Most Texas homeowners considering a solar energy system or residential wind turbine system will experience sticker shock. Wind turbine systems can run as high as $65,000 installed. The average cost of a professionally installed solar panel system is about $8 to $9 per watt, meaning that a 2 kilowatt (kW) grid-tied system can run to $16,000. Or $40,000 for a 5 kW system.
Those estimates don’t include the batteries. Deep cycle backup batteries for both wind and solar can add on 20 to 30 percent more. You might be able to save around $2 per watt by doing the work yourself. Additionally, energy efficiency programs may have certification requirements.
Solar Is Booming
It’s been an excellent decade for solar energy, and many people are considering installing systems in their homes. Incentives such as the Solar Investment Tax Credit (ITC), which was passed in 2006, make it attractive by offering a discount for homeowners and business owners who install solar panels.
Since the passing of the Solar Investment Tax Credit, the industry has experienced an average annual growth rate of 50% and has created tens of thousands of jobs. In 2018 alone, more than $17 billion was invested in renewable technology.
Solar panel installation has risen dramatically in this time frame, creating record highs in solar energy generation. In Q2 2019, over 2.1 GW of solar photovoltaic (P.V.) capacity was installed, resulting in a record 37.9 GW added to the utility-scale solar pipeline in the U.S. As a point of comparison, the average home in the United States uses 10,972 kilowatt-hours (kWh) of electricity each year, which means just 1 G.W. could power over 90 average homes in a year.
Green Energy Costs Are Going Down
Not only is overall solar capacity scheduled to double by 2024, but prices for installing solar panels on homes are falling across the country. Even better, as prices decrease for consumers, the quality, durability, and efficiency of P.V. technology increase. It’s the ultimate win-win scenario, and it deserves a critical examination so homeowners know exactly how they can benefit from getting solar panels installed on their homes.
Because residential and commercial demand for wind and solar energy is increasing, the technology is improving. There are more manufacturers, and the price is dropping. The cost of an average solar panel in 1980 was $21 per watt (for example, a 15-watt panel would cost $315.00). Today, the average cost is about $2.50 per watt (low =$1.42/watt, high=$3.75). Over 25 years, that’s a reduction of 90%.
Green Energy Output Is Improving
Power output capacities have also improved. In 1980, a typical solar panel might put out 22 watts. Now, 100-watt panels are standard. That’s a 450% increase. Panels also “follow” the sun by using a motorized mount that tracks the sun through the day to improve efficiency. They concentrate sunlight to extract more sun rays and increase efficiency 1000 times over regular flat panels.
Going Green Is an Investment
Even though market trends show that costs have continued to go down, investing in residential renewables is still an expensive prospect for most people. After all, you are essentially purchasing a power plant. Despite the up-front costs, look at it as a long-term investment for the next 15 to 25 years. And, like any long term investment, consider how it aligns with your needs and goals.
How much electricity do you use each day?
In a rural setting, will it cost more to bring poles and wires to your home?
Is your goal to have self-sufficiency while staying on the grid?
Is your goal a zero-energy home?
Determine Your Energy Usage
Determining your usage can be tricky. Trying to add up the watts and watt-hours of everything in your home that uses electricity is more confusing than helpful. The fastest and easiest way to determine your usage is to review your utility bills. For example, let’s say you use an average of 1000 kWh per month or 33.33 kWh per day. Knowing that information is essential when considering wind or solar.
Is Solar Right for You?
The next thing to look up is the amount of direct sunshine your location receives. Otherwise known as “insolation,” it is controlled by the sun’s angle, the weather, atmosphere, elevation, and place on the globe. The further north or south from the equator you go, the fewer hours of insolation. In Texas, insolation amounts vary from 4.5 to 5 hours.
Now, determine how many panels you may need with the Solar Panel Estimator. Assume your insolation hours equal 4.5. The system efficiency is a product of the efficiency ratings of the current handling hardware: inverter (to convert 12 volts DC to 120 volts A.C. and smooth it into a 60-hertz cycle), a battery charge controller, and the deep cycle batteries. Inverters typically run about 95%, charge controllers at 98%, and batteries at 80%.
So, if we multiply .95 × .98 x.80, we get a system efficiency of .74 or 74%. That means our 100-watt solar panels produce 74 watts. If we compare the output from the Solar Panel Estimator, if our system were 99% efficient, we would only need 74 panels. Since our system is only 74%, we need 99 panels to generate 33 kWh/day.
Either way, that’s a lot of panels, and a lot of money, also.
How Much Do Solar Panels Cost?
In 2008, the average homeowner would have paid around $50,000 (or just under $8.00 per watt) for a full slate of solar panels on their home. Fast forward ten years, and the average price for solar panel installation has fallen to just under $20,000 (or around $3.00 per watt)1 — a 62% annual decrease in price.
