Short Term Outlook on Electricity Prices From The EIA

The US Energy Information Administration (EIA) published on August 9, 2022 that they report electricity costs on a national average have increased 6.1% from 2021.  The forecast for 2023 is an additional 2.5% increase from 2022.  2023 forecast is a 13.4% increase from 2020*.

The majority of electric is produced using natural gas and the current price is around all time highs with the potential to go higher due to current geo political events.

So when you do you return on investment for your solar system you might want to factor in the price of electricity continuing to climb higher for the foreseeable future.


*Independent Statistics & Analysis, U.S. Energy Information Administration,


Inflation Reduction Act and Solar Incentives

The Inflation Reduction Act (IRA) of 2022 (H.R. 5376) has been signed into law and there are changes to solar incentives.  The two big changes is the credit amount and the inclusion of battery storage.

Solar Tax Credit

The item that impacts residential or commercial solar incentives, otherwise know as Solar Tax Credit or Clean Energy Credit,  The previous program started at 30% credit and dropped each year.  Currently this plan would credit 26% of a solar system.

The change is that the credit goes back to 30% in 2022 and stays at that rate until 2032.  Yes more than 10 years you can apply for this 30% tax credit.  

The credit is applied to your federal tax filing for the year the system is installed and operational.  While planning keep in mind the time required for permitting, ordering, delivering, installing and operationalize your system may take longer than you might think.  The IRA will also create demand for solar systems increasing the time to credit.

Also keep in mind that the credit is for the purchase of a solar system, regardless is you finance, and does not cover solar systems that are leased.  Read more in my post

Solar Tax Credit Bonus

It is believed that you can increase your credit by 10%, 30% to 40%, by purchasing domestically produced hardware, 100% of steel and iron must be US manufactured in the United States.  Solar panels, inverters, and electrical gear – the goods must initially be 40% US manufactured, though this percentage will increase in the future.

Battery Storage Credit

The battery storage credit is now irregardless of being connected to a solar system.  You could just install a battery system.

A battery storage system is required on your solar system if you want to be completely off the grid.  It stores power during peak times and provided power during times when your solar system is not generating, nights and bad weather for example.   A battery system is not cheap and can be more than half of your total spend so including battery systems in the IRA is a significant benefit.  Read more about battery systems in the following post –


Is Solar Systems Battery Bank A Good Idea?

Earlier residential solar panel systems did not have an easy way to add storage to your solar panel system. More and more residents are adding solar panel storage batteries. Tesla residential solar panel solution bundle includes a battery bank.

Solar panels have peak electricity generation during the day and most residents have peak consumption in the evenings.

Solar panel systems without battery storage had only 1 option in handling excess power generated and that was to sell it to the electric company. This is still an option and not a bad one. The benefit of battery storage is that you save energy during peak generation and you use it during periods of low or no generation (i.e. storms, electric grid down or nights).

Some local utilities companies feed-in tariff agreements pay for energy sold to the grid on a ‘deeming’ method. I will cover this in detail in a future post but it simply means there is a calculation done at time of installation and assumptions on how much you will sell back. If you have a battery bank you are likely to sell back less, consume more, than a home without a battery bank. This alone can make the price of a battery bank worth while.

Battery Backup or Standby Generator Alternative

The average cost to install a standby generator is between $8,000 and $20,000. This doesn’t include the annual cost of maintenance. A home with solar panels and a battery bank can get the same benefit of a backup generator, plus other benefits for roughly the same costs. A solar panel battery bank system runs between $7,000 to $14,000 to install.

You should consider what the amount of utility outage you can expect and then size your battery bank to accommodate it assuming some level of solar generation and battery utilization.


The bottom line is a battery bank will add cost to the installation but you will use more of your electricity making you less dependent on the utility company.

There are a few key considerations in determining if solar panel battery bank makes sense and we will include it in our upcoming financial analysis. Things that we will factor in include:

  • Does you utility provide pay full retail for energy you sell back?
  • How often and how long do outages typically last.
  • Does you power utility have a time-of-use pricing system where you pay different prices and different times
  • How critical is uninterrupted power to you.

Financing Solar Panels

There are many different options on how you can finance the installation of a solar panel system for your home. The choice you make will have impacts on various incentives so it is important to make an informed decision.

