Solar Cheat Sheet: Your Complete Guide to Getting Solar Panels at Home
Here’s where you can find the answer to all your solar panel questions, even those you didn’t know you had.
Andrew Blok has been an editor at CNET covering HVAC and home energy, with a FOCUS on solar, since October 2021. As an environmental journalist, he navigates the changing energy landscape to help people make Smart energy decisions. He’s a graduate of the Knight Center for Environmental Journalism at Michigan State and has written for several publications in the Great Lakes region, including Great Lakes Now and Environmental Health News, since 2019. You can find him in western Michigan watching birds.
Stephen J. Bronner is a New York-based freelance writer, editor and reporter. Over his more than a decade in journalism, he has written about energy, local politics and schools, startup success tips, the packaged food industry, the science of work, personal finance and blockchain. His bylined work has appeared in Inverse, Kotaku, Entrepreneur, NextAdvisor and CNET, and op-eds written on behalf of his clients were published in Forbes, HR Dive, Fast Company, NASDAQ and MarketWatch. Stephen previously served as contributors editor and news editor for Entrepreneur.com, and was the VP, Content and Strategy, at Ditto PR. He enjoys video games and punk rock. See some of his work at stephenjbronner.com.
Over the past few years, the stars (particularly that big one at the center of our solar system) have aligned to make residential solar panels increasingly appealing for meeting your home’s energy needs.
The rising costs of energy across the US, along with falling for solar panels aided by federal tax incentives, have simply made the economics of solar power not only attainable but beneficial for homeowners in the long run.
If you looked at solar just a few years ago, costs have continued to come down since then, said Ben Delman, communications director at Solar United Neighbors. It depends on your situation, but more and more homeowners and families are deciding that solar makes sense for them as a way to save money by taking control over where their electricity comes from.
Can solar panels save you money?
Interested in understanding the impact solar can have on your home? Enter some basic information below, and we’ll instantly provide a free estimate of your energy savings.
Below, we’ve collected CNET’s expert advice to get you through the solar panel purchasing process.
In this article
- How do solar panels work?
- Is there a solar panel option that works for me?
- How much do solar panels cost?
- How much money will solar panels save me?
- Can I install solar panels myself?
- Where should I shop for solar panels?
- How do I maintain solar panels?
- Does solar work where I live?
- Do I need a backup battery?
- Does solar increase the value of my home?
- Are solar panels a scam?
- What is net metering?
- Should I go solar?
How do solar panels work?
Buying a solar panel system means buying a lot of equipment the average person doesn’t have reason to know about. In the most basic terms, photons from the sun are absorbed by the solar panels and converted into direct current, or DC, electricity. For this energy to be used in American homes, it has to go through an inverter attached to the solar array to become alternating current, or AC, electricity.
Can solar panels save you money?
Interested in understanding the impact solar can have on your home? Enter some basic information below, and we’ll instantly provide a free estimate of your energy savings.
Read up on what you’ll actually be buying with the stories linked below:
- The Most Efficient Solar Panels
- Solar Energy Basics: The Magic of Photovoltaic Panels
- How Sand Becomes Solar Panels
- Here’s How Solar Panels Turn Light Into Power
- The Solar Panel Angle That’ll Generate the Most Energy Possible
- Solar Panel Efficiency: What Is It and Why Is It Important?
- What You Need to Know About Solar Inverters: Essential Solar Equipment
- Solar Cell, Module, Panel and Array: What’s the Difference?
- Bifacial Solar Panels Generate Electricity, but Not When You Put Them Here
- What’s a Virtual Power Plant? Should You Join One?
- How Much Energy Does a Solar Panel Produce?
Is there a solar panel option that works for me?
Fortunately for the solar-curious, many options exist for homeowners and even renters to get some or most of their electricity needs met with energy from the sun.
