Is Solar Energy Expensive?
Is Solar Energy expensive or is it practical, sensible and a wise investment?
Making an investment in your home can be a tough decision to make – especially regarding unfamiliar subjects like solar. Homeowners have a lot of questions about the type of panels needed, the quantity, and the installation process. But the most frequent questions we hear are: “Is solar energy expensive”, “Is it worth the money” and “Can I afford it?”.
These are important questions to ask, because solar is probably just one of many investments you think about in a year. You may also be considering a new vehicle, tuition, or medical care. How do you determine if solar is too expensive, or just the right price?
Expensive vs. Practical
First things first, what makes something “expensive”? While rooftop solar can be a great investment over time, the upfront price tag makes some potential buyers nervous. Any prices in the $1,000s can be enough to dissuade you from buying something – but does having a large price tag mean it is actually expensive?
You might be asking the wrong question. Instead of “is it expensive?”, let’s try “is it practical?”
Many worthwhile products are a large upfront expense, which could seem steep in the short term. You might pay more for a pair of boots you know will last, instead of ones that wear out. They might seem expensive, but the purchase is actually practical. A $200 fancy meal, however? Or a pricey prom gown that will be worn once? Expensive, but perhaps not practical.
Let’s define “expensive” as something with a high upfront cost and which will not pay itself off in value over a reasonable amount of time. With this definition, you’ll find that solar is, in fact, not expensive at all, but extremely practical.
So how much will solar cost up front?
The average rooftop solar installation in the U.S. has around 5 kilowatt (kW) capacity, and the current average cost per watt is $2.98 per watt (the first time pricing has fallen below $3/watt). Before tax credits, this means that the average installation costs about $14,900, or about the same price as a new economy sedan. After the federal solar Investment Tax Credit (ITC), which gives you 30% back on solar installation costs (as long as you pay in full instead of leasing), that average cost could be as low as $10,430!
While the price of residential solar continues to fall, waiting to install until it gets even cheaper could be a flawed idea – consider how long you plan to stay in your home as well as other factors, including the expiration of the federal tax credit (currently extended through 2021).
When will that expense pay itself off?
The speed at which your investment in solar will pay off varies from state to state and region to region, depending on many factors: weather, the price of electricity, and state-level policy being the most prominent.
Don’t assume your area is a bad place for solar without doing the research! Take a look at this map showing how fast solar can pay for itself in some cities – a few you might not expect.
Locations with more sun will generate more power, regions with more expensive electricity will mean you avoid more utility costs, and states with favorable laws will allow you to sell excess power to the grid. So the rate at which your new solar pays itself off will fluctuate – but let’s take a look at the national average, using electricity costs.
Using the U.S. overall average of $114/month for electricity, the typical bill might run you around $1,368/year. With the post-tax credit cost of $10,430 cited earlier, the system could pay itself off in 7.6 years assuming the system accounts for all of your home’s electricity needs (this is very possible, though depends on your energy use and roof – at the very least your electricity bill should still be drastically smaller than usual).
To get an idea of the electric bills you can offset for your home, you can start by finding your state average or tracking down your past year’s bill.
And remember what happens after the system pays itself off? You start actively saving money! Sounds like a good deal.
Comparing to other expenses
Still not getting a clear idea of how much solar – or your current electricity – actually costs? Let’s compare that $1,368/year electric bill figure to a few other costs:
The average American…
- …that goes out for coffee spends $1,092 a year on their fix.
- …spends $1,846 a year on clothing and related services.
- …that drives spends $1,400 a year on gas.
- …that owns a dog spends $1,542 a year on food, care, and boarding.
If we multiplied these totals over many years and asked you to pay up front, it would sound expensive, right? But they are just regular, practical costs (well, maybe except that coffee). If you think of solar in this way, it might help you grapple with what you perceive to be a large expense.
Is Solar Energy expensive? No, it really isn’t that expensive after all!
So when it comes down to it, solar isn’t really that expensive after all. Not only is it affordable over the life of the system (even saving you money), but it also improves your resale value and reduces greenhouse gas emissions from fossil fuels. Seems like a practical investment to us!
Take these steps to see how “expensive” rooftop solar would be for you:
- Use an online tool like Google’s Project Sunroof to see what solar installation might cost for you.
- Compare those results with initial quotes from reputable local installers (we recommend at least 2 different ones). It is best to speak to professionals about your specific home because solar panel installation costs and logistics vary from home to home.
- Find your current annual electricity bill, and see how many years it would take for solar to pay for itself.
- While you’re at it, calculate your own personal expenses per year on things like gas, coffee, or clothing! This is an easy way to compare solar to other costs in your budget.
If you have any questions, always feel free to ask in the comments below!
Image Credit under CC License from Pixabay