Generally speaking, determining whether or not it makes financial sense to put solar panels on your house is straightforward. You will have to do some math.
- The cost of a solar energy installation and Calculate the amount of energy it will generate.
- Then you may compare it to the amount of money you would have spent otherwise on the same quantity of energy.
- This estimate will tell you how many years it will take for your initial investment to pay for itself in terms of reduced energy expenses once you have made the purchase.
If the system will pay for itself in five years and you have the necessary funds upfront, it is almost certainly a good decision. If you have to wait longer for money or take out a loan to finance the system, you must carefully consider your options. In reality, though, things are not quite that straightforward. One of these elements varies significantly, and the costs and advantages of installing solar electricity for two houses might be drastically different even if they are next door to each other. However, several tools can be used to assist. We at Solar Reviews have developed a calculator that will instantly give you approximate expenses and savings for a solar energy system in any region of the United States. If you are new to solar energy and want to learn the fundamentals of the cost model, calculators like this one are a fantastic place to start.
The Cost of Solar Energy for Individuals and Families
Consider how much it will cost to build a solar energy system in your house. It is estimated that the up-front cost of a domestic solar energy system will range between $3,500 and 16,000 dollars. What is the reason for such a wide variety of prices? The size of the system you want to install and the sort of panels you want to utilize are two factors that influence the price a great deal. Whatever system you choose, bear in mind that solar energy is a capital-intensive energy source, with the majority of the expense of owning a system upfront when you purchase the equipment. In virtually all cases, the solar panel will be the most expensive single component of the total cost of ownership.
Subsidies
While the prices listed above are fairly clear (a solar installation firm can frequently provide a quotation for these for a house), establishing whether or not you qualify for government and local utility subsidies may be more difficult. Although government incentives are always changing, historically, the United States government has permitted a tax credit equal to up to 30% of the system's cost to be claimed.
Estimating the Amount of Energy You Produce
Second, you'll need to consider the quantity of energy that your system will generate and when it will do so to make your calculations accurate. Even for experienced solar experts, performing this computation may be a time-consuming and difficult task. However, let's go through the fundamentals first.
What Kind of Savings Can You Expect?
Following the installation of a solar power system and determining how much energy it will generate, you can (theoretically) anticipate how much money you will save on energy expenditures. Utilities often charge residential customers a fixed fee for power, regardless of whether the energy is used or not used. Therefore, instead of mitigating the high cost of peak energy production, homeowners' solar power systems only offset the price of electricity they are paid, which is considerably closer to the average cost of electricity production.
Calculating the Costs of Solar Energy
You will be in a position to conduct a final calculation and an evaluation of whether or not solar energy makes financial sense for you at this stage. The discounted cash flow (DCF) approach may potentially be used to determine a solar energy system's entire panels' cost and benefit. Installation expenses (net of subsidies) would be the primary source of outflows at the start of the project, with offset power prices serving as the primary source of inflows (both directly and through net metering).
Is Investing in Solar Energy A Good Investment?
After completing all of these calculations, you'll most likely be left with a single figure: the number of years it will take for a solar system to pay for itself in savings from your utility bills. For example, if you reside in a sunny section of the nation and are now paying high utility rates, you may be looking at a system that will reach this position in five years. Other homeowners may have to wait another ten or twenty years before reaching this stage.
