Are solar panels worth it in Utah?

7 factors to consider before getting solar panels in Utah

ConsumerAffairs has heard from thousands of solar customers who have already gone through the installation process. It’s 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 making the switch.

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

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

Average solar panel costs in Utah are comparable to the national average. Before the federal solar investment tax credit (ITC), a typical residential system ranges from $13,600 to $27,200. That price drops to $9,520 to $19,040 after considering the full 30% tax credit.

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 Utah, the average cost per watt is only $2.72.

Average solar panel installation cost by system size in Utah

2. Your current energy consumption

A typical Utah household needs a system with a capacity of 10.72 kW to offset its electricity needs with solar energy. You might need a larger or smaller system, depending on your current energy consumption.

Look at your most recent utility bills — how much electricity does your house needs each month? This tells you what size and capacity your solar system needs to be.

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.

3. Utah solar incentives: federal and state tax breaks

Solar equipment is exempt from sales tax in Utah. The federal solar investment tax credit (ITC) is another major incentive that reduces the upfront cost of going solar in Utah. The ITC provides a 30% tax credit on your total system costs, including equipment, labor and permits.

The ITC 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 also 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.

» MORE: Utah solar incentives

4. Net metering in Utah: avoided-cost buyback rates

Net metering lets homeowners with solar panels sell any excess electricity they generate to their local power grid. In Utah, utility companies compensate through energy credits through a similar system called net billing. This lets residents with solar panels earn credits for excess electricity they generate and send to the grid.

Different utility companies determine the specific credit rate, but it’s often based on a lower, avoided-cost rate. In some states, you can get compensated at the full retail rate, which is equal to what you pay when you use energy from the grid.

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 11 years in Utah. If you sell your house and move before then, you might not fully realize the financial benefits of your solar investment.

Solar panels last 25 to 30 years.

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 $53,135 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. 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): Eligible homeowners can borrow against equity in their house to finance a solar panel system. These often have variable interest rates, meaning monthly payments can increase over time.

Loans seem to be the most common ways Utahns pay for solar panels. One resident, Cara in Salt Lake City, Utah, told us about her experience: “I had always thought buying solar panels for our home would be prohibitively expensive and was surprised to find out that there is no down payment required, the terms of the loan are extremely favorable so the monthly payments are small, and hopefully we will generate enough energy to almost eliminate our power bills over the year.” So far, even in the winter, her system is generating enough energy to make it worth it.

7. The solar company you hire

People have had mixed experiences with solar companies. 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 midtier solar equipment from a company with poor customer service and no follow-up or support.

One of the most common complaints is related to pushy sales reps who make promises that can’t be delivered. 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.

Monthly costs: solar payments vs. savings

Think of going solar in terms of your monthly costs. Given rising energy costs in Utah 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. For instance, Judie in Murray, Utah, told us, “This has been good for us financially and the payment plan is lower than the monthly costs of the power provided by the local city.”

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 old are my appliances? The first step is to ensure that your electrical loads are as small as possible. If you have an older refrigerator or air conditioning unit, for instance, it’s smart to upgrade those before investing in solar panels. That way, you can get a smaller system, which will be cheaper overall.
• How much sunlight do I get? Solar panels need regular exposure to sunlight to produce the most energy possible. Utah averages three to five 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? Utah (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 my roof? If you have to replace your roof, do that before you install solar panels. Solar panels are designed to last up 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.

Pros and cons of solar panels in Utah

Going solar in Utah has some disadvantages. Specifically, the state offers very few solar incentives. It has no laws governing how electric companies compensate you for net metering. There are also few large solar companies that will install panels in Utah.

Still, you save a lot of money over time by going solar, and you can take advantage of the federal solar investment tax credit to save even more.

Benefits of solar panels in Utah

• 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 Utah 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 Utah

• 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 Utah. That way, you can store energy at home instead of tapping into the local grid when you need to.
• 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 Utah

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

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

Going solar in Utah 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. Others are happy to go solar for the environmental benefits alone.

Solar costs vs. savings: Utah and nearby states