Solar Power Costs and Tax Breaks for Using Renewable Energy

by heather

Photo Credit:US National Oceanic and Atmospheric Administration

Photo Credit:US National Oceanic and Atmospheric Administration

Welcome back to the third article in my Solar Power Series! Today I’m going to be focusing on the questions that are on everyone’s lips when it comes to solar power: how much does it really cost? What kind of solar power tax breaks can I get in my state?

If you’ve missed the previous articles in the series, here are some handy-dandy links so you can catch up:

  • Solar Power 101 – This is the place to go if you want to learn the basics on solar power and how it works.
  • Sizing Your Solar Power System – Go here if you want to learn how to size a solar power system for your home. This will be instrumental when you start figuring out the true cost of your own solar power system.

Solar Power System Costs

I know I touched on solar power system costs in my last article, Sizing Your Solar Power System, but I thought it would be helpful to pull all that information together here for a quick review.

The reason why it’s so hard to pin down a specific costs for solar power systems is because everyone’s needs are vastly different. It’s very much like someone asking, “How much does it cost to build a house?”

Well, you have to ask, do you want 500 s.f. or 5,000 s.f.? Do you want formica countertops or granite? Marble flooring or linoleum?

All these choices drastically impact the cost of a home. And, it’s the same way with solar.

Do you want a solar system that will supplement your energy use by 25%, or do you want to get all your energy from solar power? Do you live in a place with just a little sun, or one where it’s out all day? Do you have a 500 s.f. home that uses barely any kWh per day, or do you live in a 5,000 s.f. home and blast the A/C all day?

There are several factors that you have to consider when considering solar power. Here’s what you need to know when considering costs:

  • How much energy your home uses on a daily basis
  • How much of that energy you want to replace with solar power
  • How many sun hours your home gets every day

Again, I covered this in depth in the previous article in the series, so please head over there if you’d like to get the full skinny on figuring out each of these issues.

Calculate Your Solar Power Costs

I found this excellent formula for figuring out the true costs of installing a solar power system at Home Power Magazine.

Important Sidenote: If you’re at all interested in green building and renewable energy then this is the finest magazine you can find on the subject. The quality of the writing is superb, and their research is impeccable. It’s the only magazine I have a subscription to, and it’s worth every penny.

So, here is Home Power Magazine’s formula for figuring out the true cost of solar power:

Calculate Your Costs

Use this easy worksheet to figure out what a professionally installed
solar-electric system might cost. If you have last year’s electricity bills
handy, grab them and your calculator, and get started!

1. First, figure the daily output needed from your PV system:
Average Monthly Electricity Use ____________ KWH
x 1,000 [converts KWH to Watt-Hours] = _____________ WH
x Percent ( _____ %)* of Monthly Electrical Use from PVs = _____________ WH
÷ 30 days
= Daily PV Output Needed _____________ WH
(*Example: for 25%, multiply by 0.25)

2. Then, calculate the minimum system size [in watts]:
Daily PV Output Needed [from Step 1] _____________ WH
÷ Average Peak Sun Hours ( ______ hrs.) Per Day = _____________ W
÷ 0.7 [for 70 % System Efficiency Factor]
= Minimum System Size _____________ W

3. Next, determine the number of PV modules you’ll need:
Minimum System Size [from Step 2] _____________ WH
÷ Wattage Rating ( ________ W) of Chosen Module
= Number of Modules Required _____ Modules

4. Now you can figure the size of the system:
Number of Modules Required [from Step 3; round up] _____Modules
x Wattage Rating ( ________ W) of Chosen Module [also from Step 3]
= System Size [in Watts] _____________ W

5. Last, find the approximate system cost:
System Size [from Step 4] ____________ W
x System Cost Per Watt [from sidebar opposite] $______________
– Rebates & financial incentives $___________
= Approximate System Cost $___________

And if that just seems like too much work, or if you’d like to start out with a more generalized estimate, then check out this handy solar cost calculator. All you need to know here is your zip code, and how much your monthly utility bill (or kWh usage) is per month.

Now, according the the article in Home Power Magazine, the U.S. Department of Energy estimates that a 2,000 watt system costs $8 to $10 per watt to install, while a 5,000 watt system can cost $6 to $10 per watt installed.

Should You Install Your Own Solar Power System To Save Money?

Well, that’s a good question.

The experts at Home Power Magazine say that if you’re skilled at tinkering with electrical systems without fear of electrocuting yourself, if you’ve got several other DIY projects under your belt, and plenty of time on your hands, you might feel comfortable trying this project yourself. After all, installing your own solar power system can knock15%-25% off the total cost.

But, these systems can be pretty complex. Most people opt to have them professionally installed. Going with a professional ensures that they’ll be mounted properly (and at the correct angle for maximum efficiency), and that all the electrical will be safe and installed to code.

It will also take far less time to get your solar system up and running if you hire a professional to do it. And, it will probably be far less stressful.

Solar Power Tax Breaks

If your eyes are rolling backwards over the high cost of solar power, then hang on…your state and federal government is about to throw you a life preserver.

Thanks to the American Recovery and Reinvestment Act Obama passed right after he took office, everyone in the United States is eligible for some pretty great tax credits on renewable energy.

If you install a solar or wind system for your home before 2016, then you’re eligible for a 30% tax credit. And, that’s what the federal government is offering. Many states have their own tax credits and incentives to offer as well.

Want to know what your state offers? Then head over to the Database of State Incentives for Renewables and Efficiency (DSIRE).

This website is a wonderful resource because it lists every single tax credit, reimbursement, and incentive for installing renewable energy devices for every state.

Last Word…

So, if you were looking for a flat fee to install a solar power system, then I hope you’re not too disappointed you didn’t get one. I used to think it was a fairly easy question too, but as you can see there are several factors that you have to consider to come up with an answer.

Hopefully now you’ve got the tools you need to decide if a solar power system is right for you!

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