Solar Panel Costs
Homeowners considering the purchase of PV panels should consider their overall needs before investing. For example: do you want batteries for storing electricity? How much of the home do you want powered by the system? Many manufacturers offer complete packages that make the installation easier and more economical.
The initial investment in solar-energy equipment can be expensive. The cost is high because semiconductor materials used in the manufacture of PV panels are expensive. In 2005, the price of solar panels averaged about $3-$4 USD per watt of installed power. As manufacturers increase production and research continues into less expensive ways to make solar panels, the cost is expected to drop.
Costs for PV systems vary depending on what kind of rebates and other financial incentives are available, whether your home is under construction, whether PV panels are integrated into the roof or mounted on top of an existing roof, the size of the system, the price of the components and numerous other factors. The breakout of the costs will look something like this:
Sample Grid-Tied PV System Costs
A very general rule of thumb: Small, single-PV-panel systems that produce about 75 watts can cost about $900 installed, or $12 per watt. A 2-kilowatt (1 kilowatt=1,000 watts) system that meets most energy needs of an extremely energy-efficient home can cost $16,000-$20,000 installed, or $8-$10 per watt. A 5-kilowatt system that completely meets the energy needs of many conventional homes can cost $30,000-$40,000 installed, or $6-$8 per watt.
Despite the initial investment, solar systems can substantially reduce costs of energy over time and add value to your home. Plus, you might be eligible for government financial support as an incentive to buy your solar panels.
What Incentives are Available for Going Solar?
Location counts in another way besides having an effect on how much sun your system gets. If you live in a state with generous incentives to install solar systems, you might be able to get rebates, low-interest loans, state tax credits and exemptions, and other perks for switching to the sun. Federal grants and tax credits may also be available. Sometimes builders and utility companies offer incentives for solar systems.
A new federal law provides a 30% tax credit, maximum $2,000 for PV, solar water heaters and fuel cells installed in 2006 and 2007. Also, listed below are some examples of incentive programs in MA, GA, AZ, CA and IL. They come from a website that keeps track of incentives for renewable energy in all 50 states. The Website will provide more detailed information; the programs below are only a small summary of what is available.
- Massachusetts offers a number of incentives including a local property tax exemption for a period of 20 years from the date of installation of solar and wind-powered devices that provide primary or auxiliary energy to a property. For more information, go to the state's web site. Massachusetts State law exempts exempts solar, wind, and heat pump systems and all related equipment from the state sales tax. This exemption is limited to systems used in an individual’s principal residence. Homeowners who install renewable energy systems on their primary residences are also eligible for a personal state income tax credit, maximum $1,000. Here's the state's website.
- Illinois offers a 30% rebate up to $10,000 for PV systems with a rated design capacity of greater than 800 watts, and solar-thermal systems designed to produce at least 50,000 BTUs per day or contain at least 60 square feet of collectors. For more information, visit the state's energy website.
- Georgia offers a production incentive program that offers payment for connecting residential systems to the utility grid, plus a $0.15 credit per kWh for 10 years. To learn more, go to http://www.gpsgenpartners.com. In addition, Georgia has the first state law designed to accommodate a net-metering/green-power symbiosis. To find out how it works, visit cleanenergy.org.
- Arizona offers a rebate system for grid-tied residential photovoltaic systems of $4/W up to $7,000. Off-grid systems get a $2/W rebate, and the state offers a $700 rebate for solar water heating. Find out more at this website.
- California has numerous rebate and other incentive programs sponsored by the state and various localities and utility companies. Pasadena Water and Power, for example, offers its residential electric customers a one-time rebate for grid-tied photovoltaic installations of $3.50 per watt AC, up to $8,000. Visit the website to learn more. Also, check out the state’s listings for more incentive programs.
Increase Energy Efficiency Before Installing Solar Panels
Before installing a solar electricity system, it is important to make your home as energy efficient as possible, because:
- An energy-efficient home will reduce the initial cost of installing your solar system.
- The more energy efficient your house is, the smaller and less expensive a solar system you can install because you will be using less electricity.
- Remember, it is cheaper to save electricity than to generate it.
Make sure you’re using modern, energy-efficient appliances; check to be sure your home is adequately insulated; and install lighting that makes the best use of available energy. Tube fluorescent lights and compact fluorescents offer high-quality, high efficiency lighting and last 4 to 10 times longer than incandescent (standard) light bulbs.