The most common way to go solar for homeowners is the installation of panels on their roofs. These systems can be purchased directly through an installer (or assembled for the DIYers) as a large cash purchase or through relatively affordable financing (such as a 1.99% APR 15-year loan). There are also options for rooftop solar for those who may not have the capital to get a project started. These are solar leases, where a homeowner pays a fixed monthly cost to a company who retains ownership of a solar system; or a power purchase agreement, in which a homeowner pays for the electricity generated by solar panels rather than the system itself.
Finally, both homeowners and renters in many places have access to community solar. This option allows people to opt in to a nearby solar farm to enjoy some energy savings.
How much do solar panels cost?
The costs of solar panels will depend on a few factors, including where you live, how much of your energy needs you want the system to cover, whether you install it yourself and whether you want a battery (which could cost as much as the system itself). The average cost was about 3 per watt in 2022 for an 8 kW system through an installer, according to the consulting firm Wood Mackenzie.
The way you pay for your system is vital. You’ll notice the biggest hit to your bank balance by paying for solar outright, while financing will spread the expense out over years but with added interest. A lease or PPA is most friendly to the budget-minded, but you won’t enjoy the long-term benefits that come with owning a system outright.
How much money will solar panels save me?
If you’re buying a system outright or financing it, you’ll receive a 30% tax credit through the Inflation Reduction Act.
To get a better idea of when to expect a return on investment, look at how much energy you’ve consumed in the past year or two and how much it cost you. Then, working with an installer, figure out how much of your energy you’d like to offset with solar and how much the system will cost. Eventually, the savings from not having to buy electricity from your utility will be greater than the cost of the solar system itself.
In terms of payback, broadly seven to 12 years is a decent average when you see returns from investment in solar after purchasing a system, Delman said.
Can I install solar panels myself?
It is possible to install most of a solar panel system yourself.- mounting the panels on your roof and connecting them to each other. But if your home is connected to a grid, you’ll need to hire a licensed electrician for the final connection needed to feed electricity to your utility.
Another thing to keep in mind if you’re doing it yourself is whether the warranties for the panels that you purchase require them to be installed by a professional, Delman said. Often when people do it themselves, they’ll hire an electrician to do the finishing work so it can get certified. It’s also good if you’re not an expert to have somebody with expertise to just go over the wiring and make sure that everything is where it should be.
Where should I shop for solar panels?
If you want to buy panels directly, most hardware stores and larger retailers have them available. If you’d like to get them through a professional, a good place to start, according to Delman, is the website of your local solar industry association (for example, the New York Solar Energy Industries Association). These organizations should have a list of its members, which will often include installers and suppliers. Typically, installers work with one or two solar panel brands.
Look for an installer who’s experienced, particularly with the kind of situation you have at your home, Delman said. Have they worked with the same roofing materials? Do you want a ground mount system installed? Check reviews on Yelp, Angie’s List, Google and others, and get references too. (Solar United Neighbors also offers resources for going solar, free of charge.)
The best way to make sure you’re getting the best deal on your solar panels is to get multiple quotes and ask as many questions of your potential installers as you need. CNET has reviewed many of the national solar companies, but it’s a good idea to check into local installers, too, who sometimes can offer lower prices.
How do I maintain solar panels?
Solar panel maintenance is generally minimal and fairly easy. Even so, we’ve got the info you need to keep your panels in the best possible shape.
Does solar work where I live?
Solar panels, in general, will work in a variety of climates, even those with frigid winters. The more important questions to ask are: Does my roof get adequate sunlight? Are any trees shading my roof? And most importantly, does my utility offer net metering?
Net metering is perhaps the most important aspect of going solar, in that it stipulates that your energy utility will pay you for the energy created by your solar panels that you don’t consume. Net metering ensures that the return on investment in going solar is financially sound.
Does solar increase the value of my home?
Going solar has another benefit for homeowners: it can boost the price of their properties if and when they decide to sell. According to studies by the Lawrence Berkeley National Lab and Zillow, homes with solar panels often sell for about 10,000 more compared to those that don’t.
Are solar panels a scam?
