The fervor of the Climate Change movement appears to be waning, but most people still want to end pollution and get off the grid. To that end, the average homeowner needs to balance the cost of retrofitting their home from fossil fuel heating and cooling systems to solar. With a mortgage, taxes and mouths to feed, the move needs to make dollar sense. Here’s a review of where the cost-effectiveness of going solar stands.
Solar Systems Not Entirely Cost Effective
The cost of solar panel systems dropped by approximately 25 percent from 2014 to 2016. That’s not the best news because it was predicted to go down from 2014 to 2015. That tells us that the market remains sluggish. Twelve months ago, the cost of a system was as follows:
- 13-panel system ($11,500) 60 percent of home electric
- 20-panel system ($17,500) 80 percent of home electric
- 27-panel system ($23,000) 98 percent of home electric
With home equity loan rates hovering at 3.92 percent, taking out a 15-year note didn’t make great business sense. The cost for the loan would run $85, $129, and $169 respectively. The average home uses about $110-$140 worth of power each month. The numbers don’t necessarily work on their face. Throw in a tax rebate and improved home value and it looks a little brighter.
In 2017, the solar industry has gotten a tad savvier about selling solar systems and they tend to speak in terms of “kW” instead of panels. That makes it abstract to the average homeowner. Northern states use about 600kWh and southern states (with air conditioning) use in the area of 1,100kWh. A solar panel produces about 1kWh per day or 30 per month. One of the marketing reasons the industry has changed its sales pitch may be because the cost hasn’t significantly dropped despite increased demand. The 2016 costs are still viable guidelines.
For a northern home to get “off the grid,” it would require a minimum of 20 panels, theoretically. The bad news is that New England states such as Rhode Island only enjoy about 80-85 sunny days per year. Expect low yield. Southern-half states such as Arizona see the clear skies more than 240 times. The huge difference in terms of panel output puts northern states at a distinct disadvantage.
If you are passionate about reducing your carbon footprint, there are companies that make it relatively painless. Most people know about Solar City because they were swallowed up by Tesla. The outfit has a program that allows homeowners to install solar with no “out of pocket” expenses. They do require that you fork over the tax rebate. If you don’t get dollars back from Uncle Sam, you still owe the money in a lump sum payment. Homeowners usually save a percentage of their electric usage. But…they also insist on a long-term deal and the system must be resold or moved to your new home if you put it on the market.
Sunrun has a less complicated program. The organization touts asking no costs from homeowners and offers a monthly reduction on your electric bill. They handle the tax rebate acquisition, if any. Sunrun aims to turn a profit selling power back to the utility company while reducing your monthly costs. That business plan has them growing in sunnier states. Not so much up north. It’s a feel-good option.
Despite all the rah-rah talk from Green Energy advocates, independence hasn’t gotten any cheaper. Although utility bills tend to increase, natural gas has cut power plant costs and coal appears to be bouncing back. These forces have slowed the monthly electric bill upticks. That being said, energy independence can be achieved. However, it might cost you more than you’re paying right now.