It’s that time of year when Minnesotans dive into home improvement projects big and small.
Of all the home improvement projects that could be undertaken, which one offers the best payback? On average, for every $10 spent on home renovations, about $6 to $7 can be recouped in added value after selling the home, depending on the project.
It’s important to reflect on the fact that money spent on most major home improvements can’t be recouped until the home is sold. That’s also if the property maintains value, as real estate is volatile and unpredictable these days. Though values are increasing rapidly now, it’s been barely a decade since Minnesotans learned just how fast the markets can turn.
However, there’s one home improvement that can guarantee payback for every dollar spent and more. The best part? This project pays for itself regardless of whether the property is sold; and it can return its value three or four times over the course of its structural lifespan.
All Energy Solar will explain how solar panels provide the best payback for home improvement dollars, even when a loan is taken out to finance them.
The average cost of Minnesota solar panel installation
According to Solar Reviews, the average cost of a Minnesota solar installation can range from $8,850 for a smaller 4KW system to $19,462 or more for a larger 10KW system.
For reference, a typical bathroom remodel costs $10,776, while a kitchen remodel costs $25,535. But bathroom remodels and kitchen remodels are considered personal expenses and don’t qualify for tax credits or incentives.
On the flip side, installing solar panels is considered a domestic energy production investment.
All residential and commercial solar projects installed during 2021 will qualify for a 26 percent federal tax credit against the cost. Essentially, nearly anyone can recoup at least quarter of the cost of their investment within the first year solar panels are installed.
Additionally, many local communities offer solar incentives, such as the Minneapolis Green Cost Share, Saint Louis Park Solar Sundown and the Chaska Solar Rebate Program. Even utilities like the Dakota Electric Association, Rochester Public Utilities, Owatonna Public Utilities and others offer solar performance programs and other credits.
Taking out a solar loan in Minnesota
Solar loans offer homeowners a path to invest in solar energy. Regarded as a subcategory of home improvement loans, solar loans come in a wide range of payment options and terms that can vary from 10 to 25 years, often with very low interest rates.
With a solar loan, consumers are still able to cash in on all of the federal and local solar incentives for which they qualify. The incentives can be built into the loan structure, reducing the monthly payment amount from the beginning.
For example, when a $10,000 solar system combined with the 26 percent federal tax credit would reduce the cost to $7,400 within the first year, that’s taken into account when setting up the repayment structure. The same is true for other rebates and credits that might be available.
Net metering accelerates solar loan payback
Almost all residential solar systems installed in Minnesota qualify to receive utility bill credits through "net metering." Net metering is a process by which extra electricity produced by a solar power system is sent into the utility grid in exchange for credits on the customer’s energy bill.
Later, at a time when the property consumes more power than the panels are generating, the credits pay for the electricity used from the grid.
With solar panels directly powering the home and paying for electricity from the grid through net metering credits, solar customers don’t have to worry much about their utility expenses. Credits are built throughout the summer and then used during the winter when there are fewer hours of sunlight.
Payback up to 400% of initial cost over a lifetime
Instead of worrying about a power bill, the solar loan becomes the utility bill, and it’s much more predictable. Every month, the same amount will be due until the loan is paid off. It’s up to the borrower whether to make the minimum payment or to pay the loan off early.
Through the generation of solar energy to power the property, these systems will typically pay for themselves within 8 to 13 years, depending on the size of the system.
A smaller system could have a smaller loan, but take longer to reach full payback potential simply due to limitations on how much power they can generate. A larger system may have a larger loan, but could reach payback sooner because of the excess power they’re able to produce.
Solar power systems often have warranties that can last up to 25 years. Their full productive lifespan can be as long as 30 to 40 years, especially if they’re carefully maintained. As a result, these solar systems can easily pay back up to 300 or 400 percent of the initial cost of installation.
If the homeowner chooses to move, solar panels boost the home’s resale value, too. But once solar is installed, it could be worth it to stay for the long haul.
A trusted name in Minnesota solar energy
Every year, All Energy Solar makes switching to solar energy easy for property owners of all kinds — residential, commercial, agricultural, municipal and more.
Our industry experience allows us to confidently handle every aspect of the solar process. From initial energy analysis and concepts, engineering and design, construction, and monitoring, our team prides itself on being experts in all aspects in our field.
The top rated solar installer in Minnesota, All Energy Solar can help determine if your property is a good fit for solar, estimate how quickly you could achieve payback, and help you apply for all qualifying incentive programs.