I will cover the following financing options:

Finance Option Pay Back Own Install Cost
Cash Purchase Years Yes High
Solar Loan Years Yes Low
Solar Lease Months No None
Solar Rent Immediate No None
Community Solar Years Yes High

Cash Purchase


Cash purchase and solar loan options you are the owner of the system and you receive all the federal, state and local tax breaks and incentives. You also get the benefit of increased resale value.


The initial cost of the solar panels can be expensive and tax breaks are not realized until you file your tax return or you reduce payroll withholding. You are essentially paying for some or all of your electricity for the next 10+ years all at once.

Solar Loan

A loan to purchase a residential solar system covers many different options. There may be federal or state incentive loans for solar, you may have the loan through your solar system vendor or take out a home equity loan.


Solar loan has the same characteristics of a cash purchase of solar system in regards to ownership and resale value. The additional benefit of a solar loan is that your initial costs are low so your payback is much quicker. You might find your electricity savings cover most or your monthly loan payment.


Taking a loan does require you to pay interest on the loan. Additionally you will need to satisfy the loan if you sell the home.

Solar Lease

If you think of a solar lease like a car lease then you are not the owner of the solar system. Solar Lease programs vary.


Like a car lease, you typically have little up front cost and you are only making payments on the portion of the solar system you use thus making your monthly payments a little lower than a solar loan.

Another advantage of leases in general is that you are not locked into today’s current technology. Conceivably you can upgrade your system when a new model comes out. Once again, check the solar lease programs for more details.


The downside to most leases is that you don’t own so you don’t qualify for any incentives and if you sell your home the buyers would have to assume the lease or you might have to break the lease.

Solar Rent

There is at least one company that will rent a solar system to you at this time. We will cover this option in more detail in a future post.


Rent typically is the lowest cost to start, has a shorter commitment period and payback can be pretty quick.


Like Solar Lease, you do not own the system and can not claim incentives. Rent is normally a higher monthly payment than a solar loan or solar lease.

Community or Shared Solar

There are situations and programs where individuals are not able to install a solar system but collectively they can. An example is property that does not have the exposure or space to install solar but there is availability nearby that can accommodate multiple families.

This makes solar power available to residents who normally would not be a candidate for solar.


How Much Value Will Solar Panels Add To Your House

Calculating the value solar panels add to your home value can take many turns. The one agency that is not afraid to tackle the challenge is your local property appraiser and tax collector. There are local property tax authorities that have incentives where they exclude their estimated value of solar panels from your property tax.

I will go through the following different methods of estimating the increased home value solar panels could bring:

  • Less on utilities equals more for mortgage payment
  • Zillow analysis shows on average a 4.1% increased value
  • Savings per kilowatt
  • Annual savings Multiplier

Less On Utilities More For Mortgage

If your solar panels reduce your electric bill by $100 per month your home value increases by $22,000. The calculation takes the $100 per month that is not being spent on utilities and uses it for the mortgage. If you assume a 30 year mortgage at 4% you can spend 22,000 more on a solar home.

Zillow Analysis shows on average a 4.1% increased value

Zillow conducted a research project comparing homes with solar vs homes without and in general they found that homes with solar had on average a 4.1% higher value1.

Zillow goes on to say that personal preference plays a role with 80% of home buyers say energy-efficient features are important. I believe this figure has increased since their 2019 study.

Savings Per Kilowatt

A study from Lawrence Berkeley National Laboratory found resell values increased by $5,911 per kilowatt of solar power you solar panels produce. For example, a 4 kilowatt home solar system increases your home resale value by $23,644.

Annual savings Multiplier

The National Renewable Energy Laboratory cites a study in the Appraisal Journal2 that states your home resale value increases by $20 for each $1 saved annually. So if you save $1,000 annually with solar panels you could see your home value increase by $20,000.


There are many different methods to estimate the increase to your home value once you install solar panels but what is clear is that it does add value. It is quite likely that home buyers will add solar to their list of ‘nice to haves’ as our culture shifts to green energy.



Who Is A Good Candidate For Solar Panels?

There are a few general considerations that may determine whether you should consider installing solar panels. Some may be obvious but some are less so. We won’t rule out based on current electric bills in this post as pricing and costs are very dynamic. We will cover that in our financial analysis post. Things to consider include:

  • You should own the property
  • Condition and location of your roof
  • Does your community have a Home Owners Association (HOA)?
  • Is your community a Property Owners Association (POA)?
  • What is your power companies policy on buy back

You Should Own the Property

The investment and payback for solar is typically more then the term of a lease and making capital improvements to a property you do no own is not recommended or even allowed in most lease agreements. You would also miss out on the federal tax credits for solar if the you don’t own the property.

