Solar energy is a hot trend right now. In fact, in the seven years spanning 2006 to 2013, home solar installations grew by more than 1,000 percent! But is solar just a passing fad? As a homeowner, are the long-term savings really worth the up-front price? It’s time to break down how much it costs to install solar panels, how much energy your new investment can produce, and how long it will take you to break even.
Cost to Install Solar Panels
As you might expect, many factors go into the cost of a solar array, especially the number of panels you install. A typical 5 kilowatt (kW) residential solar installation consists of 25 solar panels, which can cost a total of about $25,000 to $35,000, including installation.
This sounds like a lot of money, but consider all the incentives available depending on where you live in the US that bring the upfront cost down:
- Federal income tax credits are available for every US resident and reimburse you 30 percent of the total cost to purchase and install your panels.
- State tax credits are available in a handful of states to bring the cost down further. Many offer $5,000 to $10,000 in tax credits!
- Rebates are available in 29 states and range from $250 per kW or less up to $9,500 total.
- 100 percent sales and property tax exemptions are available in 23 and 26 states respectively.
With all the incentives considered, many US homeowners can go solar for around $10,000 to $15,000. Fewer incentives are available in Canada since popular grant and rebate programs have already expired. However, British Columbia homeowners can still take advantage of HERO incentives up to $6,650.
How Much Energy Do Solar Panels Produce?
Factors including sun exposure and site conditions impact a solar panel’s ability to produce electricity. In general, a 5kW array produces about 500 kilowatt-hours (kWh) of electricity per month. In very sunny regions like New Mexico and Arizona, a 5kW array may generate 750kWh per month.
Long-Term Savings from Solar Panels
The US Energy Information Administration states the average residential electricity rate as of March 2016 is 12.58 cents per kWh. If your system generates 500kWh per month, you save about $63 monthly, or more than $750 per year.
The Canadian Electricity Association reveals the average residential electricity rate in Canada is 10.78 cents per kWh, resulting in a savings of $54 per month, or nearly $650 per year.
With $650 to $750 in savings per year, it would take 13 to 23 years to recoup the initial $10,000 to $15,000 investment. Plus, in addition to reducing your electric bills, some states offer Solar Renewable Energy Certificates (SRECs) to reward solar panel owners for producing clean energy. Net metering is also an opportunity to sell excess energy back to the grid. These opportunities save you money in the coming years and shorten the payback period even more.
Considering that solar panels can last twice as long or longer than the payback period with little to no maintenance and very dependable performance, it’s clear that solar panels provide worthwhile savings! Not only that, but your installation is also good for the environment because it reduces your individual demand for fossil fuels used to produce electricity.
To get the most from your solar array, it’s important to select quality panels that provide high efficiency and a low degradation rate. Your installer should also be knowledgeable to ensure the safest, most productive installation possible.
To learn more about helping the environment and reducing your energy bills with solar panels, contact Rainbow International®.
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