Which Green / Solar Power Solution is Best for You?
We all know that switching to an eco-friendly source of power for your home makes a huge difference for the environment, but most people aren’t aware of their options. Fortunately, making the switch can be easier than you think, even if you’re a renter. In addition, it has the potential to save you some serious green, especially if you live in a state with high energy costs, such as California or New York.
Let’s look at the three most popular ways to switch to green power for homeowners and renters.
Everyone’s first question – What are the dollars and cents of green power?
Assessing the financial benefit of green power isn’t a straightforward calculation, and that’s part of what holds many people back from making the switch. In guide, we focus on solar, and solar incentives and rebates vary widely from state to state and utility to utility. Without some basic knowledge it’s hard to know which questions to ask – here are three factors you should always consider:
=> Federal, state and local governments all have their own rules
There is a federal solar incentive that is available across the US and is known as the federal Investment Tax Credit. However, there are also state and local incentives that vary widely from state to state and even city to city (and some states effectively prohibit solar) As the incentives can be very different and change frequently, we recommend that you take a look at the excellent Database on State Incentives for Renewables and Efficiency to determine exactly what’s available in your area.
=> You can sell electricity
That energy meter? In most states, it runs two ways. “Net metering”, in a nutshell, is the concept that the power company nets out your power usage on the power grid. If you consume 1,000 kilowatt hours (kWh) of electricity in a given month but your solar panels produce 1,050 kWh of electricity, you would net those 50 kWh in the form of a credit on your utility bill. Over time, this can significantly reduce the cost of a solar installation.
=> Solar has become cheaper … but so have the incentives
Most government incentives decrease over time (as is the case with the federal Investment tax credit). Now that the cost of solar panels in certain areas has started to level off, the decrease in incentive levels could lead to an increase in the all-in cost of solar in some areas.
There’s plenty to make you skittish about rooftop solar: Installations seem expensive, there are lots of options, and panels are a no-go for most renters. Solar panels definitely aren’t right for every homeowner, but you only need a bit of background to begin making an informed decision.
If you own your home, solar panels easily offer the most financial upside, though researching equipment and installers requires some legwork. The combination of the drop in solar panel costs over the past decade and government incentives means the savings on your utility bill will often offset the total cost of the solar system over its lifetime. In addition, widely available financing and the visible commitment to the environment of solar panels have made home solar explode in popularity over the last decade.
=> Biggest economic benefit
=> Your neighbors will see you care about the environment
=> Widely available solar loans and financing means you don’t need a big down payment
=> You need to own your home
=> Researching installation options is time-consuming
=> The gradual decrease in government solar incentives puts time pressure on a purchase decision
Community solar allows homeowners and renters to purchase a share of a nearby community solar installation without installing a single piece of equipment. For example, you might purchase a 1% share of the panels in a large ground-mounted solar installation. You then receive power from the power company just like before, but at the same time you’re producing green power from the community solar installation, and the utility credits you for that power through net metering.
Aside from the obvious benefit of being able to install solar if you don’t have a home, you’re also able to keep your panel ownership if you move, and you can claim the same federal Investment Tax Credit as homeowners who have installed solar.
On the downside, community solar projects offer less economic benefit, as the cost per kilowatt-hour is higher than with a residential rooftop installation.
=> You don’t need to own your home to take advantage of community solar
=> It doesn’t matter if you move, you keep your ownership of the community solar project
=> You can receive net metering payments and claim tax credits just like homeowners with solar
=> More expensive per kilowatt hour of power produced than regular home solar
=> Not as widely available as regular home solar panels due to regional regulations
Purchasing “green energy” from your utility
The simplest but most expensive option is to purchase renewable energy credits through your utility or a third-party provider. How these credits actually work can be a bit confusing: State governments and regulatory bodies award credits to large wind farms or solar power plants, and you buy these credits in addition to your regular electricity – essentially, you’re subsidizing investment in renewable energy plants.
Unfortunately there’s no additional financial benefit to you, you just receive an additional charge on your utility bill – you can think of it as your regular power bill, plus your financial vote for investment in green power.
=> Extremely easy to switch to – usually as simple as a phone call or filling out a web form
=> No long term financial commitment, can be cancelled at any time
=> No savings on electricity – just an add-on to your current power bill
=> No ability to claim tax credits or receive net metering payments
Hopefully we’ve shined some light on your options!
As you can see, there’s a good amount to think about, but hopefully you’re feeling a bit more “empowered” than before to make a wise decision when it comes to your renewable energy options.