3 Reasons Why Waiting for Cheaper Solar Panels Won't Pay Off

We hear it constantly: “Technology is advancing so fast, so I’m going to wait and go solar in a few years when the panels are cheaper.”

On the surface, this is a reasonable assumption. After all, solar is typically lumped in with newer, rapidly evolving technologies like mobile phones and personal computers. For most people who aren’t on the “inside” of the solar energy industry, it’s easy to assume that next year will bring a whole new level of panel performance at a much cheaper price. This is not the case, however, and overlooks some very critical details.

Calculating the ROI on a solar purchase is more complex than panel pricing alone. It would be best to consider many criteria beyond hardware costs, including utility rates, personal usage patterns, incentives, and financing methods. While it’s always best to consult a solar professional for a detailed, personalized evaluation and quote, here are a few things you should be aware of when considering the timing of a solar purchase. 

1. Lucrative state and federal incentives are disappearing.

The most common and widely used solar incentive program is the solar investment tax credit (ITC), which can offset as much as 30% of a solar purchase. The total percentage of the ITC will begin decreasing after 2019, dropping to 26% in 2020 and then 22% in 2021 before disappearing permanently by 2022. In addition to the ITC, Arizona offers a flat $1,000 solar tax credit. Combined, these incentive programs significantly impact a residential solar purchase—much more than any incremental price drops we’re likely to see by 2022.

2. Utilities are changing how they charge solar customers.

When the sun goes down at night, you still need electricity. Until battery technology matures, plugging into the grid is the most economical way to ensure around-the-clock power. To address the advance of solar, many Arizona utilities are proposing new fees to help maintain their profits and ensure grid upkeep. Fortunately, APS has recently agreed to allow any customer who signs a solar contract before June 2017 to remain on today’s more solar-friendly rate plan for 20 years. This grandfathering clause remains with the home and can be passed to a new owner in case of a sale. When you consider that solar is one of the few home upgrades that puts money back in your pocket every month, the question becomes, how much money will I lose by not locking into today’s rate plan?

3. Panel prices are unlikely to outpace diminishing incentives and rising utility costs.

Leading research suggests that global blended panel prices (types of panels, country of origin) will fall at an annualized rate of about 5% annually between now and 2020. But with almost all of Arizona’s utilities actively pursuing rate increases over the next 18 months—including the introduction of demand pricing, it’s a near certainty that we will see some pretty dramatic shifts in our monthly power bills over the next few years. Add to that the loss of solar incentive programs and the opportunity to be grandfathered into current rate structures, and the short-term investment outlook for solar looks much more compelling.

As always, the details surrounding policy, rate plans, and technology are much more complex than can be fully explored in the context of this blog. If you’re interested in learning more and exploring whether solar might make sense for your home, we invite you to contact us for a free custom consultation from one of our experts today.