What Homeowners Should Know about Solar Panels

Is solar worth it?

Texas currently ranks fourth among all US states for average annual sunlight per year. Therefore, it stands to reason that homeowners here find the prospect of installing solar panels enticing. There’s the promise of renewable energy, taking a step towards a greener footprint, and perhaps most importantly of all, the prospect of reduced electricity bills. It’s all upside… or so the door to door salespeople would tell you. But before you make the leap and add a solar system to your home, let’s take off the rose-colored glasses and understand the implications involved and what homeowners should know about solar panels.

Roof Compatibility

Not all roofs are created equal, nor are they all ready to embrace and fully support a solar installation. The age, material, and even the angle of your roof can all significantly impact the installation process and their efficiency once installed. Older roofs, or as in our area, roofs damaged by hail may need reinforcement or replacement before they can bear the burden of solar panels, and add to the cost and complexity of your installation.

In some cases, solar installations are prompting roofing companies to void the warranties that they provide with their installations. Because solar panel installations require a lot of roofing penetrations and waterproofing, installers need to make absolutely sure that they follow the requirements and instructions provided by both the shingle manufacturers and installers. Also, remember that if the roof needs repairs in the future, you must contact the solar installers to remove the panels and then reinstall them, incurring additional costs.

Aesthetic Considerations

Solar panels have a distinct look that may not blend seamlessly with your home’s aesthetics. Homeowners’ associations or historical districts may have restrictions or require approvals, and even where they don’t, the visual impact on your home’s curb appeal can be significant and sometimes detrimental.

Inconsistent Energy Production

The energy production of solar panels isn’t constant. It fluctuates with the time of day, season, and weather conditions. This inconsistency requires most homes to maintain a connection to the grid for backup, diminishing one of solar energy’s primary advantages.

Potential for Technological Obsolescence

As with all technology, it evolves rapidly, and the solar panels you install today might become outdated sooner than you think. With the pace of advancements in solar technology, newer, more efficient options could render your current system less optimal within a few years.

High Initial Costs

The journey to harnessing the power of the sun comes with a significant upfront investment. The cost of purchasing and installing solar panels is substantial. According to the Center for Sustainable Energy, solar installations can run between $15,000 to $25,000 and more, which means your payback period will likely be the better part of a decade. The solar payback period is the time it takes for the savings on your electricity bill to surpass the initial investment you made on your solar panels. There IS a 30% dollar-for-dollar tax credit that homeowners can claim, but it does not reduce the up-front costs of the system.

Leases to the rescue?

Nearly all solar manufacturers understand that these high up front costs are a large pill to swallow for most homeowners so they offer lease-purchase options. But be aware, and let me highlight this in capital letters, BUYER BEWARE. They’ll tell you that it won’t affect the potential sale of your home down the road because it’s a lease. It is, but they’ll also file a lien that guarantees they get paid.

And that’s understandable. But you as the homeowner need to be abundantly aware that it WILL affect the sale of your home should you decide to sell down the road. Any potential buyers will be required to take over the lease, or pay it off at closing. Those same buyers may not be as excited about solar as you are, may not like the way they look, and certainly won’t want to take on the additional cost of a lease when they’ve just spent a lot of money for their new home.

What’s more, whether you think of it as a lease or a lien, it’s debt. And debt affects consumer debt-to-income ratios. Your potential buyer might have a $400,000 approval, but adding a $25,000 lien can unexpectedly shift their debt-to-income ratios and derail your deal before it reaches the closing table.

They don’t add value

Sales reps will tell you that solar panels add value to your home. They don’t. Particularly if they’re not paid off. And even if they are, there is still very little value add. Ask your favorite real estate agent what value they assign to solar panels when valuing a home. You’ll get confused looks. Ask an appraiser the same question. You’ll get crickets. If you’re looking to add value to your home, update your kitchen, update your master bath, add square footage. These all offer substantial return on investment. Solar will not.

So should you make the leap? Only you can ultimately make that decision, but here’s what I’ll tell you: Proceed ONLY if the prospect of going green is driving you. Move forward ONLY if you’re able to pay cash. Continue ONLY if your roof is less than 10 years old. ONLY if you’re prepared for the maintenance involved. And ONLY if you have NO plans to sell your home anytime soon. Otherwise, you’re not going to like the conversations we’ll have when you ask me to come sell your home.