Four ways to invest in solar energy

Whenever someone considers investing in solar energy, the first thought that comes to mind is often related to the high cost of solar panels. Though the price of solar panels has come down significantly over the past few decades, they are still at a price point that is out of the typical home owner's budget. There are also a host of other reasons why solar panels may not be possible for your home (covered in future article). Fortunately there are options for supporting clean energy (albeit to different degrees) that do not break the bank and can actually lower your electricity bill. These are discussed in more detail below:

1. Purchasing vs. leasing solar panels: If you would like to install solar panels on your home, you can either purchase the system to own or enter into a lease or power purchase agreement (PPA). The following video does a good job of explaining the key differences between the two:

   https://youtu.be/yHlywJWtzP4?si=nkryjYvGHFbOsw20

   As was explained, purchasing solar panels for your home allows you to directly use the energy that is produced. If sufficient solar panels are installed, the monthly electricity bill will be reduced to near zero (except for a small customer fee). You can also take advantage of any tax benefits that currently exist for new solar installations. What was not mentioned is that if your solar panels produce more energy that what you need over the course of each year, your utility may reimburse you for the extra energy. The main disadvantage of purchasing solar panels is the high upfront cost; you also need to maintain the system, but often the company that installed the panels will provide this service over a large portion (often 25 - 30 years) of the system's lifetime. A lease or PPA eliminates the initial costs and your maintenance responsibilities and reduces your electricity bill by a certain percentage. Main disadvantages include potential complications if you decide to sell your home and the fact that you will not be able to take advantage of any tax incentives.

2. Subscribe to community solar: Subscribe to a solar farm in your local area. Community solar requires no upfront installation costs or subscription fees and typically reduces your electricity bill by at least 5 percent. Please watch the video below for more details. To take advantage of community solar, your state must have passed "community solar friendly legislation" and there must be capacity available. Click here to see whether your state has passed such legislation.

   https://youtu.be/S7K0JTQV6NY?si=zjtuzcxaDM0jLT6D

3. Purchase clean energy through your utility: If you live in a state where electricity supply has been deregulated (thus allowing competition), you can request that your utility source your electricity from 100 percent clean energy (i.e., solar and/or wind). For more information on how to do this, refer to this explanation provided on the CNBC website. Though this alternative is the simplest, you will typically not realize any financial benefits and will likely end up paying 2 to 4 percent more on your monthly electricity bills.

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Helpful Hint

If you have not already invested in solar energy, consider one of the options given above. You could begin with one of the simpler options (i.e., community solar or purchasing from your utility) prior to having solar panels installed on your property. More details on the pros and cons and where to begin with each option will be given in future articles.