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Solar Panels: Are They Still Worth the Investment for Homeowners (w/o a Battery)?

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Home with electric car, battery, and solar panels


Solar energy has been touted as a game-changer for reducing electricity bills and minimizing environmental impact. As the prices for solar installations have decreased and efficiency has improved, solar panels have increasingly become a viable option for homeowners. But does the math still add up in favor of solar panels, especially given the advent of Net Energy Metering (NEM) 3.0 regulations that alter the economics of solar energy? This article explores the nitty-gritty details of investing in solar panels, with an eye on whether they are truly worth the investment for homeowners without an accompanying battery system.

Understanding Net Energy Metering (NEM)

Before diving into the details, it’s crucial to understand the concept of Net Energy Metering (NEM), a billing mechanism that credits solar energy system owners for the excess electricity they generate. Under NEM, surplus energy is fed back into the grid, and homeowners are credited for it at retail rates.

The Shift to NEM 3.0

The NEM 3.0 policy changes the dynamics of solar panel investments significantly. Under this new policy, the financial credits received from surplus energy have been slashed, making the energy you sell back to the grid far less lucrative. In some cases, the new compensation rates can be almost half of the retail electricity prices.

Solar Panel Costs

Solar panel installation costs have decreased dramatically, but the initial investment can still be a significant amount—typically ranging from $15,000 to $25,000 for a residential installation before incentives and rebates. The actual cost varies depending on multiple factors like system size, location, and the type of panels used.

Savings without Battery Systems

Solar panels can indeed cut down electricity bills, sometimes dramatically. However, the absence of a home battery system means the surplus energy generated by the solar panels goes back to the grid. Under NEM 3.0, this translates to less compensation for the energy fed back, prolonging the payback period for your solar panel investment.

In many instances, the amount credited under NEM 3.0 may not sufficiently offset the capital and maintenance costs of the solar panel system, making the venture less appealing from a purely financial standpoint.

The Case for Battery Systems

Adding a home battery system changes the calculus significantly. A battery system allows homeowners to store the excess energy generated for later use. This is especially useful during peak hours or at night, helping to circumvent the lower feed-in tariffs under NEM 3.0.

Costs and Benefits

Battery systems are not cheap; they can add an additional $9,000 to $15,000 to your initial investment. However, they offer the advantage of making your home virtually energy-independent, providing backup power during outages and the ability to use or sell stored energy when it is most beneficial for you.

Financial Incentives and Tax Breaks

Another element to consider is the availability of financial incentives and tax breaks. While these can reduce the overall investment required, they don’t fundamentally alter the math concerning NEM 3.0 and the diminished returns on surplus energy sold back to the grid.

Environmental Considerations

While the economic benefits of solar panels may be eroding, the environmental argument remains strong. Solar energy is clean, renewable, and reduces your carbon footprint. However, it’s worth noting that the push towards greener energy solutions might also make future NEM adjustments more favorable to solar energy producers.

So, Are Solar Panels Worth It?

If the primary motivation for your investment in solar panels is financial, then under the current circumstances of NEM 3.0, the answer leans towards “No,” unless you also invest in a battery system. The diminished returns on excess energy, combined with the upfront costs and maintenance, can make the investment less than lucrative in the long term without a home battery system.

For those considering solar panels purely on the environmental merits, then the financial aspects may be less of a concern, and the investment may still be considered “worth it” based on your individual values.


Navigating the shifting landscape of solar energy incentives and policies is challenging. The reality is that while solar panels offer many benefits, the introduction of NEM 3.0 has made the financial aspect less straightforward. If you are considering this significant investment, a comprehensive approach that includes a battery storage system is advisable to maximize financial benefits. Even then, each homeowner should assess their specific circumstances, consult professionals, and perhaps most importantly, understand their motivations for making the switch to solar energy.

This article is brought to you by Momentum Electrical Contractors

Specializing in installing hybrid systems that offer multiple forms of generation and smart grid management, Oakland-based Momentum Electrical Contractors are at the forefront of these transformational changes. Their expertise ensures that new residential projects not only meet but exceed the sustainability and resilience expectations of East Bay communities. For all your Oakland electrician needs, Momentum Electrical Contractors is happy to speak to you today!

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