When you buy a home solar system, sometimes the price mentioned can make you wonder why someone will move forward with something that seems so expensive.
Compared to the current situation of electricity supplied from housing and communal services, the price may not seem so high. First, pv magazine will study the status quo and how much you can expect to pay for electricity if you don’t get solar panels. We will then look at the average cost of solar panels today and introduce incentives that increase the value of solar energy at home.
Price does nothing
Typically, the first users benefited financially from the use of solar energy, providing price confidence and stopping the impact of ever-increasing utility costs.
The ultimate household electrical customers pay on average $ 0.138 / kWh in the United States, according to the Office of Energy Information (EIA). In California, the rate is $ 0.256 / kWh, in New England it averages $ 0.246 / kWh, in the South Atlantic – $ 0.126 / kWh, in the West – $ 0.124 / kWh.
The EIA reports that the average home uses 893 kWh per month, so based on an average retail rate of $ 0.138 / kWh, this electricity bill is about $ 123 per month or $ 229 per month in California.
EIA data for the last 20 years to show that retail electricity prices rose 59% in the United States, or 2.95% each year. This means that in 20 years the average monthly bill in the US will grow to $ 213 per month, and in California the monthly bills will average $ 398.
This means that based on historical rates, the average homeowner in the U.S. can expect to pay $ 39,460 over the next 20 years for electricity bills. On average, Californians could pay $ 73,465 for 20 years.
Recent world events show how volatile commodity prices can be, and energy is no exception. How much will your utility bill cost in 20 years?
These current accounts also assume that home energy use has been ongoing for 20 years, but as the United States electrifies its homes, adds more appliances and introduces electric vehicles, it is fair to expect that many homeowners will use more electricity in the future.
Another factor that may worsen tariff increases is the modernization of the national transmission network. The infrastructure that supplies electricity to our homes is aging and in need of critical upgrades, and it is estimated to be staggering $ 500 billion will be spent on building the transmission until 2035. That half-trillion dollar expense will be passed on to homeowners in the form of utility bills.
The benefits of backup power can increase over time. Power outages are growing across the United States, and analysis EIA Associated Press data show that over the past 20 years, shutdowns due to severe weather events have doubled. Storms caused by climate change are expected to continue to grow, so the role of the backup battery in providing reliable energy could increase significantly.
True, we do not know how much electricity will cost in 20 years. Although it has increased 59% nationwide over the past 20 years, there is no way to be sure it will be worth it in the future. This is where solar power takes precedence over the status quo. By purchasing a solar panel, you provide confidence in the price in the future, which facilitates budgeting and planning for the future.
So how do these cost compare to using solar energy?
The cost of solar
As a general trend, solar prices have fallen. In 2010, the installation of a solar system in residential areas cost about $ 40,000, and since then prices have fallen by as much as 70%, and over the past five years – by about 37%. However, prices have risen slightly in 2022 due to shipping costs, material costs and possible tariffs on imported solar products, and this pressure is not expected to be eased in the near future.
When comparing quotes the best indicator for comparing apples to apples is the price per watt. Comparative price analysis of the National Renewable Energy Laboratory shows the average cost per watt for the country in 2021 was $ 2.65 per watt DC, and the average size of the system – 7.15 kW. Thus, the average system will cost about $ 18,950. With a battery storage of 12.5 kWh, the average cost was $ 4.26 per watt, which is $ 30,460 with the batteries included.
The above prices do not include any incentives. The federal government is currently applying an investment tax credit of 26% to the system, reducing system costs for those eligible for $ 14,023 without batteries and $ 22,540 with batteries. Compared to potential utility bills of $ 39,460, buying a solar system in cash seems to show a clear financial benefit.
Many homeowners will need funding to purchase a solar system. Shorter terms can reach rates of 2.99% or less, but funding for a 20-year solar loan is typically 5% to 8% or more. Based on a 20-year 7% annual interest rate, the $ 14,000 system will repay a loan of about $ 26,000 over 20 years, and the battery-powered system will pay about $ 42,000.
Often, if you use a solar panel, the utility still charges you a network access fee, even if your system provides 100% of your needs. They are different from utilities, but often cost about $ 10 a month. In 20 years, that’s about $ 2,400 that you’ll still have to pay the utility, plus any energy costs you use other than what your system provides.
Based on these averages, a homeowner can expect to receive up to $ 12,000 in savings under a 20-year financing system. Homeowners in regions whose retail energy prices are higher than the national average could see savings multiple of that figure.
Although in this example batteries look a little more expensive than the status quo over a 20-year period, they improve the home by adding an important backup power service, and are increasingly being accepted for networking services, potentially opening up additional income streams for homeowners.
It should also be noted that the warranty on most solar systems is 25 years, not the 20 used in the status quo example. The panel can last a good 35 years, and although in old age it will start to produce less, any power produced by the panel you own returns money to your pocket.
Incentives and the cost of home
Many states also have additional incentives to increase the cost of solar energy. A check of the State Incentives for Renewable Energy (DSIRE) database will reveal incentives available in your stateand a representative of the solar system should be able to guide you through these benefits when you receive an offer. Government incentives often vary and vary widely, and in some cases are quite rich, offering thousands of dollars in additional benefits.
Another factor to consider is the cost of the home. A Zillow study found that solar panels increase the cost of a home by an average of 4.1%. For a $ 375,000 home, that’s a $ 15,375 price increase. In most states, home solar panels are exempt from property taxes, making it a great way to raise costs without paying taxes.
We shared a lot of data on national averages and the potential cost of electricity in the future, but is a solar panel for you? Previously, the first users received a reward for the use of solar energy and celebrate when they see the electricity bills paid to the utility company.
Every home is different, every utility is different, and every homeowner has different needs, so assessing whether a solar panel is right for your home will take some time and analysis. Representatives of solar companies will guide you through this analysis, and are usually a good rule of thumb to get at least three quotes for comparison.
An excellent resource for starting a study is Solar calculator developed by the SolarReviews information site. The calculator offers a quote and estimate of savings based on local rates and incentives available in your area. The site also provides reviews of installers, equipment and more.
Some people save tens of thousands of dollars in the long run on solar panels, while others may witness more modest savings. The solar panel will also provide the house with clean local energy, having an impact both on climate change mitigation and on supporting local jobs.
One indisputable advantage of solar energy is that it will give more clarity on how much your electricity bills will cost over the next few decades, instead of you being exposed to any tariffs that the utility company decides to charge in the future.
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