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Installing solar panel systems comes with various benefits for homeowners. Solar panels are a good investment for any home as they will lower your electricity bill while you earn money from selling excess power to the grid. Plus, using solar energy is a practical way to help save the environment. 

While it is wise to understand the general benefits of solar power installation, it depends on several factors. The first is your local climate. If you are in a cloudy location, or in a cold climate with very short winter days, the output will be less than where the climate is sunnier and closer to the equator. The second is the actual location of the panels on your house. Are they facing the right way, and free from shading? A third related to the financial benefit is based on your electricity tariff, and what “feed-in tariff” is offered by your electricity provider. A feed-in tariff is the amount paid for each kWh that you don’t use and instead sell as excess power to the grid. 

Are solar panels a good investment? Let’s explore how it works and the significant return if everything works well.

Infographic of the efficiencies of most solar panels sold in 2020

How Does Solar Panels Work

To understand how solar panels work, we answer basic questions:

What are solar panels?

Photovoltaic (PV) solar panels consist of numerous solar cells, typically made of silicon – the same material that composes microelectronics. The panels come with a positive and a negative layer. They form an electric field similar to the setup of a battery. 

How do solar panels produce electricity?

Let’s say you have solar panels installed on your rooftop. The first part of the process involves sunlight hitting the panels, generating a DC current from the energy. It then moves to an inverter that turns the DC electricity into AC. The resulting electricity then powers different parts of your home as well as any excess energy being fed into your local grid. In some installations batteries may be included, so that you can store excess power generated and use it at other times.  

The Challenges of Residential Solar Panels

Residential solar panels are fast becoming a trend, especially with legal and corporate moves designed to transition to renewable energy sources. Industry maturity varies by country, countries which have had generous solar subsidies for many years have more advanced solar industries than those which don’t. However, in general, residential rooftop solar photo-voltaic (solar PV) panels are highly reliable, with long life. 

Roof Problems

The weight of solar panels mean that they may be too heavy for some roofs. When you are getting a quotation on a solar system, ask the installer if this will be a problem. This is generally not a problem with residential solar systems, but may be a problem on commercial building with large flat roofs. 

Internal Corrosion

Internal corrosion happens when moisture penetrates the panel. This may cause a loss of electrical connection. However this is not a common problem. And many solar PV panels now come with 20 or 25 year warranties.  


Solar panels commonly suffer from micro-cracks, leading to inefficiency and ineffectiveness of the entire system. Sadly, naked eyes won’t see these tiny cracks on the panel. But they may worsen as time pass, especially with unpredictable weather. Among the reasons for micro-cracks are reckless shipping practices, faults in manufacture, cracks the occur during the installation, and thermal conditions.

Electrical Problems

Solar panels cannot perform well with faulty wiring. Oxidation, corrosion, and unstable connections will interfere with electricity generation. Don’t attempt to fix the wiring system if you don’t have the technical expertise. In many countries, tampering with solar panel wiring is punishable if you don’t have an electrical license. Allow a licensed electrician to check any wiring problems. 

PID Effect

Potential Induced Degradation (PID) happens with a voltage difference between the solar and earthing panels. This results in a reduction of voltage discharged by the primary power circuit. Aside from lowering the solar panels’ lifespan, PID reduces their efficiency and weakens performance.  

Hot Spots

Hot spots are a primary concern with solar panels since they can make them irreparable or cause significant malfunction. Hot spots happen when dirt accumulates on the panels or there are poor wiring connections. They also occur when the panels are overloaded. All these things reduce the amount of energy the panels can generate while they also lower the panels’ lifespan. 


Who would not love seeing birds settling on their home? It’s a beautiful sight, but birds become a problem when they poo on the solar panels, making the panels dirty and reducing solar production.  

Inverter Issues

An inverter is a component of a solar panel system that turns the direct current from the sun into an alternating current that powers your home and its devices. It is typically positioned on an upper floor, near the solar panels. The problem is that inverters are not as durable as solar panels; and depending on the location you may have to change the inverter every 10-15 years. Inverters installed inside the building tend to last longer than those which are installed outside. 

Infographic of how solar panels can produce power even without direct sunlight

The Probable Returns: Are Solar Panels a Good Investment Through Data

Given the increasing support for renewable energy sources, resorting to solar panels can significantly cut a homeowner’s electricity costs. The below table shows how U.S. residents can benefit from the transition. The same trend is also happening in other countries such as the

United Kingdom and rising economies like India. In Australia 30% of free-standing homes have solar PV on their roofs!

How Much Can You Save From Solar Panels?

U.S. Electricity Average Consumption13.06 cents per kilowatt-hour
Yearly Electricity Consumption10,972 kilowatt-hours
General Electric Sector Inflation Rate2.35%
Overall 20-Year Cost Without Solar$ 36,059
Standard 6-Kilowatt Solar Panel Cost
(Factoring the 26% Federal Tax Credit)
$ 11,722
Overall 20-Year Cost with Solar$ 13,885
Overall 20-Year Solar Savings$ 22,174

The above table shows how much residents can save when using solar panels as an energy source long term. It’s a no-brainer since fossil fuels such as natural gas are becoming more expensive, causing electricity costs to escalate. Solar panels have had price reductions for many years, and efficiency continues to improve. Manufacturer warranties are also much longer than they used to be. 

While the total 20-year costs with solar amounts to $13,885, you can save as much as $22,174 in the same period. The longer you use solar panels, the more savings you will enjoy. You can say that they are a long-term investment. 


Investing in solar panels for your home is like buying blue-chip stocks. In other words, you will have to shell out the initial costs, but as long as conditions are right, you’ll reap sustainable returns in the long run. 

Of note, both government and corporate institutions are pushing for renewable energy options, and solar panels are integral to it. This trend will help the global society move forward. By installing solar panels in your home, you won’t miss out. So, are solar panels a good investment? Indeed, they are!

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