Just a few years ago, a Gallup poll named Utah as the best state to live in. Considering the majestic parks, canyons, and lakes in this northwest of the Four Corners, it’s easy to understand why. Utah is a winner in several industries, and with so much natural beauty to protect, it would make sense for the state to be ahead of the pack in clean energy. But is it?
Utah’s climate ranges from semi-arid to true desert, so you know there are plenty of sunbeams to harness. However, the state lacks the incentives that could really drive the popularity of solar panel energy through the roof. Want to know more? Read all about it here!
The good news is that in Utah, your return on investment (ROI) for solar panels is high. First, examine the Swanson Effect graph above. This graph will help you understand how much per-watt prices for solar power have dropped in the past three to four decades. As storage technology improves (so you can have power when the sun doesn’t shine), costs will go down even further.
Grid electricity in Utah is among the lowest of all 50 states. So how can going solar generate so much money for you? As mentioned, it’s because of Utah’s lack of precipitation and generally hot weather. Also, while residents of every state benefit from a 30 percent federal tax credit for a solar panel installation, Utahans also get a generous 20 percent state tax credit plus a hefty rebate from Rocky Mountain Power.
Let’s take a closer look at the ROI on a solar panel installation in Utah.
In a hot state like Utah, solar energy is a no-brainer. The graph above makes that clear. The information depicted is for a 25-year period, which is generally the length of a warranty for solar panels. Whether you buy a system with your own money, take out a loan, or enter a lease agreement, you’ll earn money by doing almost nothing. The opportunity is so great that if we didn’t know better, we’d think it was a scam!
First, notice that you stand to make the most money if you have plenty of money up front to buy your system unassisted. Essentially, the formula here is more outgo, more income. If you don’t have an extra $20,000 sitting in the bank (or sewn inside your mattress), you can get it from a home-equity line of credit (HELOC).
If neither purchasing option fits your situation, take heart. In Utah, power-purchase agreements (PPAs), more commonly known as leases, are available for solar panels. When you allow a third party to own your system, you make monthly payments to that party but still save money in comparison with your original electricity bill.
Read on to find out more about each of these three excellent options for solar energy systems in Utah.
In Utah, it only takes about nine years for a solar installation to pay for itself. Although you’ll invest $20,000 initially, you’ll get more than half of that back after the first year in the way of tax credits and rebates. Each year thereafter, you’ll continue to save money, because your new electricity bills will be lower than the old ones. Within 25 years, you’ll have earned all your money back times two!
If you have at least $20,000 worth of home equity, it’s just as worthwhile to pay for Utah solar panels with a loan. In fact, even for households that do have the cash up front, a loan is an outstanding option. That’s because when you pay for a solar energy system with a loan, the federal and state solar tax credits as well as the utility company rebate still go directly to you. Moreover, in Utah, those combined incentives are considerably higher than in other states. You’ll actually never spend anything on your system, but you’ll wind up with over $15,000 at the end!
To take advantage of this no-lose deal, look for terms of 5 percent interest or less and a repayment period of about 15 years. If the interest rate you qualify for is a bit higher than 5 percent, you’ll still make money, so don’t rule out the possibility.
Many states don’t have the opportunity to lease solar panels. Lucky Utahans can go solar with no money down and save several thousand dollars within about 20 years. Because there’s so much sun to harness in the land of the Great Salt Lake, there are plenty of savings to reap. Even better, in a lease situation, the installation, maintenance (mostly cleaning), and repairs are the responsibility of the third party. All you have to do is sit back and let your panels do the work for you!
The graph above shows how you’ll come out ahead even within the first year, only to earn more money each subsequent year. That’s because your local utility company will surely increase its rates over time, which will result in progressively greater differences between your old and new utility bills.
An RPS tells state utilities to (1) start pulling some energy from renewable resources and (2) do so by a specific date. Some states have a strong, mandatory RPS; some have none at all. In Utah, utility companies do not have to participate if it is not financially feasible for them. The goal in this state is to transition to 20 percent renewable energy by 2025. The Public Service Commission determines the feasibility of such a move for various utilities. Utah legislators could ramp up the action by mandating RPS participation.
While there’s plenty of money to make from a conversion to solar panel power in Utah, that situation could improve even more with stronger policies. Hard to believe, right? The Beehive State can look at tax exemptions and performance payments in addition to strengthening the existing RPS. Right now, Utah gets a “D” overall, but don’t let that stop you from pursuing your dream of going solar and making passive income!