Believe it or not, a lot of Kansas City receives almost as much sunshine as Los Angeles! With so much open land in the plains, Kansas and Missouri are great places to utilize clean solar power. Renewable energy can protect the natural history of the state and keep the air clean and crisp. Here are several ways you can help by investing in solar power in Kansas City this summer.
Option One: PPA
Power-Purchase Agreements (PPAs) are a popular form of what’s referred to as “third-party solar.” In a PPA agreement the solar company you choose installs and owns the panels on your roof while you use and pay for the electricity that’s generated by them. This amounts to savings even in your first month!
In a PPA the solar company basically acts as your second power provider, except the solar electricity is sold to you for a much lower rate than the electricity from your power provider. Having a PPA doesn’t entirely get rid of your normal power bill since you will still need electricity from the power grid at night, but it will definitely save you money!
Option Two: Solar Lease
Choosing to lease your panels has many benefits. There are no out of pocket costs and you can expect your total power bill to immediately decrease. This option is great because there are really no downsides short term. You will only have to consider whether you want to purchase the solar power system at the end of your term or not.
Option Three: Financing
If you plan to stay in your home for a while and you’d like to own your own system but can’t afford the initial expense, you can often easily secure financing. The initial installation costs become an investment that has a return that outpaces some of the strongest performing mutual fund investments. Additionally there are a lot less principal risks because the energy credits you produce are dependent only on the sun rising each morning as opposed to moody financial market fluctuations.
Also, if you lease or do a PPA, you won’t receive any of the credits and incentives that you would receive when you own the system yourself. All of those go to the solar PPA company (that’s how they can afford to offer you such a great deal). You will receive all of these credits if you decide to finance or own your solar panel array.
From the offset you’ll start out ahead because despite putting no money down, you’ll see the Federal 30% tax credit for all costs on your tax return.
Then, after you’ve paid off your loan you can save over $1,200 per year off your power bill! Here are some specific examples for a Kansas City solar purchase with a solar loan quoted from ‘Solar Power Rocks’:
- “Installing a typical 5-kW solar system should start at about $21,250. That’s how big your loan will need to be to cover it.
- The electricity you’ll save in the first year of operation would have cost $862, but your loan payments will total $1,886, for a difference of $1,224, or about $102 per month.
- That’s not so bad when you consider your tax savings for the year will be $6,375! You’ll come out more than $5,350 ahead in year 1, which should help ease the burden of loan payments for a few years, at least.
- When your loan is paid off in year 15, you’ll start see over $1,200 per year in savings until the end of your system’s 25-year warranty. If the panels last longer (and they probably will), your return will go up!
- For our 25-year estimate, you’ll see some great profits, to the tune of $6,885, even after all the payments.
- And the future is going to look a little brighter, since your system will mean green for the environment. It’ll be like planting 110 trees every year!”
Option Four: Purchase Outright
A 5kW solar system install generally starts at around $21,000. That’s initial costs though so don’t worry, you will get a substantial amount back in incentives and rebates after the first year.
The federal incentive is calculated from the actual out of pocket costs, so even though Missouri has no state rebates, your federal solar tax credit will increase due to the higher initial expense. The federal rebate will amount to about $6,300 (30% of $21,000) for a new total price of $14,700. You can also apply the federal credit over 2 years if you don’t quite owe $6,300 for taxes next year.
Paying in cash up front was the only way to have solar panels installed back in the day and is still an option that gives you the most control over your savings. It’s not always the best option from a return on investment percentage standpoint however.
An outright purchase means you receive the biggest returns over time, since you can reap all of the benefits of owning the system, but luckily if you can’t afford the total cost upfront, there are still plenty of options.
Deciding on the best way for you to go solar in Kansas City can be kind of difficult. There are lots of options though, from power-purchase agreements to leases and loans, there is almost always something that can work for your home. Hopefully this list will help in your decision to go solar.
This is a guest post written by Jayson Goetz. Jayson is a strong believer that you don’t have to be wealthy to live a rich and full life and wants to share tips on how to do exactly this. Whether its saving money tips, smart everyday hacks, or budget travel, he hopes to inspire others to do more with less.
All photos acquired through Creative Commons. No changes made to photos. Creative Commons License.