Solar power has emerged as a lucrative avenue for individuals and businesses alike, offering both environmental benefits and substantial financial returns. By capitalizing on the abundance of renewable solar energy, you can pave the way towards a sustainable future while reaping substantial financial rewards.
In this article, I will explore seven possible ways of making money with solar power. From selling excess electricity to the grid, taking advantage of government incentives, or just by being a frugal shopper, I will delve into the strategies that can help you turn sunlight into a steady stream of income.
Whether you’re an environmentally-conscious homeowner or simply someone interested in renewable energy, these methods offer a diverse range of possibilities to generate income while reducing your carbon footprint.
Table of Contents
Federal Tax Credits
While federal tax credits relating to solar energy have lessened over the years, they are still worth exploring and applying to. Beginning in 2021 you’ll still be able to get a 22% credit.
To think about it another way, the tax credit will pay for more than a fifth of your solar-powered setup. An average homeowner will pay roughly $20,000, chopping off 22% saves you $4400.
Unfortunately, at the time of this writing, the federal government has no plan to extend the residential solar tax credit beyond 2021. You can still apply for the solar tax credit even if it’s not operational, however, it would need to be working by the end of 2023.
State, County, Or Local Tax Credits
California, Texas, and Minnesota have over a hundred credits, rebates, and other incentives. Most other states have dozens of offers and even the state of Alaska has several worth looking at.
Dsire USA has put together an awesome interactive map that lets you click on your state and explore the vast list of incentives.
When shopping around for your solar setup, be sure to see if the company is offering any sort of rebates, or if the manufacturers of the major components are offering any kind of savings.
Net Metering
Net metering is when your solar array produces more energy than it can use or store in batteries. Rather than wasting this energy, many power companies will buy that power from you.
This is a popular goal and incentive for many people that get into solar-powered energy…actually having your local power utility buy energy that your solar array produces.
While this is possible, you’re not likely to produce enough excess energy that you earn a paycheck from your local utility. It would take a large solar farm pumping power into the grid to start earning a “paycheck.” It’s also likely that power companies have restrictions or caps on how much they are willing to buy.
How much you can save depends on how large your system is, how much of it you use, and any limits or caps your power company has.
One couple in Florida reported that before solar power they were paying around $300 and ended up paying $45 after their system was installed.
One caveat to net metering is that it will require a two-way meter to be installed, which means paying for an extra piece of hardware and paying an average of $100 for the hook-up fee.
How do Power Companies pay for Unused Solar Energy?
During times when solar production exceeds the immediate demand, power companies have to find ways to handle the excess energy. To address this, many power companies have implemented net metering programs, which allow them to credit customers for the unused solar energy they generate.
This means that when customers’ solar panels produce more electricity than they consume, the excess power is fed back into the grid, and the power company pays them for the surplus energy.
Under net metering, customers’ electricity meters are bi-directional, measuring both the energy consumed from the grid and the surplus energy they send back to the grid.
The power company then credits the customers’ accounts for the excess energy at the retail rate, typically offsetting future electricity bills. This arrangement encourages the installation of solar panels and promotes a mutually beneficial relationship between power companies and solar energy producers.
The payment structure for unused solar energy varies depending on the specific net metering policies implemented by power companies and the regulatory framework in each jurisdiction.
Some power companies offer a one-to-one credit system, where each kilowatt-hour of surplus energy is credited at the same rate as the retail electricity price. In this case, customers receive a dollar-for-dollar credit, effectively offsetting the cost of the electricity they consume when their solar panels are not producing.
Other power companies may have tiered credit systems, where the excess energy is credited at a lower rate than the retail price. These variations are typically designed to balance the financial viability of the power companies with the incentives for solar adoption.
In addition to net metering, power companies may explore other options to manage unused solar energy effectively.
One approach is to implement time-of-use (TOU) rates, which involve charging higher electricity rates during peak demand hours and lower rates during off-peak hours.
