The solar industry has seen rapid growth in recent years, but two particular factors have contributed to its even faster ascent in 2022. Natural gas price increases and the extension of the 30% tax credit propelled the industry from different angles. The increase in natural gas prices made electric utilities more expensive than ever, while the 30% tax credit made going solar even more affordable. Together, these forces drove the growth of the industry, and we can expect the trend to continue well into 2023 and beyond.
The Trickle Down Effect of Volatile Natural Gas Prices
The US heavily relies on natural gas, with 39% of our power grid fueled by natural gas turbines. With that reliance comes a mirrored volatility – when natural gas prices increase, that cost is passed down to consumers who use it to heat and power their homes.
The price of natural gas became highly volatile after the Russian invasion of Ukraine in February of 2022 and kept them high throughout most of the year. This spike in natural gas prices very quickly resulted in a spike in the price per kilowatt at electric utilities all over the United States and globally.
With general inflation across all sectors of the economy, the price of solar panels and inverters also increased in 2022. However, even with those price increases, 2022 has been a record year for solar installations across the United States. This is partly due to the increased demand driven by homeowners and business owners seeking to get out of the trap of ever-increasing utility prices.
Prior to 2022, most middle class homeowners paid around $200 per month to the electric company during the summer months. In the summer of 2022, many of these same homeowners were shocked to see $300 electric bills for the first time. These high bills were primary motivators to install solar panels on homes and businesses in order to cut down on energy costs and find true energy independence.
The 30% Solar Tax Credit
The Inflation Reduction Act that was passed in August of 2022 extended the 30% federal tax credit to the year 2032, creating more predictability for the solar industry as a whole, and giving consumers another incentive to look into solar for their homes and businesses. This led to an uptick of solar installs in 2022 and should help sustain the growth of the solar industry for the next ten years as business owners and homeowners take advantage of this significant offer.
For a consumer buying a $35,000 solar array, the 30% tax credit gives them $10,500 back, making the real price of that array $24,500. Adding solar to your home also increases its market value by $10,000- $15,000, making the price of the solar even lower if you sell your home in the next decade.
Many Tampa Bay Solar clients have realized that the price of solar today is 100% predictable, while the price of electricity in the next 5 to 10 years is far from it. By switching to solar now, customers can have control of their energy consumption and own the energy their PV system generates through the power of the sun rather than rent their energy from the utility company.
As solar goes up on more homes, there is an increasing public awareness and acceptance of solar as a practical (and pennywise) addition to your home or business. Join the movement and call us today to get a free quote for solar on your roof.