Solar Power Cost – What Will It Really Cost You?



No question about it, solar power cost is heavy, and all up front. There is no denying that. But when you realize that a simple 2,500 watt solar power system adds between $8,000 and $10,000 to the value of your home, and as energy costs go up, that value increases as well, those costs don't look as daunting.

Factor in the monthly electric bill savings, and any rebates, incentives and tax deductions, and you have a pretty impressive return (ROI) on your home improvement dollar. But the bottom line for Grid-tie solar entry is $5,000, and is usually more like $20,000 to $30,000 after all installation and permitting costs are considered, and that is a little pricey, for even the biggest pocketbook.

But unlike other home improvement projects, solar costs pay you back in the forms discussed above, and they also have little to no ongoing financial operating costs. Solar power systems last generally more than 25 years, you make the environment and the air you breathe cleaner, and you leave your little corner of the world better than you found it, something that offers your children a great example. Just think about paying for years and years of energy today, and the price looks downright cheap.

But what solar power cost will you pay exactly? Taking the past few years averages, you can expect to invest about $2,000 per kWh per day that you want to save in a standard residential direct-intertie system. This takes into account all of the figures, installation, permits, etc. so it’s your solar power cost total, before any incentives or tax breaks. But direct-intertie begin to replace kWhs from the top down, and those more expensive kWh rates (at the top end of you usage) get replaced first!

This type of solar power system lets you convert most of your electric needs to your own solar energy generation. Every kWh generated by you is one you don't have to buy. You get a hedge against rising energy rates, and once it is set up, every kWh you harness in essence takes one of the kWh right off the top rate you are charged. They generally last as long as your house, reliably crank out savings day in and day out, provide a great example for neighbors, friends and family, and can even be set up to provide to specific circuits in the middle of blackouts (this costs a little more). Isn't the solar power cost crushed by its benefits?

And some states offer 50% of your installed solar power cost back to you in the form of rebates, incentives and tax credits. 50%! With that kind of rebate, you can break even in ten years, and remember, you never break even with the local power company. They always charge you, and they always raise rates. Your initial solar power cost removes those two monkeys off your back. And even with no rebate at all, every solar PV system pays itself off, all the while producing clean, pollution-free energy for your home.

There is a really cool company called Clean Power Research that provides software for evaluating economic data to determine the return and objective performance of different clean energy technologies. They have a web-based solar power cost estimator pre-programmed with utility rates, climate conditions, rebates and other info and can effectively give you an idea about some hard numbers for your specific system.

Another thing to consider is whether you fall under one of the friendlier Net Metering states' regulation. Net Metering was developed in the 90's to allow a small electricity producer (you and me) to sell excess energy at the prevailing rate back to the local utility company. Aside from paying no electric bill if you produced an excess of power, you could then sell back at the highest rate for the day! Talk about minimal solar power cost! No more selling it for 2 cents and buying for 10 cents (just a made-up example of the highest rate on any given day). You effectively have a totally efficient, long-lasting energy producing generator (your local utility provider) that you manipulate without cost or service.

Obviously, this is not a favorite idea of utility companies, who buy your power at 10 cents and resell it to your neighbor for 10 cents. To make thing fair for them, there are caps placed on production, and how long you can keep these credits, etc. As recently as 2007, there was no one nation-wide law regarded Net Metering, but 34 states offer state-wide regulations, and another 7 have some form of Net Metering support. Check out your state at the Database of State Incentives for Renewable Energy

Of course, rebates and tax incentives and deductions are a substantial way to keep your solar power cost as low as possible. The website mentioned above is also a great place to check out up-to-date info regarding rebates, incentives, tax breaks and other clean energy reimbursement plans.

One way to figure your cost is by looking at your specific rates. Take a look at your monthly electric bill, and divide by 30 days. This gives you an average kWh usage per day (U.S. average is 20kWh per day). Now figure what you want to save. You don't need to replace it all to have a dramatic impact on your pocketbook. Let's figure you want to cut it in half, okay?

Based on actual situations seen recently, on a national average, your direct-intertie solar power cost will be about $2,000 per kWh. Want to cut your bill in half? If you have the national average usage listed above, 20kWhs per day, then you need to replace 10 of those kWhs. 10 x $2,000 = solar power costs to you of $20,000. Before you faint, remember this is before rebates and incentives. Also don’t forget your system will eventually pay for itself whereas right now you’re continually throwing your money at the utility company with no ROI whatsoever!

And don't even attempt to cover your entire electrical use. The solar power cost would be monumental, approaching or eclipsing 6 figures, and in most cases, when you produce a surplus of energy, you give it back to the local utility at no cost! Most homeowners are happy to replace 35% to 65% of their bill with a direct-intertie system.

You are allowed to carry a credit over for 30 days usually, but the cost versus the reward just doesn't make sense in most 100% replacement cases, unless you are paying an unreasonably high rate for your power.

Just keep these things in mind, explore every option before taking the plunge, plan well, and you will see that in every case, your benefits and freedoms far outweigh your solar power cost.


Back to Cheap Solar Power
From Solar Power Cost Back to Home Solar Power Guide