How Much Can You Save with Solar Power?

Saving with solar power is a no brainer. In practically every state, every situation, home owners will save more money on electricity than they will spend to install a residential solar power system. And though the cost of installation can be steep initially, once all of the factors including monthly savings and financial incentives are considered, most home owners will be able to see a significant savings with solar power in years rather than decades.

Why Solar Power Savings Makes Sense

According to a study by the Edison Electric Institute, the cost of electricity prices have increased at a 2.5% annual rate. This is higher than the rate of inflation, and electricity continues to become more valuable every year. Rising fuel costs including coal and natural gas mean that every year, your electricity bill will go up. And there’s no end in sight.

Interestingly, as the price of electricity continues to increase, the cost of residential solar power has fallen significantly. Since 2010, residential installation costs have dropped 45%. Experts believe that the cost of solar power installations will continue to fall as solar power becomes more prevalent across the United States and installations become more efficient.

Many home owners who are interested in avoiding the ever increasing cost of electricity turn to solar power, and it’s a smart move. This is a great way to invest in your home and enjoy clean, renewable energy to power your everyday life.

The Cost of Solar Power Systems

A residential solar power system typically costs just under $3.00 per watt. On the average 4 kilowatt solar power system, that adds up to about $12,000. Of course, there are a number of factors that can make this cost go higher or lower, including the size of your system, installation requirements, manufacturer and labor availability, and soft costs such as local permitting. All factors considered, the national average for solar costs is $17,056, but often, installations are available for less than $10,000 in states with solar friendly incentives.

Solar power is a significant investment in your home, but when you consider the savings potential over 5, 10, or 20 years, you’ll see that you’ll more than make your money back. Often, home owners will see a return on their investment within 10 years, pocketing thousands in electricity savings — and even solar power earnings — after they’ve paid for the cost of the installation.

How Much You Can Save with a Solar Powered System

On average, U.S. residential customers use 10,908 kilowatt hours per year, and an average of 909 kilowatt hours per month. Typically, residential customers will pay about $111.08 per month for those 909 kilowatt hours of electricity.

A 4 kW system will deliver about 5,694 kWh per year, or 468 kWh per month. That means home owners with an average sized residential solar power system will be able to slash their bills practically in half. That adds up to a savings of about $675 per year, and over 20 years, that figure can reach $13,500 — or more.

Additionally, we’ve calculated this savings before all financial incentives available. In many states, you can benefit from tax credits, utility rebates, solar power performance payments, net metering, low cost loans, grants, and more.

These incentives can slash the cost of a residential solar power installation by thousands — sometimes by half or more. It’s not unheard of for home owners to get $2,000 in tax rebates, $7,500 in utility rebates, and then an additional $500 annually in solar power performance payments, for example. If you were to get these benefits (and many do), you’re looking at $19,500 back in your pocket: more than the cost of the installation itself!

States with the Greatest Savings Potential

While there’s no question that you can save on electricity costs with a solar power system installation, there are some states where you can save more than others. Factors including high energy costs, easy access to the sun, and solar friendly state policies mean you can save more — much more — on electricity with solar power in some states. These include:

  1. Hawaii: $64,769
  2. Nevada: $34,761
  3. California: $34,260
  4. Florida: $33,284
  5. New Mexico: $32,898

These states also have the greatest monthly savings potential. On average, solar home owners will save about $84 per month. But in these states, the savings typically reach three figures every month:

  1. Hawaii: $270
  2. Nevada: $145
  3. California: $143
  4. Florida: $139
  5. New Mexico: $137

Curious to find out how much you can save with a solar power system installation? View our directory of solar power information by state to learn how you can take advantage of financial incentives, state policies, and more to maximize your solar power savings.

Photo by Flickr user kubina