The Cost Of Solar Energy System

Solar energy is free but the tools that will enable you to harness this free energy are not.

If you are planning to install a solar energy system right at your home and would like to know how much it would cost, there are 3 things you need to consider:

First, the cost depends on how much energy your household requires. More energy you require means more solar panels and higher cost of installation. The good thing is, the technology to harness the power of the sun is relatively cheaper than it was several years ago.

Second, the government is offering a rebate to those who will switch to alternative form of energy. That means, the government will shoulder a portion of the total cost of the system.

Third, you can get tax credits when you switch to solar energy system. The amount of tax rebate depends from state to state but the range can go from $1000 to $2000.

All these affect the overall cost of your installation.

A photovoltaic system can cost roughly at $8000 to $10000 per 1kW system. This equates to $8 to $10 per Watt. An average American household with 3 bedrooms requires at least 1.5kW to as much as 3kW. Thus, installation can cost from $14000 to $30000, before rebates and tax credits.

Government rebate varies from state to state. As a reference, an average California household that requires 1.5kW system can get as much as $4200 rebate (1.5kW= 1500 watts x $2.80 per watt = $4200).

A household that requires 3kW system can get as much as $8400 (3kW= 3000 watts x $2.80 per watt = $8400).

Before, tax credit goes as much as 30% but it is lowered to 7.5% of system cost after rebate.

So an average household with 1.5kW system can get $735 ($14000 – $4200 x 7.5% = $735) worth of tax credit while the 3kW system can get $1620 ($30000 – $8400 x 7.5% = $1620) worth of tax credit.

Example A: 1.5kW system

Cost of solar electric system: $14000
Less rebate: $4200
Less tax credit: $735

Cost of the system after rebate and tax credit: $9065

Example B: 3kW system

Cost of solar electric system: $30000
Less rebate: $8400
Less tax credit: $1620

Cost of the system after rebate and tax credit: $19980

Again, these are rough estimates just to give you an idea of the cost of installing solar energy system. They do not represent real figures.

Top tips:

Energy independent home has higher resale value and is more preferred by home buyers. So, if you are planning to sell your home in several years, installing solar energy system does not only provide substantial saving on electric bill, it also is a good home improvement option.

If you want to finance the cost of your solar energy installation, include it in your mortgage.

If you want to reduce your electricity load, switch to energy efficient appliances. Buy electric appliances with ENERGY STAR seal.

Low energy requirement means lower installation cost.

Residents of areas with higher electricity rate can benefit most on solar energy system.

If you can’t afford the photovoltaic system, you can install solar hot water system that costs roughly from $2000 to $4000.

Solar energy is best for houses that are located far from the existing power lines.

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