For homeowners concerned about energy bills and their impact on the environment, solar power has long been a tempting option. And if you’re starting a major remodel or addition, you can reduce many of the up front costs of installing a solar power system by rolling it into one big project.
While costs have steadily decreased over the last decade, solar panels and inverters remain expensive. How can you judge whether solar power system is a good investment for your home?
A recent study released by the NC Clean Energy Technology Center has good news: according to their estimates, rooftop solar now costs the same or even less than grid power in 42 American cities. And contrary to popular perception, insolation (the amount of sunshine reaching a given area) is not always the determining factor in the cost-effectiveness of solar power – the two cheapest cities for solar are relatively cloudy New York and Boston. Both cities offer tax credits and other incentives that offset relatively low insolation. Albuquerque, which does not have as many incentives but much more sunshine, comes in third place. You can check what incentives are available in your area with the Database of State Incentives for Renewables and Efficiency.
But these results come with important caveats. First, the study assumes that homeowners install a 5 kilowatt system, either paid for upfront or financed with a 25-year loan at 5%. If we assume that a typical solar panel produces 0.75kWh per square meter, a 5 kilowatt system would require at least 70 square feet of south-facing rooftop. If you’re building a small accessory dwelling, your roof may not have that kind of space.
Second, the cost of solar only beats grid power if you use the system for 25 years. Although installing solar panels can increase your property value, if you move before 25 years have passed, your investment in solar may not pay off.
Still, the economics of solar power will only improve with time. Utility rates across the country are predicted to increase in the near future, and the cost of solar panels continues to fall. And for many homeowners, cost-benefit analysis is only one part of their decision to go solar – their impact on the environment is often just as important.