Why Solar Panels Are A Smart Investment

Ryan L. Kopf
10 min readApr 10, 2022

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Alternative energy sources are becoming more and more popular as they offer people an environmentally-friendly option on top of the enormous power costs they save.

Among these emerging technologies are solar panels, which harvest energy from the sun, convert it into electricity, and store it for future use. If you’re looking to get these photovoltaic panels installed, it might help to understand why solar panels are a smart investment.

How Do Solar Panels Work?

Solar panels are made up of smaller units called photovoltaic cells. These are specially-engineered materials that absorb the energy from sunlight. Then, the energy absorbed generates electrical charges that move from the photovoltaic cells to the circuit below, generating electricity in the process.

However, an entire solar energy system doesn’t end with the generation of electricity as it has to be stored and transmitted efficiently to serve your household. There are different technologies used to integrate solar panels into homes and businesses as a viable energy source.

To understand this you need to understand there are two kinds of electricity we work with: AC (Alternating Current) and DC (Direct Current).

Usually, the energy harvested from solar panels can be directly stored in batteries as a direct current. The generated electricity can also be used to directly power your home appliances. However, the second application first requires converting the DC from the solar panels into the alternating current (AC) that your home relies on. It uses power electronics such as inverters to transform DC to AC, and regulators to ensure a steady flow of energy to protect your devices.

Read: How does a DC to AC power converter work (sciencing.com)

For larger applications such as solar farms, a separate electrical grid is often set up in conjunction with a large array of solar panels. This solar grid, like its conventional counterparts, also has its transmission and distribution systems that allow the generated energy to be transmitted over a distance, reaching homes and businesses far from the solar farm.

Solar panels on a rooftop installed in Iowa by Iowa Solar.

What Are The Costs Involved

For most people, solar panels are a significant investment, this is why the costs involved remain one of the most important considerations before adopting this kind of technology. Similar to construction ideas, costs with solar panel projects can be divided into two: hard costs and soft costs.

Hard costs refer to the hardware involved in the project. It covers the solar panels themselves, plus the wiring used and the other electrical equipment required for the system (inverters, batteries, etc). Meanwhile, soft costs are the non-hardware expenditures. It usually covers the permits and labor necessary to set up the system.

In terms of costs and finances, here are a few reasons why solar panels are definitely worth it.

They Pay for Themselves in the Long Run

While solar panels require a significant investment, especially in terms of upfront costs, they pay for themselves in the long run. Depending on the size of the house or the building, the energy consumption, and even the amount of sunlight you get, the return on your investment may vary.

The so-called “payback period” refers to the length of time between the start of operation of your solar panels and the time that you’ve recovered your expenses setting them up. Usually, solar panels achieve a 100% ROI or more in a span of 5 to 7 years, depending on the factors mentioned earlier.

Solar Panels Cut Down On Your Power Bills

The payback from a solar power system comes from the fact that as they provide energy to your home, you reduce the electricity coming from your local power provider. After hitting your payback period, it’s all value for you and your household or your company. Return on investment is achieved in 5 to 7 years, yet the average lifespan for solar panels is about 25 to 30 years.

There are two main technologies to how your solar panels can significantly decrease your next electricity bill:

  • Net Metering

In net metering, the net or the difference between the energy you consume and the energy generated by your solar panels is the one you pay for at the end of the month. Basically, you draw power from the power provider to power up your home at night, and send them power during the day.

However, with a PV system in place, the solar energy you gather starts powering up your devices. Even better, if you generate more solar energy than you need, the excess is being sent back to the provider, incentivizing the surplus energy generated.

With net metering, basically, no generated energy goes to waste because too much solar energy from your end gets “sold” to the provider.

  • Battery Backup Systems

In cases where a net metering setup is not available, providing a battery backup system is the next best option. These power banks are batteries that are hooked up to your PV system, storing excess energy after powering your home.

Usually, once the batteries are full and the building’s electrical requirements are met, the surplus energy gets pushed back into the grid.

Additionally, there are systems that combine the two for increased benefits and reliability. When the solar panels collect energy, they power the building, and the excess energy charges the battery. When the batteries are already full, surplus energy is then directed to the net metering system to reduce your bill.

A PV System Qualifies You For Tax Credits

Another method of helping you recover investment and pay for the costs is through a tax credit. Tax credits refer to the dollar-for-dollar reduction in the income tax you would otherwise have to pay.

The federal government encourages and incentivizes the use of alternative energy through tax credits. If you meet the qualifications, then you can deduct a percentage of the costs for setting up your PV system on your next income tax declaration.

To qualify, the solar energy system must be installed and used in the same tax year and the energy it generates is used for a house based anywhere in the country. Last December 2020, Congress extended the Investment Tax Credit for alternative energy by up to 26% for those installed from 200 to 2022. This lowers to 22% for systems installed in 2023 and later.

The Federal government heavily subsidizes the cost of gasoline, coal, and oil, so it makes sense they would subsidize solar as well.

Environmental Impacts of Solar Panels

Aside from the costs involved, there’s also the environmental impact of solar panels. With the ongoing struggle against climate change and the increasing conversation around it, people are looking for more environmentally responsible options–with solar energy being a top alternative. Below are some of the positive environmental impacts of using solar panels.

Reducing Dependency on Conventional Sources

Although there has been an increase in the use of sustainable energy sources over the last years, there’s remains a huge dependency on traditional sources like oil, coal, and gas. Fossil fuels in all their forms still provide for about 84.3% of the world’s energy demand.

By having a PV system installed, you reduce the energy consumption from these non-sustainable energy options. It reduces the carbon footprint in your household and gives you the means to contribute to the fight against climate change.