No. Solar panels are a proven technology that can help you shift some of your energy use to cheaper, greener electricity. But that doesn’t mean that scammy companies (while apparently rare) don’t exist. The company discussed in the story linked below recently went out of business, but a bit of caution is a good thing.
What is net metering?
Net metering.- the process by which you’re paid for electricity generated by your solar panels but sent back to the grid.- is a critical factor in whether homeowners should go solar.
Let’s say during a beautiful sunny day, you’re at work, the lights, TV and dishwasher are off, so you’re probably generating more electricity from your system than you’re consuming, Delman said. When that happens, that electricity goes to the electric grid through your electric meter to be used by your neighbors. Net metering is what ensures you receive credit for that electricity so that your investment is still being paid back even if you’re not using the electricity yourself.
You can see what your state’s policy toward net metering is here.
Should I go solar?
Solar won’t be an option for everyone. If your home does not receive adequate sunlight due to shading on your roof, you live in a state without net metering or there’s no community solar, going solar may not be viable for you.
But with rising energy costs and the falling price of solar panels, for many people there’s never been a better time to go solar. There’s options to go solar that should fit most people’s needs, whether that’s through financing, a solar lease, PPA or community solar, that will allow them to start seeing savings on their energy bills almost immediately. By most estimates, a solar system starts paying for itself after between seven and 12 years.
Powering your home with solar not only allows you to get your electricity from a clean source, but provides an unmatched return on investment that will save you money on your energy bills and boost the value of your home.
Complete solar house
“Having solar panels has given me reassurance that my bills will stay manageable.”
— Kerrie Lane, Egg Harbor City, NJ
With Sunrun, you can take control of your own electricity, and not be left at the whims of your utility company with the next inevitable rate hike. Join the more than a quarter of a million American households who have gone solar with Sunrun.
Whenever you’re ready, our solar advisors are here to help. We can provide you with a free quote. Feel free to try our Cost of Solar Calculator.
A single solar panel costs between 2.67 and 3.43 to buy and install. 4 The price of the whole system is based on its capacity, measured in watts. How big a system you need will be based on how much energy you use, your roof’s sunlight exposure and panel efficiency.
The amount you save will rely on several factors, including: 18
- Region’s sunlight exposure
- Cost of solar system (including battery, where available)
- Cost of electricity
- Energy use
- Local rebates and incentives
The average payback period for a residential solar system is between six to nine years, depending on the cost of your system, incentives and savings from your energy bill. 19
Here’s a closer look at some of the things that determine your system costs.
Here’s a breakdown of installation costs, based on findings from the National Renewable Energy Laboratory: 10
|0.30 per watt
|0.19–0.27/Wdc (Varies by inverter option)
|Sales tax varies by location; weighted national average: 6.9%
|19.74–38.96 per hour (Varies by location and inverter option)
|12.88–25.57 per hour (Varies by location and inverter option)
|(% of direct labor) Total nationwide average: 31.8%
Figures based on the average 6.2 kilowatt residential solar system.
These figures are based on the average 6.2 kilowatt solar system. The cost of each system will vary based on panel manufacturer, inverter option, location and equipment.
Maintenance of solar panels ranges from routine cleaning to major repairs. On average, households pay 150 for one solar panel cleaning. 11 Companies charge between 3 to 10 per panel based on roof slant, home height and system size. 11 Some firms charge a flat rate fee for a system cleaning. If you clean your system twice a year, as recommended, you can expect an annual bill of about 300.
If your system is damaged, you may incur additional expenses. Repairs to your system will include the of equipment and labor. Labor is typically priced at 100 per hour. Materials for solar repairs could be as little as 180 but may also be greater than 1,000. Your combined, total bill may range from 200 to 3,000. 11
The four most common types of damage to a home solar system and the costs of repairs area: 11
|Broken glass panel
|20 – 350, plus labor
|100 – 400
|100 – 2,500
Like cleaning costs, the amount you pay for repairs is affected by things like roof steepness, system type and system size. And if your panels have extensive damage, it may be cheaper to replace them. 11
When you own your system, you are responsible for the cost of maintenance and repairs. Your warranty should cover specific system failures; contact your installer before you begin repairs. A Sunrun solar lease, lets you save thousands of dollars in maintenance and repairs. You simply pay for the power, and we take care of the rest. Our comprehensive service package features the Sunrun Guarantee, which includes best-in-class monitoring, free equipment replacement, and system repairs including parts and labor, and routine maintenance.