By aligning electricity usage with solar generation patterns, customers can maximize the utilization of their solar energy and minimize the amount of surplus energy that needs to be handled by the power company.
Power companies may also invest in energy storage technologies, such as batteries, to store excess solar energy for later use, reducing the need to compensate customers for unused energy and optimizing the grid’s overall efficiency.
Shopping Around
This is a huge purchase, right in line with the price of a car. If you live in a less populated state then you might not have many options, but in California, Texas, Arizona, and Florida, states that are known for their sunny days, there is bound to be competition.
Do your homework. Ask friends, family, and neighbors what they paid. Get as many quotes as you can and then use all that information as leverage for haggling.
Make sure to take into account the warranty offerings from different companies. You might be getting a great rate from Company A, but their coverage might stink when compared to Company B.
Ask where the company gets its equipment from and then see if that manufacturer offers any sort of rebates or incentives that you can take advantage of. It might only be a percent or two, but when you’re paying $20,000 to $25,000 for a solar setup that two percent is a good chunk of change.
You also need to see how large of a kilowatt system the companies you’re shopping around on are installing. A 10 kW installation can cost nearly double of what a 6kW setup runs, so it’s very important to determine your power needs. More on this in a bit.
Become Mindful Of Power Consumption
This one is more of a lifestyle change, but it can save you some money over time.
For a week, every time you open the fridge jot it down. Whenever you open or close the garage, jot it down. In fact, any time you do anything that eats a little power, jot it down. I bet you open your fridge more often than you think you do.
Every time you open the fridge, or the garage, or the front door, you’re using just a bit extra power. These are all tiny expenses, but combined together over time they can add up. And if you have several people that live in your house you can multiply all of your little energy usages times the number of people in your house.
I bring this up because it can help you determine what your actual power needs will be…there’s that phrase again.
Determine Your Actual Power Needs
You’ve made notes, written or mental, about some ways you use a little extra power in your day to day living. Now think about ways you can cut a little.
Maybe don’t park in the garage when you get home from work if you’re planning to go out to dinner that night. Maybe park in the driveway during the week and in the garage on the weekend.
Try to make a habit of only going to the fridge at mealtimes and know what you need out of there before you open the door so you don’t linger too long.
Refrigerators are one of the most power-hungry appliances in your house. Whatever their power usage rating is for general use, double it every time it has to turn on to cool the inside down.
You also might want to think about turning the temperature of the fridge and freezer up a little. 40 degrees and 42 degrees won’t have much of a difference on the gallon of milk in the fridge, but over time this is another little way to lower your power needs.
One last refrigerator tip, don’t put things that need to stay extra cool in the door. This is the warmest area of your fridge since it gets opened and exposed to the ambient temperature, store that stuff (looking at you eggs) on the top shelf near the back.
I’ve known a few people that decided they wanted to have power in a detached garage or shed but didn’t want to go through the hassle of having it attached to the city power grid. A great option for them was to put a solar power array large enough to run those small spaces. It was far cheaper than outfitting an entire house and provided them with a way to install lighting and power for tools.
The Long Term Savings
Solar power is about the long game. You are forking over a huge sum of cash upfront to buy all the equipment and have it installed. But, over time…as in decades…it will have paid for itself and saved you money.
According to solarworldusa.com, you can expect up to 50% savings on your monthly electric bill once your solar array is installed. The national average for an electric bill is $152 a month, so you can expect to save about $76 a month. Over a 20 year period, this works out to $18000. Of course, this figures a static rate for your bill, which certainly won’t be the case so that $18,000 will definitely be higher.
A solar power system runs the typical customer about $20,000. So if you take all of what I’ve written above in to account, you can chip away at that twenty grand and start counting your money saved as profit.
- $20,000 for the system
- Subtract $4400 for the federal tax credit
- Subtract another few thousand for local credits
- You’re down to about $13,000 – $14,000
- Your monthly electric savings pays for that in about 14 years (likely quicker)
- Then it’s all savings
Should I Invest in Solar Stocks?
