Michigan Solar Power

Tens of millions of homeowners in Michigan are eligible to save big with solar.

The cost of power in Michigan is above average with 18-21 cents per kWh depending on the utility company you work with.

Michigan actually receives a standard amount of sunlight for solar that is an average of 4 hours and as high as 6 hours of direct sunlight in the summers!

These are average sunshine rates for Michigan, but every property is unique. You can get an assessment of your home by getting in touch with our trusted solar installers near you.

Return on Investment for Residential Solar Power in Michigan

Initial investment and the monthly savings achieved with solar power depends on the installed capacity of your photo-voltaic system.

The optimal system size in kilowatts depends on your available rooftop area and yearly energy consumption, but most homes can get decent results with a 5-kW photo-voltaic system. Therefore, we will analyze the project financials for a system of that size.

The costs and savings for a 5-kW system in Michigan can be broken down as follows:

- The installed cost of a 5kw solar system is around $21,000.

- However, the federal tax credit allows you to recover 26% of the investment as a tax credit, so the net outlay is reduced to $15,540.

- Also, remember a solar system starts generating savings right away. You can expect to save around $750 during the first year, further reducing the initial expenses to $14,790

- You can expect a payback period of 7.5 years. After that, you will get at least a full decade and a half of free energy, since solar panels typically have a 25-year warranty. You can also expect to - make a net profit of nearly $16,000!

- There’s another financial benefit: your property could increase in value by more than 4.1% according to Zillow!

So let’s say your home is worth $150,000, your home could sell for $6,150 more.

$16,000 profit + $6,150 value-add = $22,150 in profit over the next 25 years. That’s almost $900 a year you could make as a profit!

- The environment also gets a benefit from your investment, equivalent to planting around 100 trees per year.

Although there are sunnier states than Michigan, the average electricity price is around $0.18/kWh, which is above the national average. This makes solar power a sound investment, because every unit of energy produced is worth more than the average price of electricity in the US.

This analysis is for a 5-kW photo-voltaic system exposed to the average sunlight conditions of Michigan.

However, every project is unique due to site specific conditions.

In general, the best locations for solar systems are those with the following conditions:

- A south-facing rooftop: the northern hemisphere gets more sunlight from the southern portion of the sky.

- No obstacles blocking a significant portion of incident sunlight.

If you like math and statistics, you can check out the NASA Atmospheric Science Data Center website. The site allows you to input your exact coordinates to generate a wealth of meteorological information, which includes data tables for solar power.

You can even break down the sunlight availability at your exact location by month and by solar panel tilt angle!

Contact our experts to learn more about solar power and to get in touch with the best solar installers in Michigan, who can carry out a detailed assessment of your property.

Michigan Tax Credit

Michigan offers no state tax credits, but the 26% federal tax credit applies and lets you get back a huge portion of your solar power investment as a tax deduction within one year.

If you don’t owe enough taxes to use up the whole tax credit at once, don’t worry: you can split it among two consecutive years.

The 26% ITC is great, but the benefit will not last forever: it is currently set to expire after 2022, when it will be reduced to a more modest 22%.

If you are planning to install a solar system in your Michigan home, we strongly recommend you do so before 2023 so that you don’t miss a huge tax break.

Michigan Electricity Rates

The high price of electricity is one of the strong points in favor of solar power in Michigan. At $0.18/kWh, Michigan is above the national average, and for a residential solar system owner this just means more savings then the average homeowner.

Besides, a 5-kW system has a comparable environmental impact to planting 100 trees per year.

To illustrate how high electricity prices are beneficial for residential solar power, let’s compare the savings offered by 5000 kWh of solar power in Michigan with those obtained from the same amount of energy in a state where the electricity price is $0.10/kWh.

Solar power savings in Michigan = 5000 kWh x $0.18/kWh = $900

Savings at $0.10/kWh = 5000 kWh x $0.10/kWh = $500

The savings are increased by over 55% in this scenario. Over the service life of a solar systems, the extra savings can be considerable due to scheduled utility rate increases from DTE, or Consumers.

Leasing VS Purchasing: What’s Best for Michigan Homeowners?

This question has different answers depending on your cash availability and credit worthiness.

Purchasing a solar system in Michigan

Purchasing a solar system in Michigan is strongly recommended for homeowners with either cash availability, credit worthiness or a lot of equity.

A cash purchase maximizes total solar system savings, but a purchase through a low-interest loan yields the highest return per dollar spent. In both cases, you get a huge tax credit in less than a year.

Leasing a solar system in Michigan

Leasing a solar system in Michigan is only recommended if you don’t have the option to secure a loan.

Otherwise, the loan is the top choice because it gives you seven times as much savings than a lease while also being a $0 down option.

Are There $0 Down Payment Financing Options in Michigan?

If you want to install a solar system in Michigan for $0 down, you have two options:

- Getting a loan to pay for the solar system and its installation, is available through our financing partners at variable terms and interest rates or as a HELOC (home equity line of credit).

- Using a solar system owned by a third party: If you go for this option, you can choose a solar lease.

The advantage of the first option is that you are the system owner and are entitled to the tax credit entirely.

With the second option, the tax credit goes to the company leasing you the solar system.

Solar Lease in Michigan

Leasing a solar system is not much different from renting a home or a car.

The basic concept is very simple:

- A company installs a solar system on your rooftop, you pay $0 down, and instead agree to pay a fixed monthly fee for using the system that is more then likely less than what you are paying every month for your electricity already.

- Leases may have terms in the range of 15 to 20 years, and in some cases you are allowed to purchase the system at a discounted price at the end of the leasing agreement.

- The idea is to pay the monthly fee with your savings, and any cash left goes to your pocket.

If you sign up for a solar lease in Michigan, you can expect to save more than 20-50% over 20 years. You must consider how you get it for $0 down and without taking a loan out.

Solar Loan

Going solar through a loan is very smart from the financial stand point, because you can claim the 26% tax credit within one year and then use that cash to start paying the loan.

Keep in mind your solar system will also generate yearly savings, which further contribute to covering loan payments.

In short, the tax credit and savings pay off a huge portion of the loan and you will only have to cover the difference, which is much more manageable than paying the full price of the solar system upfront. And much more often then not, homeowners are paying less than what they are already paying every month to their utility company.

Purchasing a solar system in Michigan through a loan results in savings of more than 20%-40% over a 25-year period, which is great for an asset obtained for $0 down.

What is the Solar Power Installation Process in Michigan?

The solar system installation process in Michigan is simplified thanks to the favorable interconnection framework which sets equal rules across the board regardless of the utility company.

Anyway, we recommend you hire experts in order to make the process as fast and smooth as possible, while making sure you get top quality workmanship.

If you have already taken the decision to go solar, the process to follow is very simple and you can start right away:

1. Fill our solar installation form, providing basic information about your property.

2. Talk with our trusted solar consultant near you to get detailed quotes.

3. Compare quotes and choose the best option for you.

4. Have your contractor install the solar system, and enjoy clean power while helping the planet.

The installation process only takes from 30- 45 days after you sign the agreement.

Remember the case study in this article is for a 5-kilowatt solar system, assuming the average sunlight conditions of Michigan.

Once you get a proposal from your contractor of choice, you will know exactly what to expect.

Conclusion

Michigan offers a favorable net billing and interconnection policy for solar power, which simplifies the installation process and eliminates unnecessary expenses that are sometimes imposed by utility companies.

Energy prices in Michigan are higher than the national average, which increases your savings per kilowatt-hour produced.

On top of that, the 26% ITC from the federal government makes sure you get a huge portion of your investment back within a year.