You can’t live without electricity in the modern age; all the essentials of life, from heat to video games, run off the stuff. And for most of us, the only option for powering up our homes has been to pay a utility to pump it in, at an average cost about $137 every month. That’s probably not your largest bill every month, but it’s still a big bite out of a paycheck, especially since everything else seems to be rising in cost all the time.
If you’re looking to save money on your electric bill, you’ve probably considered the possibility of solar power. But leveraging sunlight to power your home is a big project with big costs. How big? That depends on several factors, including your power needs, the type of solar panels you install, and the tax breaks you qualify for.
Overall cost
The average cost of installing solar panels on your home is about $25,000, but the actual cost will vary greatly—and you need to consider the potential savings you’ll enjoy when you’re producing your own power (and possibly even selling excess power back to your utility as a result). Most solar installations pay for themselves in six to 12 years, which makes them a good investment—as long as you plan to remain in the home long enough to enjoy them.
There are several factors to consider when estimating the cost of installing solar panels:
Usage. The size of your solar panel installation depends on how much electricity you need. The average household in the U.S. uses about 900 kilowatt-hours (kWh) of juice every month, or roughly 11,000 kWh every year. You can see your own usage by looking at a current utility bill, which will show you exactly how many kWh your home uses in a month. Solar installations are priced by the watt, and the average cost is about $3 per watt. So if you’re having a 6kWh system installed (which will produce about 8,400 kWh every year), that’s $3 X 6,000 watts, or about $18,000.
One thing to keep in mind is that you don’t have to cover all of your electricity costs—installing a 4kWh system that produces about 5,600 kWh per year will still lower your overall energy costs.
Type. Panels can be composed of different materials that offer different levels of efficiency, which is a measure of how effectively they convert sunlight into electricity. As with most things, you can go cheaper and less efficient, or pay more for a superior experience. There are four main categories of solar panels:
Monocrystalline. These are the most expensive types of solar panels, but also the most efficient. Their wholesale cost (not including labor and other costs your contractor may pass on to you) is usually between $0.75 and $1.50 per panel, but they offer efficiency ratings between 15-20%, sometimes higher.
Polycrystalline. These are slightly cheaper, typically wholesaling under $1 per panel, but their efficiency rating is also lower (meaning you’ll get less power from them), topping out at about 16%.
Thin-film. Considered the “budget” option, these typically cost about $0.30 to $0.60 per panel, but offer efficiencies typically below 15%.
Shingles. Solar shingles are designed to resemble traditional roof shingles, avoiding the ugly and obtrusive grid of panels bolted to your roof. They’re pretty efficient, ranging between 14% and 18%, but they’re also much more expensive—averaging about $55,000 per installation. If aesthetics matter more than money to you, they’re a perfectly good choice.
Another consideration is whether or not to use a battery storage system, which “banks” the power you generate but don’t need immediately. The battery can then kick in during blackouts, keeping the lights on. But this is costly—whole house batteries can add $10-20,000 to the project costs.
Incentives
Another factor that will impact the overall cost of a solar installation is the incentives you can qualify for. The Federal Tax Credit for Solar Photovoltaics can get you up to 30% of the cost of your installation back as a tax credit, though you have to wait until you file your taxes to see the benefit. That’s a huge break, though—if you pay $18,000 upfront to add solar panels, you can get $6,000 of it back next year as a break on your taxes.
There are also state tax credit programs and other incentives like utility rebates that can defray the cost of your installation even more. These will vary depending on where you live, so you’ll have to do some local research to find out everything you might be eligible for. If you contact a solar installation contractor they will likely be very happy to provide you with all that information as part of their sales pitch.
