Have you noticed the extreme heat this summer? Heatwaves in the Northeastern U.S. are happening more frequently, getting hotter, and taking longer to subside.
As temperatures rise during the summer months, so do energy costs! For New Jersey and Pennsylvania residents, the heat and humidity can lead to significantly higher utility bills as we all reach for the A.C.
To make matters worse, the power needed to run an air conditioner keeps getting more expensive, and not just because of inflation. Many utility companies nationwide are increasing their rates, including PECO, which serves southeast PA.
Earlier this year, PECO requested a net electric rate increase of $399 million (a 25.1% increase) to go into effect in 2025. Many other utility companies are following suit across the country. Some of those companies are using those rate increases to lobby against clean energy.
Investing in a solar system can offer a sustainable and cost-effective solution to rapidly increasing energy prices.
The Impact of Summer Energy Consumption
Nationally, energy costs have done nothing but rise since 2020. This problem is impacting the Northeast in a particularly bad way.
According to the U.S. Bureau of Labor Statistics, energy prices in the Philadelphia area rose by 4.1% over the past year. It’s even worse for New Jersey residents, who saw costs rise by 5.5%.
The average Pennsylvania household consumes over 10,000 kWh annually and spends more than $2,000 on energy bills annually. In New Jersey, costs are slightly higher.
The U.S. Energy Administration predicts that the Middle Atlantic States (New Jersey, New York, and Pennsylvania) will continue to see the largest energy cost increases in the nation.
Luckily, there’s a solution.
Why Solar Power?
Solar power is an energy-producing asset that pays for itself and eventually offers you low-cost or even free power.
Investing in a solar system allows you to generate your own power on-site. By generating electricity from your roof, you can reduce your dependency on the grid and protect yourself from fluctuating energy prices.
Solar panels can significantly reduce or even eliminate your electricity bills.
The average solar system we build in Pennsylvania pays for itself in 8-12 years but produces power for 25-30. The average system we build in New Jersey, where incentives are slightly more favorable, pays for itself in 5-8 years.
You might be thinking: “This seems too good to be true! How does a solar system ‘pay for itself?'”
Solar Systems are a Self-Paying Asset
Solar systems pay for themselves in several ways, including:
- Power Bill Savings: Generating power on-site means your electricity bill will be lower. Depending on if you size your system to cover part or all of your bill, you might only pay your utility company’s “connection fee” each month.
- The Federal Tax Credit: The federal government offers a 30% tax credit for residential renewable energy installations. This credit is filed for and claimed the year after the homeowner receives permission to operate their system. We’ve written a complete guide to the residential tax credit, which you can find here.
- Net Metering: When you run your AC in the summer, you’ll likely use more energy than your system produces. During the winter, your system may produce more energy than you need. Net metering is like “banking” your solar system’s output. Your utility company will automatically “buy” extra energy when your system over-produces and “sell” the energy your home created back to you when you’re using more than your system produces. At the end of the year, you’ll receive a check for the extra energy you produce.
- Solar Renewable Energy Credits (SRECs): SRECs are a state-specific program that generates passive income for homeowners with solar systems by crediting them for the energy their systems produce. The program only exists in ten states and the District of Colombia. They are automatically generated per 1,000 kilowatt-hour (kWh) a system produces. The value fluctuates state-to-state based on demand. New Jersey home solar SRECs sell for $90 compared to neighboring Pennsylvania, where they are valued at around $30. There’s pending legislation in Pennsylvania that may raise the value of SRECS.
So, what does all this look like in practice? We interviewed a satisfied homeowner five years after installing his solar system. We’ll be including more of his story in a full case study, but we’ve added a summary below!
Case Study: Solar in Action
Exact Solar installed a solar system for a homeowner right down the road from our office in Newtown, PA, five years ago.
Before installing a solar system, he paid an average of $200 monthly for electricity. Today, he pays nothing except his $10 connection fee. But more exciting than eliminating a power bill is that his system brings him cash flow every year.
Here are the benefits he’s enjoyed since installing the system:
The year after he received permission to operate his system, he received a $12,000 tax credit on the installation cost.
Through the net metering program, PECO sends Steve a check for his surplus power production at the end of each year. Each year, he earns between $300-$400.
In addition, he receives monthly checks for his SRECs, usually worth $30-$90 per month. Each year, these add up to around $500-$600.
Steve has earned between $4,000 and $5,000 for the last five years and has not spent a dime on power (other than his connection fee). He’s saved at least $12,000 in that period by eliminating his bill, and when you add his $12,000 tax credit into the mix, that means his system has saved and earned him between $28,000-$29,000.
His system is doing a pretty bang-up job of paying for itself! Makes you want to get in on the action, doesn’t it?
How You Can Get Started With Solar
Solar systems are very bespoke. The amount you save and earn back depends heavily on local incentives, rebates, and your home’s design.
The best way to find out exactly how much you can save is to schedule a free consultation with a reputable local installer. Our solar experts would love to tell you exactly how to invest and maximize the benefits for your unique home.