If you’re set on buying your own home solar system, you can also purchase our full-service package, Protection Plus. While the system is yours, we’ll give you the same comprehensive support that comes with our Sunrun Guarantee.
The price of your panels will depend on the manufacturer. Sunrun partners with LG, a world leader in solar technology and panels. Striking the right balance between quality, efficiency and affordability, LG offers some of the best solar panels on the market today. 14
For a given manufacturer, higher efficiency panels cost more. 5 The good news is that the highest efficiency panels aren’t always needed, especially if your roof gets plenty of sun.
Another factor in determining your total home solar system cost is where you live. Here are the states with the lowest and highest average solar system costs:
|Florida: 9,198 – 11,970
|Rhode Island: 13,104 – 15,792
|Arizona: 10,332 – 12,096
|New York: 12,264 – 16,044
|Maryland: 10,332 – 12,768
after 30% federal solar tax credit 5
Just because a residential solar system costs more in a given state doesn’t mean it’s any less cost effective. 5 Local incentives can make a huge dent in solar installation costs even in the most expensive states.
The three most common kinds of solar panels are monocrystalline, polycrystalline and thin film. 6 Here are the essential features of each:
|Monocrystalline are the most efficient on the market today, which means you need less panels to fulfill your energy needs. Monocrystalline solar cells are single-crystal silicon, giving electrons greater freedom to move and create electricity. 7 These panels are typically black, giving your roof a sleeker aesthetic. Monocrystalline panels also maintain their efficiency for longer and usually come with a 20 to 25 year guarantee. 6
|Polycrystalline panels are made with many fragments of silicon. 7 While this makes them less efficient, it creates less waste in production and are more affordable. 6 They also tend to have a blue tint, likely the most recognizable feature of solar panels today.
|Unlike monocrystalline and polycrystalline panels, thin-film isn’t made of silicon. Instead, it’s layered with photovoltaic materials on metal or glass. 8 While the least expensive option, thin-film isn’t as efficient and likely won’t cover the average household’s energy needs without taking up lots of space. 6
The type of solar panel you choose will factor into the price of the system. But remember that if you decide to lease, you’ll be paying for the power rather than the panels. The cost of solar will come down to the amount of solar power you’re projected to use under your lease agreement.
Solar panel mount types
While solar panels are the main component of a solar system, how you mount the panels will also affect the cost. There are three mount types: 6
|10–15 per mount
|Fixed-mount are stationary and can’t be moved to capture more sunlight, making them less efficient than other mounts. However, they’re also the least expensive. In addition, states with consistent sunlight such as Arizona and California are the least affected by this.
|50 per mount
|Adjustable-mounts can be tilted to maximize solar energy production. This mount type can also lay your panels flat during a storm to avoid wind damage. While they’re more expensive than fixed mounts, adjustable-mounts might make the most sense for regions with more seasonal climates and less space to maximize energy production.
|500–3,000 per mount
|Tracking-mount follows the sun’s arch for maximum energy production. Even though they’re the most expensive, track-mounting could add 45% in energy production and might be worth considering based on your location. However, track mounting also requires more attention and will be much more costly to maintain.
Fact vs Myth: Can Solar Energy Really Power an Entire House? [2023 Update]
One of the most frequently asked questions by homeowners in regard to solar power is, “can it really power my entire house?” The answer to that is actually quite simple – yes, solar can indeed power your entire home. But explaining exactly how solar energy can power the entirety of your home is a little more complicated.
According to the United States Solar Technologies Office. “the amount of sunlight that strikes the Earth’s surface in an hour and a half is enough to handle the entire world’s consumption for a full year.”