Breaking down math is pretty simple. Just multiply the price per watt by the size of the system you need for your home: $3.00 per watt times 6 kilowatts (kW) (the average system for a residential home) equals $18,000 — and voila. There you have the average cost of a solar panel installation for your home. But where exactly do those numbers come from, and is there any way you can slash that price tag even further? That’s what we’re here to help you understand.
The Basics of Solar Panel Costs
In 2019, the average national solar panel cost in the U.S. was $2.99 per watt, with a median range of $2.58 to $3.38 per watt. This number can be calculated in two ways — the cost of a solar panel per the number of watts it will generate and the installation labor costs plus the cost per the number of watts a panel will generate.
As you might imagine, the former number will be smaller than the other, but it’s also much more fixed on an annual basis. The last number can have more significant variance because companies charge different installation prices for various reasons, including time of year, location, and transportation costs from their warehouses to your home.
What matters right now is that those prices have dropped by 99% since 1980, and they’re projected to drop further — even after the residential ITC expires in 2022.
Assessing Your Solar Panel Potential
Even for the most eco-friendly among us, converting entirely to renewable energy can be very costly. This is especially true for adopting solar power at your home or business. We applaud anyone and everyone who wants to install rooftop solar panels. Still, we also understand that people need first to investigate the costs and all of the associated details driving those costs.
4 Factors That Influence Solar Panel Installation Costs
Even if every solar panel was the same, we’ve found four ancillary costs that impact the installation price tag. So, even as production costs go down, you have to pay attention to fluctuations in those charges to estimate your net cost.
1. Location of Your Home
Let’s get real here: A home in Phoenix will create more solar electricity than one in Portland — whether Oregon or Maine — even if both houses are entirely barren of trees. Geography is essential to the efficient generation of solar power. You can always install solar panels on your roof wherever you live, but where it sits matters, too.
2. Roof Shade and Overall Access to Consistent Sunlight
This one is less obvious than you think. Just because it’s daylight doesn’t mean your solar panels receive the same sunlight you received yesterday or the day before. And just because you live in the Southwest, it doesn’t mean your home will automatically be a good candidate for solar panels. You must account for the amount of coverage your roof regularly receives, whether from trees, nearby buildings, or other types of blockages.
3. Size and Shape of Your Roof
This one is a double whammy. The contours of your roof impact both the number of solar panels you’ll need to generate the necessary energy for your home and the labor involved in installing them for maximum efficiency. For example, gabled roofs with high peaks create lots of nooks and crannies for shadows, and they can be difficult for installers to navigate.
4. Average Monthly Energy Usage
This is the big one. How people use energy in a home determines the size of the solar system you need. While the average U.S. residential solar system is in the 5 kilowatt range, your family might be incredibly thrifty, meaning you might need only 4 kW to power your 2,000 square foot home. On the other hand, if you have a large family that entertains often and has installed lots of amenities in that same 2,000 square foot home, you might need an 8 kW system — and that will cost more.
Reach out to reputable solar panel companies in your area for quotes. As we discussed earlier, the specific details of your home will impact the labor costs of installation, which is the source of any variance you might see in the quotes you receive.
Ultimately, if you value the eco-friendly benefits of solar energy, you should also understand the underlying costs of that value. You must obtain all the information you can from these companies to calculate the costs effectively. Your solar panel installer should explain the pricing in full, including the payback period when your solar system will eventually pay for itself.
And if you feel you can’t afford solar panel installation at this time, you can still invest in the future of the solar energy industry by signing up for a fixed-rate electricity plan from Chariot Energy. All of our plans are powered by 100% solar energy generated at solar farms we own, so you can show your support for renewable energy without purchasing solar panels yourself. Check out our available plans for your area today!
Understanding the Solar Investment Tax Credit
The ITC has improved the expansion and health of the solar industry. It reduces the cost of installing solar panels by 30%, and it’s contributed to the solar sector consistently experiencing 50% annual growth over the past decade.
By reducing the upfront solar installation cost, more people have invested in installing rooftop solar on their homes and businesses. This constant uptick in solar panel generation has served as the backbone of solar energy’s growth, which increases the viability and long-term impact of solar power.
Unfortunately, the residential ITC will expire by 2022, with the ramp down beginning in 2020. Thankfully, solar panel installation costs overall have decreased during the life of the ITC. However, the solar panel industry is still preparing for a slowdown in installations in the short-term future.
What About Wind Energy?
Home wind energy came a long way from when the steel-bladed fan-type windmill was introduced to American farms in the 1870s. Small wind turbines that generate electricity are available in a range of sizes (“nameplate capacity”) from a roof or chimney-mounted 1 kilowatt (up to $7,000 installed) up to 100-kilowatt turbines mounted on a tower (about $80,000 installed). Many of those below 1.2 kilowatts are available in kits for the do-it-yourself-homeowner.
However, while the power output from wind turbines might look appealing, getting the most watts for the buck is more complicated than solar power. While the sun shines every day (even when it’s cloudy), the wind is far more fickle. Some parts of the country are also windier than others. Consequently, a consumer needs to research how much wind can be harnessed in their area.
