Solar panels put savings on the horizon

Solar panels are no longer just for hippies. If you're just as interested in saving money as you are in saving the planet, solar panels can help.

Their price has come down, their effectiveness has gone up, and Congress extended a 30 percent federal tax credit for installing them until the end of 2019. Solar panels can now pay for themselves in as little as five years, depending on where you live.

But are they right for your home? That's a question that raises more questions. Ask yourself these things before making a decision.

Which way does your roof slant?

Because of the United States' position in relation to the sun, south-facing roofs are the most productive for solar, followed by west-facing and then east-facing roofs. North-facing roofs are the least desirable for solar, and many people rule them out.

Is your roof shaded?

Ideally, the sun will need to hit your panels for at least five hours a day. If trees, hills or other buildings block the sun from reaching your roof, that's a problem. (And remember: Especially in the city, a tall building could pop up next door in the future.)

How big is your roof?

You need about 100 square feet of area per kilowatt of solar system. An average residential solar system is five kilowatts — 20 panels — in size. So, for that, you'd need roughly 500 square feet of space.

What's the angle of your roof?

The ideal angle for solar panels is 30 degrees, but they can be installed on roofs ranging from zero to 45 degrees. Solar panels for flat roofs are installed on tilted racks. If your roof is very steeply pitched, the sun may not reach the far side. Study your roof throughout the day to see what's really going on.

What type of roofing do you have?

It's easiest to install solar panels on asphalt shingles or corrugated metal roofs. Putting them on slate or tile roofs is more complex and costlier. Your jurisdiction may not allow solar panels on a wood shake roof because that's a potential fire hazard.

How old is your roof?

Solar systems are usually warranted to last for 25 to 30 years. That means your roof should have many years of life left when you install solar panels. Otherwise, you'll have to temporarily remove them when you replace it, which adds to the cost.

What size system do you need?

Be warned that salespeople can be overly optimistic about how much power a solar system will generate. That's why you should run the numbers yourself using the Energy Department's impartial PVWatts Calculator. The typical five-kilowatt system generates an average of 7,000 kilowatt-hours per year.

How long do you plan to live in the house?

It's best if you plan to stay in your home long enough for the solar panels to pay for themselves, because it's hard to predict how much potential buyers will value solar panels and whether you'll recoup your cost.

How expensive is your electricity?

Solar panels are more valuable if you live somewhere with high electricity rates. The U.S. Energy Information Administration provides a map of electric rates, so you can see how your state compares. Confirm by looking at the rate per kilowatt hour on your bill.

What state incentives are available?

Many states offer their own incentives on top of the federal tax credit. For example, the state of Maryland will pay $1,000 to residents for installing a solar system. Look up your state in the Database of State Incentives for Renewables & Efficiency.

Does your state have net metering?

Net metering means that if you generate more electricity than you need, the power company will buy it back from you, which can be beneficial. Thirty-eight states offer net metering.

Is my state an SREC state?

Roughly 30 states plus the District of Columbia require power companies to generate a portion of their electricity from renewable sources such as solar. Power companies will pay you to help them do this. SREC stands for solar renewable energy certificate. For every 1,000 kilowatt-hours of solar power you generate, you earn one SREC. Your utility will buy it from you — for as much as $480 in some areas.

How's the weather in your state?

Solar panels should work in most any state except, perhaps, parts of Alaska. But you can look up your state's average number of days of sun to get a feel for just how productive your system might be.

Should you buy your solar panels?

The standard five-kilowatt system costs an average of about $16,000 — $11,000 after the federal tax credit. If you can afford it, buying your solar panels outright will bring you the biggest return on your investment. If not, you could get a solar loan. For those with solid finances, the best choice is a secured solar loan, which means you use your home as collateral. The rate will be lower than on an unsecured solar loan, and the interest will be tax-deductible.

Should you lease your panels?

Solar leasing is available in about half the states. The company installs solar panels for you in exchange for letting it collect your government incentives. Much like leasing a car, you don't pay much, if anything, upfront, but you pay the company a monthly rent for as long as 20 years. Problem is, when those years are over, you don't own anything. Either the company will remove the solar panels or you still have to buy them. A PPA or “power purchase agreement” is similar to a solar lease, only instead of paying rent, you agree to pay for the power the company's panels produce.

If it seems as if there are more questions than answers, here's the bottom line: If you have the right kind of roof, your local electric rates are high, and your state provides a lot of incentives, it's time to take a serious look at solar.