While solar is a popular venture to invest in, make sure you do your homework to evaluate various factors before making any investment decision. Any investment in the stock market comes with a risk.
Here are a few key points to consider when deciding whether to invest in solar stocks:
- Growing Renewable Energy Market: The global shift towards renewable energy sources, including solar power, presents a significant opportunity for investors. Governments, businesses, and individuals are increasingly embracing clean energy solutions, driving the demand for solar power. This growing market can potentially benefit solar companies and their stocks.
- Favorable Policy Environment: Government policies and incentives play a crucial role in shaping the solar industry’s growth. It’s important to stay informed about the policies and regulations related to solar energy in the regions where the companies you’re considering investing in operate. Favorable policies, such as tax credits, subsidies, and renewable energy targets, can positively impact the profitability and growth prospects of solar companies.
- Technological Advancements: Solar technology has been advancing rapidly, leading to increased efficiency and cost-effectiveness. Companies that invest in research and development to enhance solar panel efficiency and storage capabilities may have a competitive edge in the market. Understanding the technological landscape and the companies’ commitment to innovation is important when assessing their long-term potential.
- Financial Performance and Stability: Before investing in solar stocks, it’s crucial to evaluate the financial health and stability of the companies in question. Consider factors such as revenue growth, profitability, debt levels, and cash flow. Assessing a company’s financial performance can provide insights into its ability to withstand market fluctuations and sustain growth over the long term.
- Competitive Landscape: The solar industry is highly competitive, with numerous companies vying for market share. It’s essential to research and compare different solar companies, their market positioning, track records, and competitive advantages. Companies with strong market positions, diversified portfolios, and proven track records may present more favorable investment opportunities.
- Risk Considerations: Like any investment, solar stocks carry inherent risks. Factors such as regulatory changes, market volatility, technological disruptions, and geopolitical developments can impact the performance of solar companies. Diversifying your investment portfolio across different sectors and conducting thorough research can help mitigate risks associated with individual stocks.
Frequently Asked Questions
Can I Really Make Money with Solar Power?
Solar power offers numerous profitable opportunities for individuals and businesses alike. By capitalizing on the abundance of renewable solar energy, you can generate income through methods such as selling excess electricity, participating in government incentive programs, or providing solar installation and maintenance services.
How Much Money Can I Make with Solar Power?
The amount of money you can make with solar power depends on several factors, including the size of your solar installation, local electricity rates, government incentives, and the specific method you choose.
However, many individuals and businesses have found solar power to be a lucrative investment, with potential returns that can range from modest savings on electricity bills to significant revenue streams.
Is It Necessary to Install Solar Panels to Make Money with Solar Power?
There are various ways to participate in the solar industry without directly installing panels, such as investing in solar projects, providing financing solutions for solar installations, or offering solar-related services.
Are There Any Government Incentives Available for Solar Power?
Many governments around the world provide incentives to promote the adoption of solar power. These incentives can include tax credits, grants, rebates, and feed-in tariffs.
The availability and specifics of these incentives may vary depending on your country or region, so it’s important to research and understand the incentives available in your area.
Is Making Money with Solar Power Environmentally Friendly?
Making money with solar power is not only financially rewarding but also environmentally friendly. Solar power is a clean, renewable energy source that reduces greenhouse gas emissions and dependence on fossil fuels.
By investing in solar power and generating income through sustainable methods, you contribute to a greener and more sustainable future.
Are There Any Risks Involved in Making Money with Solar Power?
Factors such as market fluctuations, regulatory changes, technological advancements, and competition can impact the profitability of solar ventures.
It’s important to conduct thorough research, assess the risks involved, and make informed decisions based on your financial goals and risk tolerance.
Can I Combine Multiple Methods to Maximize My Earnings from Solar Power?
Combining multiple methods is a great way to maximize your earnings from solar power. For example, you can install solar panels on your property to generate electricity and sell any excess power back to the grid while also participating in government incentive programs or offering solar-related services.
Diversifying your approach can provide multiple income streams and enhance your overall financial returns.