Wind speed varies locally at different elevations. While it might seem like a light breeze at street level, it might be a dead calm at 30 feet up or even blustery at 100 feet. Hills, river valleys, trees, and buildings also affect wind speed, especially in urban settings. Keep local building codes and other rules in mind!
Costs Associated With Wind Systems
Let’s say you want to add a pole-mounted residential wind turbine to your system. The turbine costs $1,800 online with free shipping. The 30-foot pole, also purchased online with wires and a few bags of concrete, costs $500. The total cost comes to $2,300. Factor in the Federal Energy Tax credit and the price drops to $1,610.
Let’s also say you’ve done your homework regarding local average yearly wind speeds. Your new wind turbine will generate, on average, 3.4 kWh per day in a 12 mph wind zone (Class 4). However, the local average wind speed is only ten mph (Class 2). Calculating these conditions shows the opportunity to produce an average of 2.8 kWh per day (about the equivalent of 8 solar panels).
By combining wind and solar, you have an integrated renewable system that becomes a reliable source of home electrical energy 24 hours a day, generating an average of 5 kWh/day. In some parts of Texas, like Austin, where net metering is available, homeowners can sell their excess generated power to the utility company.
Wind System Maintenance Costs
Maintenance is minimal for both solar panels and wind turbines. Solar panels directly convert sunlight to electrical energy. To ensure they get the most power, they might periodically need dust and leaves cleaned off with a hose.
Solar panels wear out over time, losing on average a watt of generating capability over 20 years. Wind turbines usually only have two moving parts that are exposed to the weather. Blades are typically bolted onto the hub, which is protected by a nose cone. There is also the pivot that allows the wind turbine to swivel into the wind. Both of these can easily be replaced with parts from the manufacturer.
Something Smaller: The Grid-Tied System
A grid-tied solar/wind system retains a connection to the utility grid. That means you will still be a utility customer, but you will offset the energy you use from the utility by making your own. A Texas homeowner can now walk into their favorite home center and buy a solar power kit that will generate about 1230 watts for home use for around $7,000 (10 panels, power cleaner, and inverter). Deep-cycle storage batteries can also be added and generally cost about $250/each and last ten years.
On average, these panels alone would make about 4kWh for daily use and knock off 120 kWh from the monthly bill for a savings of up to 12% for a typical 1000 kWh bill of $119 (11.9 cents/kWh) that means a monthly savings of about $14.24 or $171.36/year.
Assuming prices and usage remained frozen, the system would pay for itself in 17 years with the Federal Tax Credit or 24 years without. That assumption, of course, is ridiculous. Energy prices spike, and the price paid for each kWh will vary during the year, trending higher over time. With this in mind, the return on a solar energy investment might only take 15 years or even less. Plus, consider that an energy savings of 12% are three times what you’d get from putting that initial $7,000 in a bank.
Another way a solar energy investment pays for itself is by increasing your home’s value. Most home mortgages are for 30 years, yet few consumers live in their homes for that long. According to the U.S. Department of Housing and Urban Development, a home’s value rises $20,000 for every $1000 in reduced yearly electricity costs. So even if you don’t remain in your home for 30 years, you will recoup much of your investment upon the sale of their home.
Before You Do Anything, Make Your Home More Energy Efficient
The easiest thing to do is find ways to cut your electrical use by eliminating inefficient devices. In Texas, the biggest user of energy in the home is the air conditioner. A 30-ton central air conditioning system with a SEER rating of 13 can use 2.3 kWh. Over ten hours that adds up to 23 kW — two-thirds of the electrical load. There are other energy-efficient ways of cooling your home.
Swamp coolers, for example, work through evaporation. Absorption chillers are common alternatives. They heat refrigerant at low pressure until it evaporates, then it loses its heat through condensing back into a fluid at high pressure. The heat source can be natural gas, propane, kerosene, or solar heat. Because there is no compressor to supply pressure, the system uses little energy.
The second biggest user is the electric water heater — heating water in your home accounts for 17% of annual energy costs. A 40-gallon heater uses an average of 8 kWh/day. Make an upgrade and switch to an on-demand system, use natural gas or propane to heat your water, or consider a solar water heating system in addition to your solar panels.
Consider switching to energy-efficient alternatives and Energy Star-rated appliances. How many lights do you use in a room, and are they CFL bulbs? Can you change from a desktop computer to a laptop or tablet? Be honest with yourself and fix any energy-wasting behaviors such as leaving lights on all day or running the air conditioning while you’re not home.
Also, think about how well insulated and weather-sealed your home is and whether it needs improving. Getting rid of the waste will reduce your energy requirements right off the top, which means you need to produce less electricity and install fewer panels.
The Best Scenario? Green Energy Combined With Smart Usage
Whether you invest in your own green power setup or simply purchase a green-energy electricity plan from your preferred provider, going green with your electricity use makes sense — financial and environmental. And when you take steps to reduce waste and optimize your electricity use, not only are you being an intelligent consumer, but you’re also reducing your energy costs.