Why Installing a Solar Energy System May be Cheaper and Easier Than You Thought

If you’ve looked into having a solar powered energy system in the past, you may have dismissed the idea out of hand. In many cases this may have been because of the high initial cost of the equipment and the long period that is necessary to recoup this cost in reduced energy bills. However, it may be time to reconsider that decision. The situation is a very different one from a few years ago. The costs associated with installing and operating a solar energy system have become much cheaper. In contrast the prices of energy supplied by the energy companies has steadily risen.
In 1977, at the very start of viable domestic solar technology, the price to earn a single watt of power was $76.67. In 2013 that figure had dropped to$0.74! That is a price drop of 99% in 36 years. Some of this price reduction has come in the form of improved technology that is more efficient. Another part of this price reduction, is in the form of subsidies that are available to offset the cost of installation. In part, the increase in commercial solar energy farms has also reduced costs, although high capacity storage will become a new challenge for companies that seek grid parity with traditional energy generation methods.
Although solar power can be utilized anywhere that has daylight, it’s important to realize that some locations are better than others. Installing this type of system will make a lot of financial sense if you live in a very sunny locale. To operate at optimal efficiency a modern solar panel requires five hours of direct sunlight per day. If you live in an area where the sun is not as intense, then the panel will still work, but the efficiency will be compromised to a certain extent. Another factor to consider is the current traditional energy price in your area. If you live in a place with a high cost per kW/h, then even a solar panel with reduced efficiency may be an attractive alternative. Wherever you live the federal government offers a tax credit. This can save you up to 30% on a system installed before the end of 2016. Obviously all these factors should be calculated into any solar power feasibility study that you carry out.
For some people, even with the extra financial incentives, a solar powered system may still be beyond their reach. With prices beginning at $10,000 up to $30,000 and beyond, this is a high initial investment, that many will be unable to afford. Many companies that install solar systems offer a no money down deal to get the panels installed on your roof. This deal may take the form of a 20 year loan. The idea is that the system will reduce your energy bill enough to pay for the system within the time period. Most people will find that this period is too long of a commitment and the pay back time is simply too long. In answer to this concern some companies now offer to install the system for free, but there is a catch. Essentially the homeowner enters into a 20 year long lease known as a Power Purchase Agreement or PPA. The PPA means that for 20 years, you agree to purchase the power that is generated by the solar panels, on your own roof, from the company that installed the system. This may seem extreme, but current solar panels will work for 30 years minimum and many earlier models from the seventies are still working fine today. If you find this idea attractive, it is important to note that the federal tax credit will go to the company, and not the homeowner, as they are the owners of the system until the end of the 20 year period.
In any event when entering into any kind of agreement with a solar power installation company it’s important to understand what you’re getting into. There are many reputable companies to deal with and some fly by night ones that should be avoided. Warning signs of a scam may include outlandish claims, fine print in contracts regarding price escalations and excessive sliding scales of penalties for non payment. Any company behaving in such an underhand way should be avoided at all costs. Any reputable company will stand by their product. Installation should be fast and simple with a minimum of mess and disruption. Many good companies will also offer servicing and may inform you of any upgrades that become available in the future.

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