Updated: Apr 12
The costs of solar panels are a serious concern for potential customers, particularly those dealing with the high cost of electricity and wondering what alternatives they have. Solar power, once seen as a fad in power production, has advanced quickly to become a viable alternative in the energy production market. Improvements in the technology are made every year, resulting in more efficient energy production at lower cost.
Energy prices continue to fluctuate, rising on average every year. Solar energy offers families an alternative power source that eliminates the fears of rising or fluctuating costs and could put money back in their pockets. Read on to learn exactly what you are getting when you make the choice to go solar and what you may earn for making that choice.
What You Will Pay for Solar Power
Solar technology costs vary from state to state and depend on the size of the system you choose. The more energy production you want, the more solar-power equipment you will need. An average-sized system that produces 5 kilowatts of power could run as much as $14,000. However, there are many factors to consider that come with that cost, including life-time system savings on energy and a variety of incentive programs that can help reduce that cost.
How to Reduce the Cost of Solar Panels
Most state governments offer some form of tax credit to encourage homeowners to buy a solar-power electric system. Until 2019, the federal government also offers an incentive, a 30% investment tax credit. Many citizens in the Houston area may qualify for the SolarSPARC program which helps reduce the costs of solar-power system installation. The rebate reduces the price by an additional $3,000.
With other programs available in some states, this price could go down even more.
A U.S. government study found that homeowners choosing a smaller company could save up to $5,000 in installation costs. Additionally, comparing companies also gives you access to a wider variety of equipment. If the costs still remain out of reach, you might consider leasing the panels from a company. A third party would cover the entire cost for purchasing and installing the equipment needed and would be responsible for any maintenance costs. The company will charge you a reduced fixed rate for power.
What You Will Save with Solar Panels
But how much will this system save you each month? That depends on the system you installed. A system that produces 13,000 kilowatt-hours per year could provide savings of $150-$200 a month which, depending on your market, could eliminate or drastically reduce your electric bill. That savings could then be used to pay back the loan you took out to install the system. The national average for time spent repaying solar-power systems ranges between seven and 15 years.
In the example discussed above, an owner could pay off a system costing less than $8,000 upfront in four to six years. With an average system lifetime of 20 to 30 years, those savings each month will accumulate. The previously discussed homeowner saving $150 a month from the installed system would pay the loan off using those savings in four years. A homeowner that went on to put that $150 a month into a basic savings account for 20 years would have over $36,000, not accounting for interest. If the system lasts 30 years, that savings climbs to $54,000.
What Do You Choose?
Should you make the plunge and purchase a solar-power system? Beyond the cost considerations for the system, you also need to look at your property to see what kind of direct sun exposure you have to work with. Solar panels can function using direct or scattered light, but they work best with the former.
If you plan on putting the panels on your roof, consider the location of the home. If your home faces north to south with direct or mostly direct light, the roof will work well. Other structures similarly roofed would also work. If you don’t have that location to use, a garage or ground system provide more options for installation.
Whichever system you choose, you will enjoy a boost in home value. The Department of Energy reported value on homes with solar-power technology installed increased up to $15,000.
Knowing what you are buying helps you make smart choices that can drastically reduce your costs while elevating your savings over the lifetime of the system. It frees you from fluctuating energy prices and increases the value of your home. Making the choice to go solar isn’t just good for the earth, it’s good for your wallet, too.