Is solar worth it? – pv magazine USA
When shopping for a solar home system, the price listed can sometimes make you wonder why anyone would go ahead with something that seems so expensive.
Compared to the status quo, electricity provided by the utility, the price may not seem so high after all. First, photo magazine will look at the status quo and how much you can expect to pay for electricity if you don’t get solar panels. Next, we’ll look at the average cost of solar panels today and introduce incentives that increase home solar value.
The cost of doing nothing
Typically, early adopters have benefited financially from switching to solar power by providing price certainty and stemming the impact of ever-rising utility bill costs.
Residential electricity consumers end users pay on average of $0.138/kWh in the United States, according to the Energy Information Administration (EIA). In California, this rate is $0.256/kWh, it averages $0.246/kWh in New England, $0.126/kWh in the South Atlantic region and $0.124/kWh in the Mountain region. West.
The EIA reports that the average home uses 893 kWh per month, so based on the average retail rate of $0.138/kWh, that’s an electric bill of about $123 per month, or $229 per month in California.
Over the past 20 years, EIA data Pin up that retail electricity prices have increased by 59% in the United States, or 2.95% each year. This means that in 20 years, the average monthly bill in the United States would increase to $213 per month, and in California, monthly bills would average $398.
This means that, based on historical rates, the average US homeowner can expect to pay $39,460 over the next 20 years in utility bills. On average, Californians could pay $73,465 over 20 years.
Recent world events show how volatile commodity prices can be, and energy is no exception here. How much will your electricity bill cost in 20 years?
These estimated bills also assume that energy use in the home is constant over 20 years, but as the United States electrifies its homes, adds more appliances, and adopts electric vehicles, it’s fair to expect that many homeowners will use more electricity in the future.
Another factor likely to exacerbate tariff increases is the upgrade of the national transmission network. The infrastructure that provides electricity to our homes is aging and in need of critical upgrades, and it is estimated that a staggering $500 billion will be spent building transmission by 2035. This cost half a trillion dollars is passed on to homeowners in the form of high utility bill rates.
The Backup Power benefit may also increase over time. Power outages are on the rise in the United States and analysis EIA data from the Associated Press shows that severe weather-related outages have doubled in the past 20 years. Storms fueled by climate change are expected to continue to increase, so the role of battery backup in providing reliable power could increase significantly.
The truth is that we don’t know how much energy will cost in 20 years. Although it has increased by 59% across the country in the past 20 years, there is no way to know for sure what it will cost in the future. This is where solar has an advantage over the status quo. By purchasing solar power, you ensure price certainty in the future, which makes it easier to budget and plan for the future.
So how do these costs compare to solar power?
Cost of solar
In general, solar prices have fallen. In 2010, it cost around $40,000 to install a home solar system, and since then prices have dropped 70% and around 37% over the past five years. However, prices have increased slightly in 2022 due to shipping costs, material costs and possible tariffs imposed on imported solar products, and these pressures are not expected to ease in the near term.
When comparing quotes, the best metric for an apples-to-apples comparison is cost per watt. National Renewable Energy Laboratory Price Benchmarking indicates the average cost per watt for the country was $2.65/W DC in 2021, and the average system size was 7.15 kW. So an average system would cost around $18,950. With 12.5 kWh of energy storage per battery, the average cost was $4.26/W, which translates to an average price of $30,460 with batteries included.
The prices above do not include any incentives. Currently, the federal government applies a 26% investment tax credit to the system, which reduces system costs for those who qualify to $14,023 without batteries and $22,540 with batteries. Compared to the potential $39,460 in utility bills, buying a solar system in cash seems to have a clear financial benefit.
Many homeowners will need financing to purchase a solar system. Shorter terms can reach rates as low as 2.99% or less, but financing for a 20-year solar loan is usually between 5% and 8% or more. Based on an annual percentage rate of 7% over 20 years, a $14,000 system would total approximately $26,000 in loan repayments over 20 years, and the system with batteries included would total approximately $42,000 in loan repayments. ready.
Often when you go solar, the utility will still charge you grid access fees even though your system is producing 100% of your needs. These vary from utility to utility, but often cost around $10 per month. Over 20 years, that equates to about $2,400 you’ll still have to pay the utility, plus any costs for the energy you use beyond what your system provides.
Based on these average numbers, a homeowner can expect up to $12,000 in savings with a system financed over 20 years. Homeowners in areas with retail energy prices above the national average could realize savings in multiples of this figure.
Although in this example the batteries appear to be slightly more expensive than the status quo over a 20-year span, they improve the home by adding the crucial backup power service, and are increasingly allowed to participate in services network, potentially generating additional revenue. flows for owners.
Another thing to note is that most solar systems are guaranteed for 25 years instead of the 20 used in the status quo example. A panel can last a good 35 years, and although it will start to produce less with age, any power produced by a panel you own is money in your pocket.
Incentives and home value
Many states also have additional incentives to increase the value of solar energy. Checking the State Incentive Database for Renewable Energy (DSIRE) will show the incentives available in your stateand a solar representative should be able to explain these benefits to you when you receive a quote. State incentives change frequently and vary widely, and in some cases are quite rich, providing thousands of dollars in additional benefits.
Another factor to consider is the value of the home. A Zillow study found that solar panels increase the value of a home by an average of 4.1%. For a $375,000 home, that’s an increase in value of $15,375. In most states, solar home power is exempt from property taxes, making it a great way to increase value without paying taxes.
At the end of the line
We’ve shared plenty of data on national averages and the potential cost of electricity in the future, but is solar for you? In the past, early adopters have been rewarded for switching to solar power and rejoice when they see $0 electricity bills paid to the utility company.
Every home is different, every utility is different, and every homeowner has different needs, so assessing whether solar power is right for your home will take some time and analysis. Solar company representatives will walk you through this analysis, and it’s generally a good rule of thumb to get at least three quotes for comparison.
A great resource to start your search is the Solar Calculator developed by the SolarReviews news site. The calculator offers a quote and estimated savings based on local rates and incentives available in your area. The website also offers reviews of installers, equipment, and more.
Some people will save tens of thousands of dollars in the long run with solar power, while others may realize more modest savings. Solar power will also provide the home with clean, local energy, which will have an impact on both mitigating climate change and supporting local jobs.
One of the undoubted advantages of solar energy is that it will provide greater clarity on the cost of your electricity bills over the next two decades, rather than exposing you to the rates that the utility company will decide. to charge in the future.
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