What Is Solar Power for the Home?

Installing solar power systems can provide homeowners with a number of advantages, including decreased electric bills, reduced carbon footprints, and possibly increased home values. However, these advantages frequently have high installation and upkeep costs, and the size of the gains might differ greatly from one home to the next.

This article will help homeowners make the financial calculations required to determine the viability of solar power in their homes.

KEY TAKEAWAYS

• Those who want to live more sustainably could think about installing solar panels on their house
• Solar energy benefits the environment while also providing the opportunity to make money by selling any extra electricity back to the grid.
• Although prices have decreased over the years, installing and maintaining solar panels can be very expensive.
• For properties that get plenty of sun exposure all year long, solar panels work best.
• Make sure you comprehend the social and economic implications before making a decision to use solar electricity.

Learning about Solar Power

Calculating if installing solar power for your home makes financial sense is straightforward in theory. You will have to figure out:

1) A solar power system's price

2) How much energy it will produce

3) Equivalent quantity of energy for less than you would typically have to spend

4) How long will it take for your initial investment to recover itself through reduced energy costs?

5) Whether the system will be financially viable in five years

If it does and you have the money up front, going ahead is probably a smart move. If purchasing the system will delay the collection of funds or obtaining a loan, you should carefully weigh your options.

However, in reality, things are not quite so straightforward. The costs and advantages of installing solar electricity for two homes—even if they are neighbors—can range significantly due to the wide difference in each of these parameters.

There are several tools that can be useful. A calculator provided by Solar Reviews will instantly show you the average costs and savings for a solar power system in every region of the United States. If you are new to solar energy and want to understand the fundamental cost concept, calculators like this one are a fantastic place to start.

We'll go through each of the important elements you should take into account when estimating the expenses and possible savings of solar electricity for your home in the remaining sections of this post.

The Cost of Solar Power for Homeowners

Let's start by examining the price of building a solar energy system for your house. A domestic solar power system typically costs between $3,500 and $16,000 up front.

Why such a wide range of prices? Well, the size of the system you want to install and the kind of panels you want to utilize will determine a lot of the variety. Whatever system you choose, keep in mind that solar energy requires a significant upfront investment, making up the majority of the cost of ownership. The solar module will almost definitely account for the majority of the entire cost.

There are also some extra expenses. The inverter, which converts the direct current generated by the panel into the alternating current utilized by home appliances, metering equipment, a variety of housing components, cables, and wiring equipment are all additional pieces of equipment required for installation. Some house owners also think about battery backup. Batteries have historically been unaffordable and unneeded if the utility pays for extra electricity that is supplied into the grid (see below). It's also necessary to account for the labor cost of installation.

A PV solar array requires some additional expenses for operation and maintenance in addition to installation fees. Inverters and batteries (if installed) typically need to be replaced after several years of use, in addition to routinely cleaning the panels.

Subsidies

While calculating the above mentioned costs can be fairly simple—a solar installation firm can frequently provide a price quote for these for a homeowner—finding government and/or local utility subsidies can be more difficult. Although government incentives are subject to frequent modification, traditionally the US government has permitted a tax credit of up to 30% of the system's cost.

The Database of State Incentives for Renewables & Efficiency (DSIRE) website has further information on incentive schemes in the United States, including those in each state. Such details are frequently accessible in other nations via official or pro-solar websites. Additionally, homeowners can contact their local utility provider to learn more about its policies on grid connectivity, selling surplus energy to the grid, and financial incentives for installing solar panels.

Calculating Your Energy Production

The quantity and timing of the energy your system will produce must be taken into account in your calculations. Even for seasoned solar engineers, this computation can be exceedingly challenging. But first, let's go through the fundamentals.

The amount of solar irradiation present in the area surrounding the home—or, put another way, how sunny it is where you live—is one of the most crucial factors to take into account. Being nearer to the equator is generally better when utilizing solar panels, but there are other aspects to take into account. The National Renewable Energy Laboratory (NREL) creates maps of the United States that illustrate the amounts of sun irradiation, and the tools on its website offer comprehensive solar data for certain places within the country.

Your home's orientation is also crucial because rooftop arrays work best with south-facing roofs that are free of trees or other obstructions to sunlight. If this is not an option, panels can be erected outside the house and mounted on external supports, but this will cost extra because of the additional hardware and wires needed.