Condition And Location Of Your Roof

You can mount your solar panels on the ground but most residential homes have solar panel on their roofs. The estimated life of your roof should be similar to the estimated payback for installing solar. You don’t want to install solar panels on your roof and find out you need a new roof next year.

Does you roof receive sun or is it blocked by trees or other obstructions? Some obstructions can be removed, such as trimming or removing trees, and other can not, such as a blocking building.

The ideal positioning of solar panels is a southern exposure with east and west also working out almost as well. Northern exposure is not a good situation. Your ideal location should have all day exposure to the sun.

Another roof consideration that we will cover in the financial analysis is where or not you have enough room to mount enough solar panels to be an acceptable cost savings.

What Is Your Power Companies Policy On Buy Back

This is a consideration we will factor in when we conduct our financial analysis and solar panel system design.

Solar Panels and Home Owners Associations

Approximately 53% of households are in an planned community of Home Owners Association (HOA). Home Owners Associations are not always up on all the state and federal laws and might try to deny your right to install Solar Panels.

What Are You Looking For In A Residential Solar System?

Most people just think of lower electricity bills as the only benefit of installing a residential solar system. It certainly is a driving factor but it also enables other applications and benefits. I will cover what comes to my mind when I consider solar and would love to hear what other consider as well.

There are a few benefits that come to mind as I consider installing a residential solar systems. These benefits include:

  • Cheaper electricity
  • Emergency power backup
  • No cost charging of an electric vehicle
  • Green Energy
  • Tax credits

Cheaper Electricity

The price of electricity, compared to other countries, is not terribly high at this time but times are changing. The recent run up in crude oil prices and other commodities can and will impact electricity prices going forward.

The current administration is also pushing green energy and putting financial and regulatory pressure on electricity generate from non-green sources such as nuclear, gas and coal.

The cost of installing residential solar systems have come down as technology improves while electricity prices might be on the incline. I will cover the financial cost model and payback in coming posts.

Most power companies have a buy back program to pay you for electricity you don’t need and upload onto their grid. The probably don’t pay top dollar but it is better than nothing when you have more power than you can use.

Emergency Power Backup

It seems our national electrical grid is aging and subject to outages due to acks of God or terrorists. I lived in Florida during hurricane Wilma and we were without electricity for 12 days. Portable standby generators are noisy, fuel inefficient, and produce only a portion of the electricity you need each day. During the hurricane we had coffee, a fan and a refrigerator operating a few hours each day. We had cold showers in the dark and no air conditioning.

The cost to install and operate an emergency backup generator is not cheap. You can spend between 10,000 and 25,000 to install and 100’s in gas each year to operate. I am looking for a residential solar system solution that includes a battery system that would eliminate the need to install a emergency backup generator. A battery would also allow me to use my power during times when solar is not enough. I will factor this into my cost benefit analysis in a future post.

No Cost Charging Of An Electric Vehicle

I currently do not own an electric vehicle (EV) but for the first time I am beginning to consider it. The cost benefit analysis of going electric versus gas factors in the price of electricity from your power company. If I can generate my electricity at little cost it will make the benefit of an EV more compelling.

There are some reasonable tax credits if you buy the right EV and I would expect additional incentives from our current administration. I will have a future post on EV reviews and the current incentives.

Green Energy

I am not a fanatical green energy proponent but will gladly adopt green energy solutions if they make financial and operational sense.

Tax Credits

Like EV’s there are some federal and state incentives to going solar bringing your cost of installation down. I will go into more detail on these incentives in a future post.


So you can see there are many things you can factor in when considering a residential solar system. I believe it is good to know what you are considering as benefits, your requirements, before you start getting quotes. Solar system sales people are going push their solution and it might not provide you all the benefits today and in the future.

I would love to hear from you what your considerations are. Please post a comment.

Welcome to

Like many, I am considering adding a solar solution to my residential house and barn. I have been considering doing this for quite some time and I think is the time to take a long hard look at the cost and benefits and all the solutions available.

Please join me in my quest and I welcome comments and suggestions.