Are you thinking of investing in a solar power system for your home? Renewable energy has become hugely popular over the past several years, but none more so than solar energy. In many countries around the world, households are shifting over to solar technology and investing in residential solar systems to meet the growing demand for affordable and reliable sources of energy.
But how viable are rooftop solar panels for the average home? Are the benefits worth spending on what is still a considerable financial investment?
Is solar panel cost rising or falling?
Before you take the plunge and invest in solar energy systems, it is important to know what you are getting into and what the decision entails. One of the first things you should determine is whether the cost of going solar is increasing or decreasing.
The good news is that the solar system cost has dropped steadily over the past several years. In fact, the prices of photovoltaic (PV) modules have decreased by as much as 99% over the past 40 years. That is a pretty significant decrease by all accounts, and the cost is expected to drop even more in the coming years.
Beyond being aware of the decreasing cost of solar energy, it might also be worthwhile to know the reason for the price drop. Perhaps one of the most significant factors that affect solar panel cost is the increased efficiency of solar panel technology over time.
The first solar cells were developed in the 1800s. Back then, their efficiency was rated at less than 1%, which meant that they weren’t feasible energy sources. By 1954, Bell Laboratories came out with the first silicon solar panel. Although this particular model was significantly more useful, it still only had an efficiency rating of 6%.
The efficiency of rooftop solar panels has gone on a drastic upturn since then, however. It wasn’t long before solar panels were rated at 30% efficiency. Although most commercially available models are rated at 19% to 21%, they are still a lot more efficient than solar panels from only a few years before. Nowadays, it is possible to purchase high-efficiency solar panels that produce 25% more electricity than the standard budget panels that dominated the market just a few years ago.
The significant decrease in prices is one of the main reasons for the widespread popularity of solar panels. While a 6 kW home system would have cost more than $51,000 ten years ago, the price for a similar system now would come out to just over $17,700. And when you subtract the 26% that you could potentially make back in federal tax credit, the cost of going solar is closer to $13,100. This would be enough to cover the electricity usage of an average-sized home.
Swanson’s Law can explain the reduced prices and increased efficiency of solar panels. Named after SunPower founder Richard Swanson, the law states that the price of solar panels decreases by approximately 20% for every twofold increase in solar capacity.
Swanson’s Law actually reflects a phenomenon that is common among many different technologies. With computer technology, for example, desktop systems and laptops today are cheaper than they have ever been, despite the huge increase in computing power as compared to ten years ago.
The implications of lower solar energy costs
The declining cost of solar energy has a number of significant implications for homeowners and anyone else who is considering installing such a system. It is estimated that solar energy will become less expensive than fossil fuels by 2025. The cost of PV electricity has already dropped by as much as 73% from 2010 to the present. In comparison, the cost of onshore wind energy has fallen by 23% during the same period. If the trend persists–and there is every indication that it will–it is expected that all forms of renewable energy will be priced competitively to fossil fuels by 2025.
To illustrate the point more clearly, it is worth comparing the average costs of fossil fuels and renewable energy sources. The worldwide rate for onshore wind energy now averages $0.06 per kWh. Solar energy, on the other hand, averages $0.10 per kWh. In comparison, electricity generated from fossil fuel ranges from $0.05 to $0.17 per kWh. If the price of renewable energy continues on its downward trend, it is estimated that onshore wind and solar PV energy will cost only $0.03 per kWh by 2025.
We don’t have to wait until 2025 to see the benefits of lower renewable energy costs. Even now, it is already cheaper to generate electricity from solar energy than from coal. In fact, it is estimated that as much as 42% of coal production around the world is largely unprofitable and that the United States could save as much as $78 billion by shutting down its coal-based power facilities.
In many parts of the United States, renewable energy is already cheaper than coal. Many state governments realize that building new solar power facilities is actually less costly than maintaining existing coal-fired plants. While the cost of solar and wind energy has dropped considerably since 2009, the cost of coal has only decreased by 9%. The cost of operating nuclear power plants has increased by 23% over the same period. Even setting aside the subsidies that you could potentially get from the government, the cost of renewable energy will be a lot lower than the cost of fossil fuel technologies.
What all this means is that replacing your conventional energy sources with solar power is a financially viable option. In addition to potentially saving a lot of money, you also get all the other benefits of utilizing a renewable and environmentally friendly energy source.
Factors that affect the cost of solar panel installation
Getting solar panels installed involves more than just paying the cost of the panels themselves. There are many other factors to consider that will affect the total cost of going solar. Among the most important factors to consider are:
- Brand and type of solar panels
- The size of the system
- The supplier of the solar panel system
- The cost of permits
- Your home’s design
- The cost of solar panel installation in your state
- Federal tax solar rebates and other financial incentives
Some brands of solar panels are more expensive than others. The difference in price can sometimes be attributed to higher quality materials and more efficient technologies. However, it is just as likely to be due to the cost of marketing and promotions on the part of the company selling the system.
Solar energy companies spend considerable amounts of money to attract customers and encourage them to buy their products. In some cases, solar installers may pass these costs on to you. You may be able to get better deals by comparing plans from different companies. In general, you will get lower rates by dealing with installation companies directly rather than shopping online.
The size of the system will also affect the overall cost. In general, bigger systems will cost more because they require more equipment and materials. They will also require more work and personnel to install, which further adds to the cost.
