US Home Solar Power Costs Drop Sharply over Last Decade
January 17, 2017
Posted by GetSolar Staff In Thursday, May 19 2016 under: Solar Costs, incentives, Home Solar Power
If you're reading this, chances are you're at least a little bit interested in learning more about solar power costs for your home or business. You may have heard that solar photovoltaic (PV) panel systems are expensive. This has been true in the past, but in many instances, solar panels can save you a lot of money over your current utility bill. Indeed, the price of solar panels has dropped almost 80% over the last decade, with total installed systems costs including labor and permitting dropping over 55%.
With the right mix of federal and state incentives, a well planned home solar PV system can provide a great return on investment. The national average price per watt for residential home solar power was about $3.69 in 2015, (with large utility scale solar systems in the sub $2.00 per watt range due to their economies of scale, see chart below from SEIA/GTM Research showing the blended average cost of solar across all segments). To see why solar may provide a great return on investment, let's briefly cover a few of the main topics that relate to cost and system performance:
Location and orientation
First things first, an unobstructed, south-facing roof is ideal for mounting home solar power panels (or any solar panel for that matter) -- it ensures that the system gets as much exposure to the sun as possible. (There are also minimum load-bearing requirements of roughly 3-5 lbs per sq foot, but most roofs are sturdy enough for the job.) Generally speaking, lots of direct, quality sunshine throughout the day means you can get more juice out of each panel. Better system performance, in turn, means you can get away with installing fewer panels and generate more electricity. This saves you money and speeds up the economic return on the system.
While the American Southwest enjoys the most sunshine in the country, the vast majority of US locations get plenty of sun to make solar energy a very reasonable option. For details, check out this solar radiation map from the National Renewable Energy Lab. (See Image courtesy of the US National Renewable Energy Lab NREL)
Our qualified solar installation partners from the EnergySage Network have local expertise, and can help you determine the expected performance of your desired system based on actual rooftop satellite image and shading.
Your utility bill
Take a look at your electricity bill. If you're paying on average more than 14 cents per kilowatt hour (kwh), you should definitely take a harder look at solar. Why? By reducing the amount of money you pay to your utility each month, your PV system will "break-even" sooner than it would, for example, if you were only paying 8 cents/kwh (the national average is around 13 cents per kwh). Simply put, the more money you save each month using solar, the better your return on investment over time.
Electricity price inflation: As conventional electricity prices continue to rise over time, your monthly savings grow. You are in essence locking in energy prices for the life of the system. Solar panels should come with a 20 to 25 year warranty of guaranteed levels of electricity production, and many systems can last 30 years or longer (no moving parts, no fuel to burn, no emmissions, just silence).
Energy efficiency: often, simple steps—like installing LED lights, or buying energy-efficient appliances—can drastically improve the ROI on your solar PV system. In short, such steps enable you to meet more of your electricity demand with solar, further shrinking your monthly utility bill. Adding so-called negawatts to the mix will save you cash over the long haul and make each kilowatt from your solar panels go further.
To promote the adoption of renewable energy, the federal government offers a 30-percent tax credit to homeowners and businesses who install solar energy systems. By lowering up front costs, such incentives dramatically improve the return on investment for solar.
Many states, municipalities and utilities offer tax credits and solar rebate programs, too. Check out the solar incentive map for details visit the DSIRE database.
Your system specifications
Not every solar panel is created equal. Single crystalline panels, for example, are more expensive to manufacture but offer high efficiency rates and a proven, long-term track record. Poly- or multi-crystalline panels, by contrast, are less expensive but are also less efficient. Ultimately, you'll want to balance upfront costs with expected efficiency to attain a low levelized cost of energy (LCOE) over the lifetime of your system.