As long as the sun keeps shining (which we assume is for a long time), there’s going to be no dearth of solar energy.
Despite being one of the oldest sources of renewable energy, the sun was only considered a viable source in the 1950s. However, ever since the significance of solar came to the forefront, the research and commercial usage has only grown stronger.
Solar cost reduction over the years
Photovoltaic technology (PV ) has improved at breakneck speed in the last few years.
While the earliest panels could eke out less than 1 percent efficiency, scientists of today have managed to reach as high as 45 percent efficiency. More efficient panels mean more savings. The jump is encouraged by government incentives, a growing awareness of green energy, and general improvement in technology.
Solar panel installation cost in 2000 was roughly $11 per watt. In 2010, it came down to $6-7 per watt. This means that in just 10 years we saw a cost reduction of more than 60 percent. Even in the last few years, the cost has kept decreasing.
How much could you save from going solar in 2000?
It’s the year-on-year inflation rate that makes all the difference. For instance, a $100 electricity bill in 2000 would be $168.32 in 2021. That’s a 68.32% jump in just 21 years. If you have gone solar in the year 2000, you could avoid the steep inflation rate in electricity bills.
What will be the cost in the next 20 years?
People who are still not sure about installing solar systems due to the installation cost, miss out on a key point—the solar energy loan will be a fixed rate while inflation will keep increasing the gross expenditure.
Despite a higher installation cost in 2000, early adopters have managed to enjoy a strong ROI in two decades. Similarly, if you plan to go solar with reduced cost in 2021, you’ll be able to save a huge amount of money in the long run.
If we consider a 2.56 % inflation per year for the next two decades, a $100 electricity bill in 2021 will go up to $165.79 in 2041. This is an additional saving many don’t consider.
Thanks to solar loans and tax incentives, transitioning to solar today is a smooth ride.
Solar energy loan
Solar panel installation today can cost residents north of $20,000 and that’s why a lot of people opt for loans. Solar loans come with a diverse range of interest rates and repayment periods. On top of that, loans can be secured with an asset such as a home. It acts as a safety net for the lenders and it’s tax-deductible for borrowers.
A solar loan is often termed as the “good debt” since its value is projected to increase with time. Installing solar panels not only helps you save a lot of money but also results in added home equity.
Just a house that got the solar system installed in 2000 is worth more today than a similar house without it. This is why the sooner you invest, the better deal you’ll get.
Tax benefits of going solar
As long as you don’t sign a lease to go solar, there are other tax benefits that come into play.
Since its introduction in 2006, the investment tax credit (ITC) has been a game-changer. Residential and commercial owners who are planning to go solar in 2021 and 2022 will be able to claim a tax credit of 26% of the system cost. The credit, however, drops to 22% for the year 2023. For 2024 and beyond, commercial owners will get a tax credit of 10% but it won’t cover the residential projects anymore. The year of project commencement decides the rates of ITC.
Few states provide an additional set of tax benefits to their residents. In states such as Arizona and California where solar is a strong alternative to traditional energy, people are able to enjoy sales and property tax exemption, and other affordable housing and self-generation incentive programs.