The adoption of solar panels is expanding throughout the U.S., and the popularity is increasing even among unlikely regions such as the Midwest.

Homeowners are seeking options to slash their energy costs and methods to utilize cleaner energy given that generation from renewable sources has increased. The use of wind and solar has exceeded 10% of total electricity generation in the U.S. for the first time in history, according to data in March from the Energy Information Administration, the independent statistical arm of the Department of Energy based in Washington, D.C. As the capacity for generating power from wind and solar has risen, these two sources of power consist of 7% of total electric generation in 2016.

Texas generated the largest amount of wind and solar electricity generation, although the majority of it was wind, the EIA report said. The wind and solar output was highest in Iowa where these two renewable sources made up 37% of electricity generation last year.

As more consumers are choosing to harness cleaner energy, living in the Midwest or other areas with fewer sunny days is no longer a hurdle to renting or buying solar panels for their homes, according to a study conducted by Redfin, a Seattle-based real estate brokerage, along with Sun Number, a U.S. Department of Energy SunShot-funded startup that developed a patented, automated process for analyzing the solar potential of rooftops.

The analysis concluded that ten Midwestern cities could have the largest potential for solar power. Each city was ranked by a Sun Number and Redfin matched those areas to determine the price of homes that wrote "solar panels" in their listing description and compared the prices of homes which lacked mentioning solar panels.

Adding a solar panels "will likely increase your home's value," according to the U.S. Department of Energy. A study showed that the panels are viewed by potential home buyers as an upgrade, similar to a kitchen has been remodeled or a finished basement. A home with solar panels can elicit a premium of about $15,000 and tend to sell quicker, the U.S Department of Energy said.

Here are the ten largest U.S. cities in the Midwest region with the highest potential for solar power:

  • 1. Columbus, Ohio
  • 2. Chicago
  • 3. Madison, Wis.
  • 4. Dayton, Ohio
  • 5. Cincinnati
  • 6. Milwaukee, Wis.
  • 7. Indianapolis
  • 8. Cleveland
  • 9. Detroit
  • 10. Minneapolis/St. Paul

Renting vs. Buying Panels

But for those looking to utilize solar energy in their home, implementation is a big decision: to buy or rent? 

When solar panels are owned by a third party and not the homeowner, it can delay the sale of a home, said Christina Mathieson, founder of the HomeVolution Program, a West Sayville, New York-based clean energy training company.

"Owning a solar system adds tremendous value to a home," she said. "Going solar has tax advantages in most states whether it's owned or leased and it allows the homeowner to have more control over his monthly living expenses."

When homeowners buy the panels, they are able to lock in a monthly payment which never increases, said Mathieson, who wrote the curriculum for a New York State Department of State continuing education course designed for real estate professionals so they can estimate the value of a home which has solar panels.

"At the end of the term of your loan, the payment goes away but you continue to produce energy -- that you're not buying from the utility -- for 25 years or more depending on the panel you chose and the warranty," she said. "Solar can be appraised on the value of the energy it will produce for it's remaining useful life or the value of the equipment itself when you own it."

Opting to lease the panels has its downfalls because free solar does not exist. Lease agreements mean homeowners must pay a "rental" fee for the equipment and payments often rise on average by 2.9% annually, said Mathieson.

"You're either paying now or you're paying later," she said.

Potential homebuyers might balk when the solar system is owned by a third party, because they can easily purchase a brand new one for the same price or less, said Mathieson.

Another loophole is that there is no pre-payment option on many lease and power purchase agreement contracts which means the owner is contractually obligated to buy the power that the system produces for 20 years on average.

"If the new owner doesn't want that solar system, the current owner must completely pay off the contract in order to sell the house," she said. "If I was buying your home that had a third-party owned solar system attached to it and you owed $32,000 on the balance of the contract, my debt-to-income ratio would increase by that full amount. This often takes a pre-qualified buyer and disqualifies them."

Signing a 20-year contract might be a daunting prospect for many homeowners who are unsure if they will sell their home before then to relocate or purchase a larger or newer home.

"Every homeowner should read what they sign and in the case of the transfer of ownership of a home, it's best to make sure the solar is a part of the deal and not a surprise that you won't own either," said Mathieson. "20 years is a long time for a contract for something you'll never own."

Homeowners could possibly reap a 200% return on a solar investment, which can easily pay for the cost o the installation, said Pete Wilking, CEO of A1A Solar Contracting, a Jacksonville, Fla.-based residential solar contractor.

"A system can save homeowners up to $4 per watt or approximately $15,000 for many homes," he said. "Homebuyers get double rewards. In addition to the energy savings achieved by solar panels, they may also receive tax credits."

Adding solar is likely more advantageous since a kitchen renovation only generates a 60% return, Wilking said.

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