigerator or air conditioning unit, it’s smart to upgrade those before investing in solar panels.

Pros and cons of solar panels in New York

It’s a common misconception that solar panels always completely eliminate your monthly power bill — this is not always the case. Still, you’ll likely be paying much less than you would for traditional utility bills. However, you can expect some seasonal fluctuation in how much energy your panels produce.

Benefits of solar panels in New York

Solar power is a renewable energy source that does not produce greenhouse gas emissions or other pollutants. They also require little maintenance and can increase the property value of homes.

• Better for the environment: Traditional energy sources like coal and natural gas release carbon dioxide and other harmful pollutants into the air. Solar panels generate electricity from sunlight, a clean and renewable energy source. Installing solar panels on your roof helps the environment primarily by reducing greenhouse gas emissions and dependence on fossil fuels.
• Higher home resale value: Installing solar panels can significantly increase a home's value. According to the study mentioned above, houses with solar panels sell for 4.1% more on average. The exact increase in value varies by location, with homes in active solar markets sometimes seeing even higher boosts.
• Cheaper energy bills: The average homeowner in New York uses a lot of power, which adds up to a lot of savings when you switch to solar. 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.

Drawbacks of solar panels in New York

The main obstacle to going solar is the high upfront cost of purchasing and installing solar panels, inverters and other equipment. Then, since solar panels do not generate electricity at night, you need to pull power from the grid or get a storage battery to keep your lights on.

• 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 New York. That way, you can store energy at home instead of tapping into the local grid when you need to.
• 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. Heavy snowfall that’s common in the state can also damage solar systems.
• Some solar companies are sketchy: Watch out for door-to-door solar scams that attempt to gather your personal information, misleading claims, false advertising and aggressive sales tactics. Like in any booming industry, some salespeople want to make a quick buck and might say anything to close a sale. It’s important to read your contract carefully, especially if you finance or lease a system.

» MORE: Solar energy pros and cons

Find solar companies in New York

A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for the top solar companies in New York to learn more.

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

Depending on the size of your system and what financial incentives you qualify for, a typical residential solar panel installation costs $10,360 to $29,600 in New York. Over 25 years, New York homeowners with solar panels can save about $75,242 in total utility power costs.

For a lot of homeowners, solar panels are worth it as long as their cost savings over time outweigh the initial investment. Others are happy to go solar for the environmental benefits alone. The ConsumerAffairs Research Team conducted an in-depth analysis to determine how much it costs to go solar in New York and the average solar costs in other states.

Solar costs vs. savings: New York and nearby states