There are a few ways to save big with renewable energy, and the first isn’t particularly exciting at first blush—budgeting. Not all renewable energy approaches make sense for every home, budget and lifestyle. Before delving into your renewable energy options, which might vary based on your budget and location, audit your existing energy consumption and have a discussion with other household members about future plans. If you plan to sell and move within five years, is switching to renewable energy really the most financially savvy move? You might certainly get added home value with renewable energy upgrades, but it’s not always enough to make up for the initial investment.
Every household should have a budget that’s accurate, regularly visited and routinely updated. Many energy companies, from electricity to gas and water, will happily provide you with data on average energy usage. For some households, it makes sense to opt for average monthly payments which guarantee the same billing price every month regardless of use. You normally have to live in the home for at least one year before this becomes available. If this interests you as part of your audit, make sure you add up last year’s total bill to make sure average monthly rates aren’t more expensive.
Now that you know your annual and average energy usage for a particular necessity, it’s time to figure out if renewable energy makes sense. Consider electricity as an example. If you’ve been thinking about solar panels, where you live can also make a big difference. Rules, regulations and sheer amount of sunlight vary drastically state to state.
Armed with information on your current usage and bills, take into account:
- The cost of solar panels based on your home, needs and where you live. If you live in a sunny state like Arizona, you’ll nearly have non-stop energy assuming you install enough solar panels for your needs. However, in a state like Oregon, you won’t necessarily get enough sun.
- Whether your state offers free solar panels. Nothing is free, but there are some states which offer power purchase agreements (PPAs) that require no money down or initial upfront investment. Instead, you make lease payments or monthly payments by the kilowatt hour, similar to how you currently make electricity payments.
- If your state lets you sell unused energy “back to the grid.” In some states, you can sell any energy your solar panels gather and you don’t use. For someone in a very sunny state who doesn’t use much energy (which your audit will tell you), this might be a make or break factor.
- Current solar tax credits. Look at both federal and state solar and renewable energy tax credits. They can and do change yearly, and at the federal level many energy-efficient tax credits are being phased out. Talk with your CPA before making any renewable energy purchase decisions so you can be sure to maximize the perks. In many cases, solar tax credits decrease your overall costs and can be a deciding factor.
Some nimble budgeting and projecting can tell you whether investing in renewable energy right now, for this home, is a wise move. You don’t always know if or when you’ll have to move or sell a home, but you can make some informed guesses. Do you see this being your forever home? Do you or someone in the household have a job that’s likely to move you in the near future? Are there extenuating circumstances, such as aging parents, that might dictate moving to another home?
Not all renewable energy upgrades are budget busters. In fact, many are relatively affordable, especially in states where you can get a PPA or sell back to the grid. However, you want some assurance that you’ll save money with renewable energy while also helping to green up the environment. How much savings you “need” to go the renewable energy route is up to you. Renewable energy options can be installed quickly unlike many other types of home upgrades, which means there’s no “down time” while your home undergoes a green boost. Start budgeting and planning today to discover is renewable is for you.