A Solar-Powered Home: Will It Pay Off?
Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies.
What Is Solar Power for the Home?
Homeowners who install photovoltaic power systems receive numerous benefits: lower electric bills, lower carbon footprints, and potentially higher home values. But these benefits typically come with significant installation and maintenance costs, and the magnitude of the gains can vary widely from one house to another. This article will help homeowners make the financial calculations required to determine the viability of solar power in their homes.
- Those seeking to go green may want to consider equipping their home with solar panels.
- Not only is solar power good for the environment, but you can earn money selling back excess power to the grid.
- While costs have come down over the past years, installation and maintenance of solar panels can be quite costly.
- Solar panels are best-suited for homes that receive ample sun exposure throughout the year.
- Before committing to solar power, be sure to understand both the social and economic factors.
Understanding Solar Power
Photovoltaic (PV) solar technology has been around since the 1950s, but, thanks to declining solar module prices, it has only been considered a financially viable technology for widespread use since the turn of the millennium.
Solar panel size is quoted in terms of the theoretical electrical output potential in watts. However, the typical output realized for installed PV systems-known as the “capacity factor”-is between 15% and 30% of the theoretical output. A 3 kilowatt-hour (kWh) household system running at a 15% capacity factor would produce 3 kWh x 15% x 24 hr/day x 365 days/year = 3,942 kWh/year, or roughly one-third of the typical electricity consumption of a U.S. household.
But this calculation may be misleading because there is little reason to speak of “typical” results; in fact, solar may make sense for one household, but not for the house next door. This discrepancy can be attributed to the financial and practical considerations considered in determining viability.
Solar Power for the Home: Costs
Solar power is capital intensive, and the main cost of owning a system comes upfront when buying the equipment. The solar module will almost certainly represent the largest single component of the overall expense.
Other equipment necessary for installation includes an inverter (to turn the direct current produced by the panel into the alternating current used title loans in New Mexico by household appliances), metering equipment (if it is necessary to see how much power is produced), and various housing components along with cables and wiring gear.
Some homeowners also consider battery storage. Historically, batteries have been prohibitively expensive and unnecessary if the utility pays for excess electricity that is fed into the grid (see below). The installation labor cost must also be factored in.
In addition to installation costs, there are some further costs associated with operating and maintaining a PV solar array. Aside from cleaning the panels regularly, inverters and batteries (if installed) generally need replacement after several years of use.
While the above costs are relatively straightforward-often a solar installation company can quote a price for these for a homeowner-determining subsidies available from the government and/or your local utility can prove more of a challenge. Government incentives change often, but historically, the U.S. government has allowed a tax credit of up to 30% of the system’s cost. ? ?
More details on incentive programs in the U.S., including programs within each state, can be found on the Database of State Incentives for Renewables Efficiency (DSIRE) website. In other countries, such information is often available on government or solar advocacy websites. Homeowners should also check with their local utility company to see whether it offers financial incentives for solar installation, and to determine what its policy is for grid interconnection and for selling excess power into the grid.