To go greener, switching to solar power has become an attractive option for homes and businesses around the world. But how much do solar panels cost? "It can really depend," says Fluke's solar power specialist, CEO Will White. “If you have a 1,500-square-foot house that uses a lot of energy and a 12,000-square-foot mansion where you don’t use a lot of energy, the cost of solar panels will be very different.” In this AD guide, you'll learn everything you need to know about the financial implications of solar energy, including upfront costs, tax credit opportunities and other solar incentives, and long-term return on investment.
How much do solar panels cost?
“The average cost to install solar panels in the United States will be between $15,000 and $30,000,” says Crystal Perso, co-founder of Wildgrid Home, an online home electrification education platform designed to help homeowners move away from fossil fuels. Naturally, this number is a wide range. "That's because every solar system is unique, but generally the bigger the roof, the more panels you need and the higher the overall cost," he said.
How is the cost of a solar panel calculated?
While the average total cost of solar systems is between $15,000 and $30,000, most solar power companies actually price their services on a cost-per-watt basis. “Three dollars a watt is pretty standard,” says Perso. "The average home can have five to six kilowatts of system (that's roughly every 1,000), so you could get anywhere from $15,000 to $20,000."
During the buying process, homeowners often approach various solar companies and installers to request a quote. “They will come and look at your site, find out how much space you have, what are your electrical limits, what is your annual energy consumption, and then they will design a system specifically for that house,” he said. . . . . solar panel installer.
To determine the cost of each project, a solar power installation company will consider several factors and calculate the cost per watt. Although, as Perso explains, the final price for the consumer is largely determined by its energy consumption. "You'll get a solar energy estimate based on your previous electricity bill," he explains. If your bill tends to go up because you use more power, your system will need more panels to meet your power needs. Likewise, if your bill is due due, you probably won't need the system, hence the low price.
“If you have a very small house but very high energy bills, your roof may not be big enough to hold all the panels, so you may need panels anchored to the ground,” Perso says of the various systems that can be installed. . “Or you might have a huge house and a very small monthly electricity bill, which is usually not there, but you might not need to cover the roof and panels – let's just say no. You may only need 10 pieces.”
What affects the price of a solar panel?
White points to a site called Energy Sage, which allows homeowners to compare the prices of different solar providers in the area. However, the question arises why pricing can vary so much between companies, usually for the same type of solution. Consider the following factors that affect the price a company can offer. “I like to think of it as different layers that contribute to the final sum,” Perso says.
Product
The first "hard" offer is usually the product itself. There are many brands of solar panels on the market, and their prices vary. “Some are inexpensive, some are more expensive,” says Perso. The price difference is usually related to the efficiency of the panel, which is the percentage of sunlight that reaches the panel and is converted into usable energy. The best solar panels usually have the highest efficiency. “SunPower produces one of the most expensive panels on the market, but its efficiency is 22%, which may seem low but is actually very high in the solar industry,” adds Perso. "So SunPower's offer could be closer to $4/watt."
system size
The size of a solar system also greatly affects its value. It is understood that a larger system requiring more panels will typically cost more than a smaller system.
Installation Requirements
The installation area will also affect the cost of the solar system. “Do you want solar panels in your garage but need extra wiring because your meter is in the basement? A full journey can cost about $2,000 more,” Perso said. “You want the valve to be hidden so you have to dig a trench? This is something that often happens to clients. »
Position
When considering the average cost of solar energy, it is also important to consider the location and installation conditions of the system. “I live in Vermont, where there's not a lot of bureaucracy around solar energy,” White says. "So our costs are a little lower than in states like Massachusetts or New York, where there are a lot of permits and other processes that add to the cost of the system."
Additional Factors Affecting Solar Panel Cost
Other factors that can determine the cost of installing solar panels include labor costs, market competition, and "add-ons" to the system such as solar panels.
Financial Benefits of Solar Energy
While switching to solar energy may require a significant initial investment, there are also many financial and tax benefits to consider.
federal incentives
In the United States, the federal government offers a federal tax credit for solar energy. "It's a 30 percent federal tax credit," says Perso. “That means if your signs are worth $15,000, 30% of that amount is $5,000. Then you can deduct your $5,000 of taxable income and deduct that." It is sometimes referred to as an investment tax credit, or ITC, but as the Energy Efficiency and Renewable Energy Authority explains, this special credit for residential solar panels is different from the ITCs offered to companies that own solar systems.
local incentives
Depending on where you install solar panels, city or state incentives may be considered. Not all states offer this; However, when considering the cost of a solar panel, it's worth doing a little research in your area. At the state level, incentives often take the form of discounts or low-interest solar credits that make it easier to purchase a solar system.
pure measure
“When you switch to solar, they put in a two-way meter that measures how much electricity comes into your home for use and how much goes out of your house to the grid because your solar panel system is producing electricity,” Perso says. . . . This is especially important for a concept known as net metering, which allows solar plant owners to sell unused energy from their solar panels to utility companies. “If you have solar panels but personally pay less for electricity, you will just get a loan or pay for the extra energy you get,” says Perso. However, not all states participate in e-commerce, so it's important to check if it's available in your area.