With the sun delivering an awe-inspiring amount of energy to the earth on an almost hourly basis, it stands to reason that solar energy can indeed power an entire house. Let’s take a deep dive into how exactly this happens and how you can make estimated solar calculations at home.
How Does Solar Energy Work?
Simply put, solar panels work by capturing particles of light (or photons). These photons break electrons free from their atoms, knocking them apart, and generate what we know of as the flow of electricity.
Now, this statement may sound complicated to varying degrees based on how much science you remember from back in high school, but the main takeaway is that sunlight is converted to energy through a seemingly complex, but actually surprisingly simple process which involves capturing the sun’s energy, and turning into electricity. Once the energy is generated, it’s used to power devices, products, and homes.
If you want to learn more about the science of solar energy, take a look at our blog on frequently asked questions in regards to solar energy.
How Can Solar Energy Power Your Whole House?
So, can a home solar system really power your entire house? As we’ve stated, yes! But, it does depend on a few variables that you’ll want to take into consideration when deciding to go solar. Mostly, these variables are used to determine the power output levels and the number of solar panels that your home requires to meet your energy goals. In this case, we’ll explore the goal of running your whole house entirely on solar power.
Every home is different, and every home will require a unique amount of solar panels in order to effectively convert the sun’s energy into the energy you can use to power your home. At SunPower by BlueSel, we understand how to install your panels at the perfect angle, in the perfect spot, to maximize sun intake. Installing your solar panels in the perfect spot can make a big difference in regard to energy.
HowStuffWorks.com explains perfectly how solar panels can power an entire house:
“As solar panels protrude from the precipice at various angles, they capture whatever sunlight is available, and convert it to DC power. An inverter converts the DC power to AC power (which is what we use to power electronic devices). And for people who want to completely power an entire home with the sun’s rays, there are systems available to convert and store extra power in the form of battery energy.”
What’s Your Home’s Monthly Energy Consumption Rate?
According to U.S. Energy Information Administration. “in 2019, the average annual electricity consumption for a U.S. residential utility customer was 10,649 kilowatt-hours (kWh), an average of about 877 kWh per month.”
For the sake of simplicity, let’s round that number up to 900 kWh per month, and let’s assume that this number applies to most residential properties in the United States. If we divide 900 by 30, we can determine that most homes consume 30 kWh per day or 1.25 kWh per hour.
However, it’s important to remember that this number does vary depending on your home’s size and the amount of household energy consumption activity. You may also find your home’s specific energy consumption rate listed on your monthly electricity bill. So, be sure to check that out before making your own calculations.
How Many Hours of Sunlight Does Your Home Receive?
After determining your household’s monthly energy consumption, you’ll also want to figure out how many hours of peak sunlight your home can expect to receive.
Now, we understand that this number varies day-to-day, especially in Massachusetts, but making an educated estimate and then using the equation outlined below will allow you to determine a rough idea of the power required before consulting a professional solar installation company.
As a SunPower Master Dealer, we’ll use their comprehensive, yet straightforward equation to determine how many watts of power your home would need per day to run off solar power.
“Multiply your hourly usage by 1,000 to convert your hourly power generation to watts. Divide your average hourly wattage requirement by the number of daily peak sunlight hours for your area. This gives you the amount of energy your panels need to produce every hour. So the average U.S. home (900 kWh/month) in an area that gets five peak sunlight hours per day would need 6,000 watts.” (source: SunPower )
What Type And How Many Solar Panels Does Your Home Need?
Depending on the maker, solar panels come in all different shapes, sizes, build qualities, and power outputs. You’ll want to speak in-depth with a professional solar system installation consultant to determine the best and most efficient solar panels for your home. However, for today’s article, we’ll use SunPower’s A-Series Solar Panels as our example.
Panels range in wattage capacities with conventional solar panels typically starting at around 250 watts per panel. SunPower’s A-Series panels produce up to 400 watts per day per panel in peak conditions. Therefore, if we divide the energy needed to power the average home, 6,000 watts, by the 400 watts produced by each panel, we would determine that the average home requires at least 15 A-Series panels to run entirely off of solar energy in peak conditions.