When deciding on a solar panel system, you will first have to determine how much electricity you need to generate and decide on an appropriate system that will provide a sufficient amount of electricity. Although bigger systems will cost more to install, they will also generate more electricity, which translates into more savings.
The supplier will also affect the cost of your solar panel system. Some installers are directly affiliated with distributors, which means they can purchase equipment and components wholesale or in bulk. This translates into lower costs, with the savings being passed on to the customer.
The cost of permits can add to your overall installation expenses. In most communities, you will have to pay to have your system connected to the power grid. There may also be additional costs associated with getting solar panels installed in your community.
The design and physical characteristics of the home can also affect the cost of solar panel installation. It will be cheaper and easier to install a solar panel system in a house that has a section of the roof facing the sun at the proper angle. On the other hand, it may cost more to install a similar system in a house where the roof design requires special arrangements.
The cost of solar panel installation varies from state to state. This is often due to the different costs of electricity in different states. In places wherein electrical costs are relatively high, it will generally be more expensive to install a solar panel system.
Finally, consider your eligibility for rebates. Depending on where you live, the state and local government and utility companies may offer rebates and other incentives to homeowners that have solar panel systems installed. These perks could reduce the cost of your system by as much as 26%.
How much does it cost to buy solar panels for the average home?
When shopping for solar panels for your home, the most accurate way to calculate the cost is by determining the price per wattage. In the United States, the cost per watt is fairly consistent throughout the country, ranging from $0.85 to $1.25 per watt for a 150-watt to 350-watt system.
Keep in mind that this cost is only for the solar panels. The cost of the inverter, batteries, and other equipment will add considerably to the cost. For a complete solar power system, you could expect to pay from $2.57 to $3.35 per watt. With most average-sized homes, the cost of installing a solar panel system ranges from $11,411 to $14,874 after tax credits.
How many solar panels does my house need?
The number of solar panels needed to supply power to a home depends on the floor area, the number of rooms to be powered, and what devices will be used. For a house with a floor area of approximately 1,500 square feet, the cost of electricity for a month averages about $100. These houses typically require 16 solar panels to supply adequate power.
It may also be necessary to install solar thermal panels to heat water. For a family of four, two solar thermal panels should be sufficient to provide for all the household’s heating needs.
How much can I save by going solar?
One of the most compelling reasons to have a solar panel system installed is saving money on electricity costs. Although reducing emissions and minimizing carbon footprints are significant benefits as well, being able to cut utility bills drastically is undoubtedly one of the most appealing aspects of going solar.
As with most other aspects of solar energy, the amount of money you will save depends on several factors. Among these are:
- The size of your solar panel system
- The cost of electricity in your community
- How much sunlight you receive
- How much you can get in rebates and incentives
The actual figures may vary, but households in Portland save an average of $17,000 over 20 years by going solar. Households in Boston save approximately $43,000 for the same period, while households in Los Angeles can save as much as $50,000.
The amount of time in which you can make back your investment will vary as well. On average, households that install a solar power system will recoup their investment in a little over eight years. However, households in some communities can make back their investments even sooner. In Jersey City, Washington DC, and Boston, for example, most solar-powered households make back their investments in six years or less.
Many websites have savings and cost calculator utilities that will help you determine how much you could potentially save by going solar. Some of the more fully-featured examples will enable you to make accurate estimates based on the electricity costs in your area, your home’s features, and other factors.
How will solar technology affect home value?
Another good reason to have a solar panel system installed in your home is the value that it will add to your property. The direct benefits of going solar are fairly obvious. But not many people realize that such a system will continue to pay off even when they decide to sell off the property.
As mentioned previously, a solar panel system will pay for itself over time. The reduction–and even elimination–of electricity bills could result in the system paying for itself two or even three times over in the course of the system’s lifetime.
Of course, this assumes that the homeowner lives in the same house for the duration of the system’s warranty. But this isn’t always the case. Many homeowners are reluctant to invest in such a system due to the uncertainty of living in the house long enough to recoup their initial investment.
But you don’t even have to make back all your initial expenditure to profit from having a solar panel system installed. All factors being equal, a home with such a system will almost always have a higher value than a similar home without a solar panel system. Apart from raising property values, homes with solar power capacity will also make for more attractive real estate listings, particularly if it is already connected to the community power grid.
So how much value does solar power capability add to a home? It is estimated that solar-equipped homes sell for approximately $16,995 more than similar homes on average. This figure is based on an evaluation of the closing prices of more than 22,800 homes in six states across the United States. More specifically, the study compared the sale prices of more than 3,900 homes with photovoltaic (PV) systems and more than 18,800 without solar power.
Considering that solar panel systems average from $10,000 to 18,000 in materials, it is reasonable for homeowners to expect to recoup most–if not all–the money they have spent on installing the system. And remember, this is on top of the savings that they would have incurred if they had lived in the home for the duration of the warranty period, plus incentives.
Furthermore, solar panel systems don’t count toward property taxes in some states. In some jurisdictions, the presence of PV systems will not affect the property taxes on the home. Although a $15,000 kitchen can result in a significant increase in property taxes, a similarly priced PV system may not count toward the property tax calculation. Keep in mind that this isn’t the case with every community in the United States, so check your local regulations beforehand.
Perhaps the most important thing to take away from all this is that a) many factors can affect the financial viability of solar panel systems, and b) they are definitely worth the investment. You will have to do some research taking into consideration the unique factors of your community, local regulations, your home design, and your homeownership. The one thing that is certain is that solar power is worth considering for any homeowner.
