Using Alternative Energy Sources to Improve Your Home's Resilience

As the impact of extreme weather and climate change grows, energy systems have been more taxed than usual. If you're a property owner, installing alternative energy sources off the grid can provide additional security against such events. They can also raise your home's value.

If you're considering adding an alternative energy source as a home improvement project or to increase the value of your home, here's what you should know.

Alternative energy options

There are three major alternative energy sources available to homeowners.

• Solar: The most popular alternative energy source converts sunlight into energy using photovoltaic cells, which then feed a home's electrical system or collect in storage batteries. Solar panels also power a new generation of portable generators, which can supplement needs.
• Wind: Harnessing wind power for energy goes back millennia and remains an option today for home use, depending on wind conditions in your area and local bylaws regarding wind turbines.
• Water: Microhydropower for homes uses water flow—from a river, for example—and a turbine, pump or waterwheel to harness and convert rotational energy into electricity.

Storing energy

As you generate energy, you'll want to store some portion of it to use if there's a power cut or loss in the grid. For this, you'll need an inverter, which regulates the flow coming from your alternative energy source and then converts the energy for usage or storage in your home. Large wall batteries can hold the power, but the type, age, size and number of batteries—plus your general energy usage—determine how long the energy lasts. This can be anywhere from a few hours to a full day or more.

Some states allow alternative energy produced by homeowners to be sold or banked with the local grid system for later use or to reduce their on-grid electrical bills. This is also known as net metering. In other areas, alternative energy power sources simply operate as backup power if the grid goes down.

Financing options

The cost to install an alternative energy source varies based on the system type, size, location and available financial incentives. Nevertheless, it generally requires a significant upfront cost.

For example, the average cost of a home solar panel installation in the US ranges between $12,600 and $31,500 after tax credits. This cost can increase to $40,000 or more after adding batteries and other equipment. Some areas also require purchasing both solar installation permits and inspections.

Some property owners finance projects through a home improvement loan, home equity line of credit or cash-out refinance. Leasing is another option, which involves paying a monthly fee to the company that owns the equipment. Terms vary by company, but you may have the option to buy out your lease after a period of time.

Incentives and rebates

The good news is that many states and municipalities support alternative energy sources with rebates, grants and other financing programs. Homeowners can get up to a 30% federal tax credit for solar panels installed from 2020 to 2022 and a 26% credit for those installed in 2023, with no maximum amount to claim.

Impact on home value

Adding an alternative energy option isn't just about improving security against power loss—it may also increase a property's value. Location plays a role in just how much these home values increase. In fact, more than 80% of buyers say energy-efficient features are important when selecting their home.

The bottom line

If you're interested in adding an alternative energy source to your home, first consider your household needs, available space, budget, financial incentives and added property value before making what may be a significant long-term investment—even with available incentives. The peace of mind an alternative energy system can bring, however, may be invaluable.