Long-term return on investment
By purchasing solar panels, you can eliminate or significantly reduce your monthly energy bills. Once you own a home source of electricity, you no longer have to pay utility companies for electricity from the grid. These savings can be in the thousands of dollars a year, but exact numbers depend on the average household electricity consumption and the cost of electricity in the area.
Improved home value
If you ever decide to sell your home, installing solar panels can add value to your home. As this article explains, according to the National Renewable Energy Laboratory (NREL), for every dollar saved on your energy bill by using solar power, your home's value typically increases by $20. For example, if a homeowner saves $1,000 a year with solar power. In terms of energy, the value of your home will increase by about $20,000.
Solar Panel System Payment Options
There are many different ways to pay for solar systems, each with its own benefits. Consider the following common buying scenarios.
Variety
Paying in cash is usually the cheapest long-term option for solar panels. Because it eliminates interest rates and allows homeowners to take advantage of meters earlier, tax credits and reduced energy costs.
solar credit
A solar loan allows homeowners to apply for a loan, usually from a bank or a solar company, to purchase a solar system that will pay off over time. Although homeowners will pay interest on these financing options, they must ensure that their monthly payments are less than or equal to their regular utility bills during the payment period. “I always advise people to negotiate a monthly payment that is equal to or less than the electricity bill,” says Perso, “because then you never pay for solar energy, you just replace it.”
electricity purchase and sale agreement
Thanks to power purchase agreements, sometimes called PPAs, homeowners don't own solar equipment but can still run their homes on clean energy. Often, a solar energy company will design a system for little or no cost, and then pay the owner the same way it pays any other utility company for the number of kilowatt hours of electricity used per month. The company usually sells excess electricity generated by the system to other buyers. In this case, the owner is not responsible for many of the initial costs and does not have to pay for repairs. However, they are not eligible for tax credits, meters, or other benefits because they do not own the equipment.
Plot rental
Like the PPA, solar leasing is another option where a third party owns the solar equipment. Instead of paying after the fact, homeowners accept a fixed monthly payment from the solar company for a set period of time, often 20 years. As with a power purchase agreement, owners may not own the equipment, but can often purchase the solar system at a reduced price at the end of the lease.
sun community
Finally, public solar power allows a group of people to purchase a large-scale solar system. This option may be of interest to tenants or those who live in apartments or condominiums and cannot install panels in their home. Many stakeholders can benefit from the program, including individuals, businesses, and non-profit organizations. Program options often vary, including whether interested parties can buy or rent signage or enjoy tax incentives.
Choose the right payment option
White and Perso agree that in most cases it is better to buy a solar system with cash or credit. “Owning the system will be more financially beneficial,” says White, as people will be able to take advantage of all the incentives that ownership brings. However, for those who are retired or have no tax liability, owning third party property can make sense. “Rent is more likely to be sold to people who are retiring and may not have taxable income,” says Perso. “You may not be eligible for a tax credit, but you can switch to solar with minimal risk.” While owning a system places the responsibility for maintenance and repairs on the owner, Perso and White explain that there are often warranties from solar companies and installers that minimize this risk. “Depending on the warranty, they may include different types of service; like something broke, they came back,” says Perso.
Other FAQs
Are solar panels worth it?
Like any clean energy, solar panels can significantly reduce carbon emissions for every person. Financially, it can be a good investment to increase the value of your home while lowering your taxable income and utility bills. However, each situation is different, and it may be helpful to speak with a tax advisor or financial planner to determine potential returns.
How long do solar panels last?
Solar panels should last 25-30 years, and most manufacturers offer a warranty for this period in case of failure.
How long does it take for solar panels to pay off?
According to Perso and White, most solar systems will pay off in 7 to 9 years. At this point, if the homeowner bought the panels with cash, the initial installation cost will be equal to the amount the homeowner pays for electricity.
Is it possible to save money by making a solar system with your own hands?
Perso and White recommend trying a DIY solar installation, although it sounds like a good way to save money. "I don't recommend doing that," White says. "Unless you're an experienced electrician or a solar installer." However, there are a few small homemade systems that can be purchased and installed relatively easily, but are not large enough to power an entire house.
It was originally published in Architectural Digest.
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