Professional Solar Installation Consultations
While these numbers can give you a handy pen-and-paper estimate on what your home requires to run entirely off solar power, it’s necessary to consult with a professional solar installation expert. With many specific variables to consider (such as roof condition and angle, nearby shading, daily sun exposure, home size, etc.), you’ll want to ensure that professionals determine the most accurate data. From here, you can decide whether or not solar power is suitable for your home.
Enjoy all the benefits of a solar energy system while reducing your carbon footprint on the planet. Solar energy can power your entire home, as long as the right company is working with you to install your panels.
- Do Solar Panels Cause Health Issues? June 20, 2023
- Solar Facts You Need to Know June 14, 2023
- Summer Solar FAQs May 21, 2023
- Why Now is the Time to Go Solar in Massachusetts May 15, 2023
- Guide to Solar Panel Maintenance Costs April 20, 2023
The Cost of Solar Panels: Is It Worth It?
Do the benefits of solar panels outweigh their costs?
Nathaniel Riley brings 28 years of experience in financial services, including merger-arbitrage trading, hedge funds, and alternative investments.
Somer G. Anderson is CPA, doctor of accounting, and an accounting and finance professor who has been working in the accounting and finance industries for more than 20 years. Her expertise covers a wide range of accounting, corporate finance, taxes, lending, and personal finance areas.
Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies.
What Is Solar Power for the Home?
Homeowners who install solar power systems can receive numerous benefits: lower electric bills, lower carbon footprints, and potentially higher home values. But these benefits typically come with significant installation and maintenance costs and the magnitude of the gains can vary widely from one house to another.
This article will help homeowners make the financial calculations required to determine the viability of solar power in their homes.
- Those seeking to go green may want to consider equipping their home with solar panels.
- Not only is solar power good for the environment, but you can earn money selling back excess power to the grid.
- While costs have come down over the past years, installation and maintenance of solar panels can be quite expensive.
- Solar panels are best suited for homes that receive ample sun exposure throughout the year.
- Before committing to solar power, be sure to understand both the social and economic factors.
Understanding Solar Power
In principle, working out whether it makes financial sense to install solar power for your home is simple. You will need to calculate:
- The cost of a solar power system
- How much energy it will produce
- What you would otherwise pay for the same amount of energy
- How many years it will take for your upfront investment to pay for itself in saved energy costs
- Whether the system will pay for itself in five years
If it does and you have the upfront capital, it’s probably a great idea. If you’ll have to wait longer for savings or take out a loan to afford the system, you’ll need to think the decision through carefully.
In practice, however, things are not this simple. There is a large variation in each of these factors, and that can make the costs and benefits of installing solar power for two homes—even if they are neighbors—radically different.
There are some tools that can help, though. Solar Reviews offer a calculator that will quickly provide you with representative costs and savings for a solar power system in every part of the U.S. Calculators like this are a good place to start if you are new to solar energy and want to understand the basic cost model.
In the rest of this article, we’ll take you through each of the key factors you should consider when calculating the costs and potential savings of solar power for your home.
Before getting solar panels, get quotes from several reputable installers to compare.
The Cost of Solar Power for Homeowners
First, let’s look at the cost of installing a solar power system for your home. The average, upfront cost of a residential solar power system is between 3,500 and 16,000.
Why the huge range of costs? Well, a lot of the variation depends on the size of the system you’d like to install and the type of panels you want to use. Whatever system you use, keep in mind that solar power is capital intensive and the main cost of owning a system comes upfront when buying the equipment. The solar module will almost certainly represent the largest single component of the overall expense.
There are some additional costs, as well. Other equipment necessary for installation includes an inverter (to turn the direct current produced by the panel into the alternating current used by household appliances), metering equipment (if it is necessary to see how much power is produced), and various housing components along with cables and wiring gear. Some homeowners also consider battery storage. Historically, batteries have been prohibitively expensive and unnecessary if the utility pays for excess electricity that is fed into the grid (see below). The installation labor cost must also be factored in.
