How much can a home solar energy system save you?

How much can a home solar energy system save you?

Why solar power for home can’t wait

Written by Andrew Sendy

Updated August 12, 2021

5 minutes read

Categories: Solar 101, Solar efficiency, Solar energy, Solar incentives, Solar panels, Solar power

Why solar power for home can't wait

According to the United States Energy Information Administration, solar power installations in America are expected to produce 305,000 MWh of usable energy each day in 2019. That is enough to provide millions of homes with clean, efficient, and affordable electricity.

What is puzzling, however, is that installations of residential solar power systems are actually down in 2018. Notwithstanding the fact, the 30% federal tax credit remains, net metering remains and in dollars per watt terms home solar systems are cheaper than they have ever been.

Intense competition between solar companies has pushed down solar panel costs despite the introduction of a 30% import tariff on solar panels by the Trump administration at the beginning of 2018. This increases the cost per watt of imported modules for a short period before cheaper manufacturing costs in China reduced the wholesale price of modules enough to negate the import tariff.

So why then is residential solar panel installation not booming ahead? The answer seems to lay in a lack of education and awareness of the investment return that can be achieved by installing solar panels on a house. Homeowners simply don’t know how good of an investment solar panels for home are, and they don’t know how to work out how many solar panels are needed to power a home. This article will show you tools to work out system size, the cost of your system, how much the solar tax credit will reduce the system cost and (based on your electricity rates) how much solar will save you.

While solar energy does require a heavy upfront cash investment, they last 25 years and over this time they are a much more cost-effective way of powering your home than continuing to pay your electricity bill to your utility company.

What is the Current Price for Residential Solar Installations?

Each residential solar installation is unique. The final cost of solar installation depends on many factors. These include:

  • Your location. Some rebate programs and tax benefits are only available in certain states. Get a more accurate idea of prices in your area with this handy list.
  • Available cooperative options. Solar communities are group projects that allow individuals to invest cash in a collective solar farm.
  • The type of panel you choose. Used panels can cut your upfront liability, but they aren’t always a good bargain.

Your energy needs also have a large impact on your out-of-pocket installation fees. Bigger homes need more panels, which will increase your costs.

How Much Does the Average Homeowner Save by Switching to Solar?

Once again, the price of residential solar power generation per kWh varies. Factors that impact your monthly costs include:

  • Your agreement with the local utility company. Some companies will buy your excess energy. This can significantly lower your monthly payments.
  • Your initial residential solar installation investment. The time it takes your savings to catch up with your initial investment is called the solar payback period.
  • How much energy you generate. Producing more energy makes you less dependent on grid energy and saves you dollars.

Energy savings are best understood as costs avoided rather than lower prices. The US Energy Information Administration calculated the average cost of residential power from all sources in July 2018 to be 13.12 cents per kWh. Thus, after your solar payback period, every kWh of solar energy you produce saves you 13.12 cents.

How Much Will a Solar Power Installation Cost for Your Home?

The average cost for a new residential solar installation is $22,821. Depending on the options you choose, your final price tag could sit anywhere between $2000 and $40,000. Buying used solar panels and installing them yourself can save you a lot of time. However, your lack of expertise can compromise your outcomes. Choosing higher quality materials does inflate your upfront costs. However, new panels are likely to last longer, which saves you maintenance and replacement costs over time.

The best way to find out how much you’re likely to pay for a system is to get a quote from a local solar installation company. Representatives can help you understand how much power you can expect from your property, which equipment works best, and what your out-of-pocket expenses should be.

What Rebates and Tax Credits Are Available for New Solar Installations?

The Residential Renewable Energy Tax Credit is a federal program that allows homeowners to claim up to 30% of their initial investment into solar energy as a credit to their yearly tax bill. Currently, the program is set to expire on December 31, 2021. In order to take advantage, systems need to be in service before that date.

Many states offer incentives to encourage their residents to switch to solar. Others have instituted policies that support efforts toward renewable energy. Find out what’s available in your state here.

Solar panel manufacturers frequently offer special deals and rebates to encourage the purchase of specific models. Talk to your solar installation representative for more information on these programs.

How Many Solar Panels Do You Need to Power Your Home?

The amount of photovoltaic energy produced by your solar panel depends on its size, shape, and the material from which it is constructed. Other factors like placement and the number of hours of sunlight the panels are exposed to affect your energy outputs too. Use this solar panel estimator to get a more accurate idea of what your new solar installation will need.

Is Solar Energy Cost-Effective?

As technology improves, more homeowners adopt solar power, and governments continue to encourage its use, the price of solar continues to plummet. Since 2010, the median installed price of solar energy has fallen from $7 per watt to just over $2 per watt in 2015. While market conditions, supply issues, and political trends cause periodic fluctuations, the price of solar energy is likely to continue falling.

While the price of solar energy is still slightly higher than energy from more traditional sources, investing is still an intelligent financial move. In 2017, the average monthly utility bill in the United States was $111.67. After achieving solar payback, many homeowners no longer receive a utility bill. Others may receive copious credits during the summer months that help them offset the expense of grid power during the winter. Residential solar installations are a long-term investment that continues to pay off for many years.

Get more specific information on how cost-effective solar energy is in your area. Contact an installation company in your area to see how solar can work for you.

Author: Andrew Sendy Andrew Sendy LinkedIn

As chairman of Solar Investments Inc and chairman of the largest solar panel installation company in South Australia, Andy is passionate about solar power. With his unique working background he writes on the residential solar industry in America from a unique perspective.