The Cost of a Home Solar Power System
Solar power is an increasingly popular option for home owners seeking savings on their energy costs, while also enjoying clean, renewable energy. Between 2013 and 2014, the number of residential solar installations increased by 51%.
Clearly, residential solar power is becoming a more attractive option for home owners in America. Can you afford to join them? As residential solar power systems can be expected to result in a net monthly savings, the answer for every home owner is a resounding yes. But how much does solar power cost, exactly?
Most solar power home owners in America can expect a solar energy system to cost between $5 to $8 per watt of solar capacity. That means the typical 3 kilowatt (3,000 watt) system costs between $15,000 and $24,000 to install.
That’s the short answer. The long answer is that the true cost of a solar power installation for your home can fluctuate depending on a number of factors including your roof configuration, available financial incentives, and prices dropping as the cost of solar power installations gets cheaper over time. Read on to learn more about how you can plan for solar installation costs, and save money on your electricity for decades.
Solar Power Cost Factors
It’s tough to put a single price tag on a residential solar power system. Unlike, say, a particular pair of shoes, a solar power system installation depends on a number of factors, many of which are entirely unique to your home. Factors that can influence the cost of installing solar power in your home include:
- Available roof space and configuration: Not all roofs receive sunlight in the same way, with some benefiting from lots of available unshaded roof space, and others working around significant shade. The type of roof, slope, and more all play a factor. If you have a challenging roof space for solar power, installation costs can increase as alternative installations are implemented, or on a shady roof, you may have to increase the number of solar panels installed to receive adequate solar power. Roofs facing south with typically be ideal to receive the most sunlight.
- Solar power system size: You’ll need an area that is large enough to accommodate the size of your solar power system.
- Permits and restrictions: Home owner’s association interference and local permits can increase the cost of installation.
There are also a number of factors that make a difference for how much you can save with solar power. These are some of the factors that can influence how much you’ll save with solar power — and how quickly you’ll recoup your installation costs:
- How much energy you use: Your current energy costs and usage will influence the amount of savings you’ll see from your solar investment. Typically, you can expect to replace at least 40% of your energy with solar power.
- Net metering policies: Net metering is available nationwide, but some states and municipalities have better policies than others. Some offer credits for your excess solar energy at the full retail rate, while others simply give a credit at the utility’s avoided cost rate. In some states, net metering customers may have to pay a fee to access the grid.
- Available incentives: The policies on tax credits, rebates, and other state and local incentives in your area can make a significant difference. For example, some states can offer solar rebates of $7,500 or more, while some offer none. You can learn more about incentives in your area in our state profiles, or from the Database of State Incentives for Renewables & Efficiency.
- Length of home ownership: Residential solar power systems are typically designed to last 20 years. Will you still live in your home 20 years from now? You’ll see the most savings if you stick around. Of course, having a solar power system will significantly increase the value of your home at resale, particularly if your state has property tax exemption. Solar power contracts typically transfer to new owners.
Solar Power Costs Continue to Fall
Another factor working for home owners interested in solar power is the constant decline of costs to install solar powered systems. Year after year, residential solar power gets cheaper to install. This is in stark comparison to grid power, as utility companies increase electricity rates year after year.
As the industry scales, prices will continue to improve. Scaled up manufacturing, improved materials, and more experienced and trained installers are driving down the cost of installing solar power for home owners.
However, that doesn’t mean you should wait long to start your solar power system installation. In many states, incentives for solar home owners are limited, and if you wait, you could miss out on valuable rebates, solar credit purchases from your utility, and other perks that can far outweigh the savings of waiting for a lower price to come around.
Solar Power Affordability
With an average price tag typically between $15,000 and $24,000, residential solar power may seem like a luxury that’s simply out of reach for many home owners. However, in addition to financial incentives such as rebates and tax credits, there are a number of options that make it easier to turn your solar power dreams into a reality.
Experts point out the benefits of solar leasing, which allows you to lease the solar panel installation on your home. Under a power purchase agreement, you’ll pay a fixed monthly amount for your solar panel installation. In most cases, solar power will significantly reduce if not eliminate your electricity bill, and the monthly lease payment will be less than the original monthly utility bill, resulting in a net savings every month. This helps you avoid the significant upfront cost of installation, while still enjoying the rebates, energy credits, and savings of having a residential solar power system.
Another excellent financing option for solar power, Property Assessed Clean Energy (PACE) financing, is available in many areas. Under PACE, home owners receive financing from local governments for their solar power installation, and then pay back the loan over years as a special assessment on their property tax. The loans are typically low cost, saving home owners significantly over the cost of a traditional loan.
Ultimately, home owners can expect to see a net monthly savings on energy costs with a solar power system. This can add up to thousands in savings over the life of the system, while offering stability in energy prices and the peace of mind that comes from using clean, renewable energy for your home’s electricity needs.
Photo by Flickr user quinnanya
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