In addition to installation costs, there are some further costs associated with operating and maintaining a PV solar array. Aside from cleaning the panels regularly, inverters and batteries (if installed) generally need replacement after several years of use.
While the above costs are relatively straightforward—often a solar installation company can quote a price for these for a homeowner—determining subsidies available from the government and/or your local utility can prove more of a challenge. Government incentives change often, but historically, the U.S. government has allowed a tax credit of up to 30% of the system’s cost.
details on incentive programs in the U.S., including programs within each state, can be found on the Database of State Incentives for Renewables Efficiency (DSIRE) website. In other countries, such information is often available on government or solar advocacy websites. Homeowners should also check with their local utility company to see whether it offers financial incentives for solar installation and to determine what its policy is for grid interconnection and for selling excess power into the grid.
The U.S. installed 19.2 gigawatts of solar PV capacity in 2020 to reach 97.7 GWdc of total installed capacity, enough to power 17.7 million American homes.
Calculating Your Energy Production
The second factor you’ll need to consider in your calculations is the amount of energy your system will produce and when it will do that. This can be a very complicated calculation to make, even for experienced solar engineers. However, let’s run through the basics.
One of the most important considerations is the solar irradiation levels available in the home’s geographical location; in other words, how sunny it is where you live. When it comes to using solar panels, being closer to the equator is generally better, but other factors must be considered. The National Renewable Energy Laboratory (NREL) produces maps for the U.S. showing solar irradiation levels and the tools on its website provide detailed solar information for specific locations within the U.S.
Equally important is your home’s orientation: For rooftop arrays, a south-facing roof without trees or other objects obstructing sunlight maximizes the available solar energy. If this is not available, panels can be mounted on external supports and installed away from the house, incurring additional costs for the extra hardware and cables.
And then you must factor in the size of your system. Solar panel size is quoted in terms of the theoretical electrical output potential in watts. However, the typical output realized for installed PV systems—known as the capacity factor—is between 15% and 30% of the theoretical output. A 3 kilowatt-hour (kWh) household system running at a 15% capacity factor would produce 3 kWh x 15% x 24 hr/day x 365 days/year = 3,942 kWh/year or roughly one-third of the typical electricity consumption of a U.S. household.
How Much Will You Save?
Once you know how much a solar power system will cost upfront, and how much energy it will produce, you can (theoretically) predict how much you can save in energy costs per year.
This is another tricky calculation, however, because a lot depends on how you pay for electricity at the moment. Utilities often charge residential consumers a flat rate for electricity, regardless of the time of consumption. This means that instead of offsetting the expensive cost of peak electricity production, homeowners’ solar power systems merely offset the price they are charged for electricity, which is much closer to the average cost of power production.
However, many utility companies in the U.S. have introduced pricing schemes that allow homeowners to be charged at different rates throughout the day in an attempt to mirror the actual cost of electricity production at different times: This means higher rates in the afternoon and lower rates at night. A PV solar array may be very beneficial in areas where this sort of time-varying rate is used since the solar power produced would offset the most costly electricity.
Exactly how beneficial this is for a given homeowner depends on the exact timing and magnitude of the rate changes under such a plan. Similarly, utilities in some locations have pricing schemes that vary over different times of the year due to regular seasonal demand fluctuations. Those with higher rates during the summer make solar power more valuable.
Some utilities have tiered pricing plans in which the marginal price of electricity changes as consumption rises. Under this type of plan, the benefit from a solar system can depend on the electricity use of the home; in certain areas subject to rates that increase dramatically as consumption increases, large homes (with large energy needs) may benefit most from solar arrays that offset high-cost marginal consumption.
