Alternative sources of energy are gaining momentum in the US. Saving money and increasing sustainability of the households by building energy-efficient homes, improving insulation of older constructions, and using solar panels to provide all or part of the power used in a dwelling is gradually becoming more mainstream. While the multifaceted benefits of these Green options are desirable, their cost is often prohibitive.
The good news is that the more popular and in-demand a particular trend becomes, the better are the odds of its cost going down. Solar panels provide a good example of such a trend: as the number of manufacturers around the world, especially in China and other Asian markets, increases, the prices continue to drop. A deeper understanding of how the solar panels are priced requires a brief overview of the types of solar systems available on the market.
One of the neat features of solar power systems is high degree of customization. The major types available are grid connected, stand-alone grid-tied, off-the-grid, and stand-alone off-the-grid. Grid connected, or grid-tied systems, allow alternating between solar power generated and grid electricity simply by turning a switch. Off-the-grid systems come with a battery that is charged by solar energy and is used to provide the power. An integrated solar power system is built into a roof or added to an existing construction, whereas a stand-alone system is built separately from the existing building.
The cost of a solar power system depends on watt peaks generated. A 1,000 thousand watt, or one kilowatt, system will yield 1,000-2,000 kilowatt hours, kWh, of electricity a year, depending on the type of the climate. The higher the kWh number, the higher is the cost. But even a system with high kWh relies on the amount of sunlight it receives. In addition to kWh, the cost is defined by the type and size of the system.
Even though the prices for the solar power systems have decreased seven fold in the past two decades, the cost of solar energy is still three to five times of that of standard grid electricity. Thus going solar requires an investment, especially for those who are already connected to the grid. For those who live off-the-grid, installing a solar power system can actually be a money-saving solution. The time needed to recoup the cost of a system will depend on the initial investment, how sunny the climate is and the lifespan of a system.
In the United States, a basic 1 kilowatt peak system costs about $8,000-12,000 before sales tax. Installation of a system will add another $1,000-2,000. It is possible, however, to bring the cost down by tapping into governmental assistance programs and bank financing. Federal and state governments offer incentives, tax credits, and rebates to people purchasing solar power systems, whereas banks may offer low-interest loans for the purchase for such upgrades. Once the system is installed, its financial return is defined by the value of the generated electricity. At the very least, a solar power system is going to replace electricity that used to be provided by an energy company or a utility. In some European countries, e.g., Sweden, a household can actually sell the excess energy back to the government at an attractive price. In some instances, a solar power system can be included in the home insurance, although the terms and conditions vary greatly depending on insurance company.
The actual cost of installing a solar power system compared to the financial return it will bring depends on many variable factors and only the type of the system and installation cost can be known from the beginning. However, by doing a careful and thoughtful assessment of a system's potential in a given climate and researching local and federal incentives for alternative power systems, this cost can be controlled. Lastly, there is another aspect to it that cannot be easily priced: the pleasure of living in a sustainable, environmentally-benign home.
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