Additionally, by having solar power in your home, you also have an alternative in the event of a blackout. Instead of using old generators that are also fueled by diesel or gas, you can just sit back and relax as your solar panels keep your appliance running in the daytime and the battery systems provide you with energy at night.

Help Reduce Air Pollution

Most power plants running on fuel also emit smoke as a byproduct of the combustion processes involved. The smoke from these plants contains a lot of pollutants that negatively affect air quality and pose short- and long-term hazards to natural life near it.

The Nitrates, Sulfates, and Dioxins put into the air from burning coal and natural gas are not good things for our bodies to breath.

These pollutants account for thousands of cases of asthma, lung cancer, and respiratory illness each month.

Renewables like solar, as well as wind and water energy sources, are clean and renewable sources that do not produce any harmful byproducts. Using a solar energy system in your home means that you contribute less to the harmful smoke emitted by conventional energy plants.

Even when you factor the energy used to manufacture solar panels, they overall produce 95% fewer pollutants than coal for the same amount of generated energy.

Solar panels on a rooftop reduce our use of coal.

Help in Water Conservation Efforts

Water is generally used as a coolant for a lot of traditional energy sources, including fossil fuel and nuclear power plants. For industrial hydroelectric power plants, a dam is usually built to store water and provide controlled flow. Unfortunately, damming local waters usually pose threats to the environment. Dams accelerate climate change and drastically change the habitat for most local flora and fauna.

Adopting solar power grids doesn’t require water in its day-to-day operations, making it a more sustainable alternative. No forests have to be cut down to make way for dams. Photovoltaic systems, on an industrial scale, can be installed on rooftops and even on top of the water as floating grids.

Damns are often built to support traditional fossil fuels.

Support Further Technological Advancements

The growing demand for renewable energy provides an incentive to the scientific community, pushing for studies that help develop better technologies. With a growing market, tech startups and small businesses are more motivated to find better and cheaper ways of harnessing the power of the sun to provide electricity for homes.

A great example of smarter solar panels is the Smartflower. Instead of the fixed solar panels you often see, the sunflower-inspired tech has movable solar panels that open and close to clean themselves. More importantly, this flower-shaped solar energy harvester follows the sun throughout the day, ensuring optimum collection from daybreak to sunset.

Some people have said there are dangerous chemicals in solar panels, but the truth is that solar panels are largely made of silicon (one of the most abundant elements on Earth) and aluminum (a highly valuable and safe metal). These “dangerous chemicals” are only present in theoretical technologies that are not used in the real world.

Restrictions and Considerations Before Installing Solar Panels

Of course, while the sun provides free and clean energy, the technology to harvest it is still developing and there are new and exciting technologies being developed. Below are some considerations you might want to see and take into account before making the switch to solar energy.

Initial Cost

As explained earlier, there are a lot of expenses associated with getting a PV system installed on your premises. The real challenge here is in getting started because you have to purchase most parts and get them installed before you start enjoying its benefits. Its high upfront costs make solar energy inaccessible to some who might not have resources.

An alternative, however, is to start small when it comes to solar energy. The technology is easily scalable, meaning you can buy additional panels or upgrade your storage equipment should the need arises.

Weather Dependency

The amount of solar energy you can harvest in a day depends largely on the weather. Since the sun provides the power you need, cloudy or rainy days are particularly disadvantageous for this kind of energy source. You might also want to remember that operational hours for solar panels are also limited. Their efficiency depends on which direction they’re facing, which means that there’s the best time for gathering energy and other times where it doesn’t function just as well. Also, solar panels mostly don’t work at night–although recent technological advancements are making progress to work around the perceived lack of sunlight.

If some light still pierces the clouds often solar panels can still generate power.

Space Requirements

One consideration in getting solar energy installed is the space requirement. Viable solar panels that can power your house are usually heavy and large, requiring you to find ample space on which to install them. Most rooftops are sufficient to hold solar panels but still, you might want to consult with an expert to whether the space you have is capable of handling solar panels.

For example some older homes have required additional wood added to the structure to ensure the structure will support the weight.

Then, there’s also a space requirement for the electrical equipment and energy storage segment of your solar energy system. You’d want to keep your inverters, regulators, and power banks safe from the elements as much as possible.

Materials Handling and Disposal

Although harvesting energy from the sun is a clean, renewable method, the manufacturing and waste disposal involved for solar panels isn’t. Producing a solar cell requires the use of certain harmful chemicals like cadmium, copper indium, arsenic, hydrogen fluoride, and more. Although there are prototypes for alloy-based PV panels with no toxic components, it’s still far from being a commercially viable alternative to the ones currently available.

Also, since it contains toxic chemicals, it is important to handle them properly. While solar panels have a relatively long lifespan, they have to be disposed of properly when the time comes. This can get particularly tricky if you live in areas with no materials handling facilities properly equipped to handle this kind of waste material.

Yes, you can make money on solar!

Clean and renewable solar energy is an ever-improving technology. As mankind finds new challenges discovered as a result of climate change and pollution, you can rest assured that renewable sources will only get cleaner and more efficient as an energy source for your home or place of business.

Going back to the question of whether solar panels are a smart investment, the answer is a resounding yes. The benefits greatly outweigh the risks, ensuring that you get your money’s worth after a considerable period of time. Not only that, but adopting solar power also ensures that you contribute a greater share in conserving the environment.

Benefits to solar:

  • It could cost less than you’re paying now, even if you get a loan to pay for the solar panels.
  • Rest easier knowing you are putting less pollution and toxins into the air.
  • Enjoy a cleaner world where you can breath better.

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Ryan L. Kopf

Serial C.E.O. and Entrepreneur. Great at technology, innovation, and entertainment arts.