I often hear claims that you’ll never pay an electric bill again if you go solar, but that’s not true. The concept of free energy from the sun is appealing, but solar power isn’t actually free. There are costs associated with capturing that energy for use in your home.

Installing a residential solar system doesn’t equate to $0 energy bills. Prices for the solar system and installation vary, but adding solar typically comes with a five-figure price tag. Solar systems only provide power when the sun is shining. You will still rely on your electric co-op for power at night and on overcast days. Most electric utility rate structures include a set monthly service fee. Unless you plan to disconnect from electric service completely, you will still have a monthly electric bill.

Solar may or may not be a good investment for you. Several factors impact how well the investment pencils out, including where you live, home orientation and shading, electric bill rate structure and cost, available incentives and tax credits, and your budget. If you are considering solar, there are three steps to take before making the investment.

Boost your home’s efficiency

It wouldn’t make sense to put a new motor on a boat with holes in it, so why would you put a solar system on an energy-wasting home? Make sure your home is as energy efficient as possible. Invest in reducing wasted energy before investing in creating new energy.

The efficiency updates I recommend before installing solar include insulating and air sealing your home and upgrading to efficient appliances, especially the HVAC system. Energy efficiency upgrades might have a better return on investment than installing solar.

A more efficient home means a smaller and lower-cost solar energy system. Solar systems are typically designed to produce the amount of energy a home uses in a year, so if you complete energy efficiency improvements before installing a solar system, make sure the solar contractor accounts for those energy savings.

Talk with your electric co-op

Check with your electric co-op about the requirements to install solar and how it will impact your bill. If you decide to install solar panels, working with your utility will be essential, as you will need to take important steps, such as signing an interconnection agreement to ensure the system is properly connected to the electric grid.

Consider your options

Get at least three quotes to compare each contractor’s recommended system design, equipment and cost. It’s a significant investment, so you want to know your options. In addition, there are several ways to pay for a solar system. It can be bought outright with cash or financed by a loan. State and federal tax incentives can help offset the costs.

There is also the option to install solar through a lease or power purchase agreement. In this structure, a third party (usually the solar installer) owns the system. They install the system on your property and then sell you the energy produced at a predetermined rate. They are responsible for maintaining the system and own it at the end of the agreement term.

Loans, leases and power purchase agreements can impact the sale of a home. Although a solar system may increase the value of your home, some buyers and lenders are not interested in taking on leases or power purchase agreements.

Before you make the leap to invest in solar, improve your home’s energy efficiency and empower yourself by thoroughly weighing the costs and benefits.