The size of your system must also be taken into account. The size of solar panels is described in terms of its theoretically possible wattage of electrical output. However, the capacity factor, or actual production, of installed PV systems typically ranges between 15% and 30% of the theoretical output. A 3 kilowatt-hour (kWh) household system operating at a 15% capacity factor would generate 3,942 kWh/year, or nearly one-third of the normal electricity usage of a U.S. family (3 kWh x 15% x 24 hr/day x 365 days/year).

How Much Will You Save?

You may (theoretically) estimate how much you can save on energy expenditures annually if you know how much a solar power system will cost upfront and how much electricity it will produce.

However, because so much depends on how you currently pay for electricity, this is another difficult equation. Regardless of when electricity is used, utilities frequently charge residential customers a flat fee. This means that homes' solar power systems only balance the price they are charged for electricity, which is significantly closer to the average cost of power generation, as opposed to the costly cost of peak electricity production.

However, in an effort to reflect the actual cost of electricity production at different times, many utility companies in the U.S. have implemented pricing plans that permit homeowners to be charged at various rates throughout the day: This entails higher rates in the afternoon and lower rates at night. In regions where this type of time-varying rate is utilized, a PV solar array may be quite advantageous because the solar power generated would balance out the most expensive electricity.

Depending on the precise timing and size of the rate increases under such a plan, this may or may not be advantageous for a particular homeowner. Similar seasonal demand patterns result in certain regions having utility price plans that change throughout the year. Solar electricity is more attractive in the summer when rates are higher.

With tiered pricing, some utilities adjust the marginal price of power as use increases. The benefit from a solar system can vary depending on how much electricity is used in the home under this type of plan; in some regions where rates rise dramatically as consumption rises, large homes (with large energy needs) may benefit most from solar arrays that counteract expensive marginal consumption.

Selling solar energy back to the grid may even be feasible for some residences. This is accomplished in the United States through "net metering" plans, whereby residential consumers use the electricity they export to the grid to make up for the electricity they consume at other times (when the rate of electricity production from the solar array is higher than the rate of household electricity consumption); the monthly electric bill reflects net energy consumption. Different regions have different net metering rules and practices. For more detailed information, homeowners should consult the DSIRE database and can also get in touch with their neighborhood utilities.

Calculating Solar Power Costs

Selling solar energy back to the grid may even be feasible for some residences. This is accomplished in the United States through "net metering" plans, whereby residential consumers use the electricity they export to the grid to make up for the electricity they consume at other times (when the rate of electricity production from the solar array is higher than the rate of household electricity consumption); the monthly electric bill reflects net energy consumption. Different regions have different net metering rules and practices. For more detailed information, homeowners should consult the DSIRE database and can also get in touch with their neighborhood utilities.

Instead of computing the DCF, the levelized cost of electricity (LCOE), which is the cost of energy charged by the local utility, is typically used to assess the viability of solar power. The cost per kilowatt-hour ($/kWh or /kWh), which is the same format as that found on energy bills, is often used to compute the LCOE for residential solar. The following equation can be used to approximate the LCOE:

LCOE ($/kWh) = Net Present Value (NPV) of the Lifetime Cost of Ownership ($) / Lifetime Energy Output (kWh)

A PV solar module's useful life is often estimated to be 25 to 40 years. The maintenance costs are included in the cost of ownership and must be subtracted to determine the NPV. The cost of energy provided by a utility can then be compared to the LCOE; keep in mind that the relevant price is that which is charged during or just before peak PV solar production times.

Is Solar Power Worth It?

After performing all of these calculations, you'll most likely arrive at a single number, which represents the number of years it will take for a solar system to pay for itself in energy bill savings. If you now have high utility costs and live in a sunny area of the country, your system may get to this point in five years. To get to this position, other homeowners might have to wait 10 or 20 years.

To put it another way, the majority of households will eventually benefit from a solar energy system; it may just take a number of years. Therefore, whether it is worthwhile to install such a system frequently depends on a number of much less technical factors than those we've listed above: how long you plan to live in your home, the financial incentives offered in your community, and simply whether you want to do your part to protect the environment.

Do You Really Save Money With Solar Panels?

Depending on where you live, the system might eventually pay for itself and then some. This is due to the fact that your utility bill for purchasing electricity will be lower. You could further lower your costs if net metering is enabled.

The Bottom Line

It may seem difficult to decide whether to build a PV solar system, but it's crucial to keep in mind that this is a long-term investment. From a budgetary standpoint, solar electricity is a wise alternative in many regions. request a quote for solar installation or call us at 949-228-9497