Solar energy is on the rise across the country and despite recent tariffs that have been placed on solar cells, the cost of solar energy is becoming more competitive every day. For homeowners, the decision to go solar is usually based on economic or environmental concerns and if you are considering solar energy, we would like to share some insight to better inform your decision process.
The economic question is simply, will solar save me money on my electric bill? The answer is not so easy. In states with high electric rates, the advantage of investing in solar is undeniably attractive with as little as 3-year paybacks. Here in Santa Fe we pay relatively little for our electricity as compared to other states, so the investment payback ismuch longer. The cost per kilowatt hour (kWh) starts at roughly 7 cents and rises incrementally up to about 12 cents per kWh for most households. That is only about a third of what certain states, like California, pay. So, investing in solar here may take up to 12 years or more to pay back your investment.
The environmental question is simple: will solar be better for the environment? The answer is a resounding Yes! It is interesting to know that 1 kilowatt of electricity produced by burning coal will have the byproduct of 1.2 pounds of carbon released into our atmosphere. If you annually use about 8,000 to 10,000 kilowatt hours of electricity, enough for a 2,500-square-foot home, you will need about a 5.7-kilowatt solar system which will annually offset over 12,000 pounds of carbon emission into our atmosphere.
The next question to answer is how do you intend to pay for it? Buying a system outright is one way, but that requires a lot of money up front. There are other options, such as a lease program. You don’t buy the equipment, you lease it, and the solar company supplies the electricity for a guaranteed long-term fixed rate. This power purchasing agreement is hedging that utility companies will raise rates and your fixed rate will result in increased savings over the years.
As leases can be problematic, some companies offer a loan program much like a home-equity loan. As you pay back the note, you are not paying PNM, and you eventually pay off your loan. Another economic consideration is the $5,000 federal tax credit that is taken in its entirety in the first year.
There have been some negative consequences that have come up selling solar homes. For instance, if a home seller is leasing a system and the prospective buyer doesn’t want it, will they be able to get out of the lease? If it’s a loan, is the lien attached to the home? If you don’t know, you will need to find out. We deal with contracts all day long and what we know is that most people (except attorneys) don’t like to read them. However, you will need to read thoroughly the solar lease or loan-purchase contract looking for acceleration clauses, transferability rights, and the like. There are no standard contracts and they differ from company to company.
The best of both worlds is saving money and the planet simultaneously and solar may achieve that goal. Whether your payback is in 3 or 12 years, the net result is that you won’t need to buy electricity any longer because you will be making your own. Then if you consider going electric with your next car, the benefits to your checkbook and the planet will be tremendous.
Roger andMelissa are Realtors at Keller Williams. Melissa was the 2017 president of the Santa Fe Association of Realtors. Call them at 505-699-3112, email firstname.lastname@example.org, or follow them on Twitter @CarsonandCarson and at www. facebook.com/carsonandcarson.santaferealestate