Home Solar Power: Cost v.
Savings
By Althea
Chang
Installing solar panels, or photovoltaic cells, is a great way to reduce
harmful pollution and
lower your electricity bills, if you have the money to spend
upfront.
For the average family of four, living in a single family home, that
means an investment of
around $30,000.
Like any investment, there are returns that can be gained over time.
In this case they include tax rebates in addition to future savings
on utility bills.
But before you find an installer and start making plans for the
money you’ll save by going solar, you may want to consider how long
it will take for this investment to pay off.
Tax Incentives Are a Start
To support the use of solar and other renewable sources of power,
the IRS offers an energy
tax credit in
2009 for 30% of the cost of qualified alternative energy equipment.
And depending on where you live, you may be able to get state
income tax credits,
a sales tax exemption on your purchase and a property tax exemption.
Take
To find out what kind of incentives your state offers for installing
solar cells in your home, visit the Database of
State Incentives for Renewables & Efficiency at
DSIREUSA.org.
Recouping Upfront Costs: By the Numbers
If you think $30,000, or even $5,400, is a high price to pay,
consider that the use of solar cells now costs less than 1% of what
it did in the 1970s, according to the Energy Efficiency and
Renewable Energy division of the U.S. Department of Energy.
Still, it could take more than six years for you to recoup the cost
of the average home system, according to Broadpoint.AmTech, a
technology research firm.
In its calculations, the firm assumes an average cost of $28,000 to
equip a home with solar panels and an estimated tax rebate of
$10,000. The firm also assumes you’re paying 17 cents per kilowatt
hour for conventional electricity, which you’ll still need to pay
for from time to time. At these numbers, if you receive six full
hours of sunshine a day, it would take about six and a half years
for your investment to pay off, the firm estimates. If you change
the price of electricity to 11 cents per kilowatt hour, the average
according to the federal government’s Energy Information
Administration, it’ll take almost 10 years based on
Broadpoint’s equation.
Of course, that's just the start: If you do have that kind of cash
on hand, using solar panels could actually make potential future
electricity price increases less of a concern.
Electricity Savings Can Vary
How much you actually save in electricity also depends on your
location, how
energy efficient your home is and
what other changes you make to
improve your home's energy efficiency.
Solar power works best in an energy efficient building, the
Department of Energy says, so adding insulation, energy efficient
lighting, appliances and windows goes far to reduce
your home’s electricity use before
you install your system.
Net Measuring a Local Benefit
Some utility companies use a measurement system called net metering,
which could add to your savings.
With net metering, when your photovoltaic system generates more
power than you need, the excess energy you create goes back to the
grid and makes your meter run backward, in effect paying you for the
energy you contribute.
For example, in