For some homes, it might even be possible to make money by selling solar power back to the grid. In the U.S., this is done through net metering plans, in which residential consumers use the power that they put into the grid (when the rate of electricity generation from the solar array is greater than the rate of household electricity consumption) to offset the power consumed at other times; the monthly electric bill reflects net energy consumption. The specific net metering regulations and policies vary across regions. Homeowners can refer to the DSIRE database and should also contact their local utilities to find more specific information.
Calculating Solar Power Costs
At this point, you will be in a position to make a final calculation, and an assessment of whether solar power makes sense for you.
The overall cost and benefit of a solar system can theoretically be evaluated using the discounted cash flow (DCF) method. Outflows at the beginning of the project would consist of installation costs (net of subsidies) and inflows would arrive later in the form of offset electricity costs (both directly and through net metering).
However, rather than using DCF, the viability of solar power is usually evaluated by calculating the levelized cost of electricity (LCOE), then comparing it to the cost of electricity charged by the local utility. The LCOE for household solar will typically be calculated as cost/kilowatt-hour (/kWh or ¢/kWh)—the same format commonly used on electricity bills. To approximate the LCOE, one can use the following equation:
LCOE (/kWh) = Net Present Value (NPV) of the Lifetime Cost of Ownership / Lifetime Energy Output (kWh)
The useful life of a PV solar module is generally assumed to be 25 to 40 years. The cost of ownership includes the maintenance costs, which must be discounted to find the NPV. The LCOE can then be compared to the cost of electricity from a utility; remember, the relevant price is that which occurs during times at or near peak PV solar production.
Is Solar Power Worth It?
Once you’ve worked through all of these calculations, you’ll likely end up with a single number—the number of years it will take for a solar system to pay for itself in savings from your energy bills. If you live in a sunny part of the country and have high utility bills at the moment, you could be looking at a system that will reach this point in five years. Other homeowners may have to wait 10 or 20 years to reach this point.
In other words, most homeowners will eventually see a benefit from a solar power system; it might just take decades for this to be realized. Whether it is worth installing such a system therefore often comes down to a number of much less technical factors than those we’ve listed above: how long you are going to stay in your home, the subsidies available in your area, and simply whether you want to do your bit for the environment.
Pros and Cons of Solar Panels for Your Home
Like most things, solar power has its benefits and drawbacks. At the same time, some economic costs may be defrayed by the social benefits to the environment and lowering your carbon footprint, which may be more important to you than a purely monetary evaluation.
- Green energy that lowers your carbon footprint
- Net metering allows you to sell back excess energy produced
- You may be eligible for certain tax breaks
- Installation and maintenance costs are still high
- Solar only works when the sun is out
- Parts of the system need to be replaced every few years
- Some tax breaks may have expired or will be expiring
Can a House Run on Solar Power Alone?
Practically, it is not often possible. This is because solar only works when the sun is shining—when it is cloudy or nighttime, they do not generate electricity. There are some battery solutions to provide power during these times, but they still tend to be quite expensive. Most homes with solar panels still rely on the grid from time to time.
Do You Really Save Money With Solar Panels?
Depending on where you live, it is possible that the system can pay itself back and more over time. This is because you won’t be spending as much money buying electricity from your utility. If net metering is in place, you could reduce your bills even further.
How Much Does a Solar Panel Cost?
have been coming down steadily over the years. The total cost will depend on how many kilowatts of power your array will generate. According to consumer reports, after solar tax credits are accounted for, the cost for a solar panel system on an average-sized house in the U.S. in 2021 ranges from 11,000 to 15,000.
How Long Will It Take To Recoup the Initial Cost?
Depending on where you live and the size of your system it can take, on average, anywhere from 10 to 20 years to break even on a solar installation.
The Bottom Line
Determining whether to install a PV solar system may seem like a daunting task, but it is important to remember that such a system is a long-term investment. In many locations, solar power is a good choice from a financial perspective.
Even if the cost of solar power is found to be marginally more expensive than electricity purchased from a utility, homeowners may wish to install solar power to avoid future potential fluctuations in energy costs, or may simply wish to look beyond their personal financial motivations and use solar for green living.