What’s the Average Cost to Install a Solar-Electric System to Power Your Home?

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Solar home

What’s the average cost to install a solar-electric system to power your home?

This question is one of the most frequently asked in the industry, and also the question that makes most solar installers very uneasy — not because they don’t want to give you a forthright answer, but because the correct answer for any individual will depend on a number of variables that dramatically affect the price.

For example, is your home on-grid or off-grid? If it’s off grid, you will need additional equipment such as a charge controller, monitors and storage batteries. Next you will need to figure out how much energy your home will use and how much storage (number of batteries) you will need. The size of your system and battery bank will depend on how much sun your location receives (solar insolation) and how many consecutive days overcast conditions may keep your system from producing energy. More than likely, you will want to add a backup engine-generator to your system rather than having to size your battery bank to meet the worst-case scenario. A generator will also help you maintain the health of your battery bank, safeguarding a large part of your investment.

Most off-grid homes need to be very energy-wise to keep costs for a solar energy system within bounds. Although if the utility grid is located more than one-half mile away, even a fairly large solar-electric system will cost less than having the utility bring in power. To keep system costs down, the quick rule here is that every dollar spent on saving energy, such as using low wattage, compact fluorescent light bulbs and installing energy saving appliances, will save $5 or more on solar generating equipment. Some types of appliances, such as clothes dryers, electric ranges and most air conditioning units are simply altogether impractical.

For an on-grid system, the key factor to understand is what your goals are. Are you looking for self-reliance during grid outages? If yes, your system will cost a little more for batteries and a charging system, sized according to how many days of autonomy you might need before grid energy is available again.

Or is your goal a zero-energy home — where your solar-electric system offsets all of your energy use on an annual basis? Or are you just interested in doing your part for the environment by producing as large a portion of your electricity as you can afford, or for which you have space that you can allot to energy generation? In any case, the starting point is to look at your utility bill and find out how many kilowatt-hours you use on average each day.

Many people mistakenly think that the size of their home is a major factor in determining the size of their solar-electric system. In fact, a home’s size is mostly irrelevant. The size of your system and its costs will depend on how much electricity you use and where you live. For example, a 2 kW system in Minnesota will produce very different results than the same system located in Arizona. A home with an electric water heater and electric range will use more electricity than a home with a tankless water heater and gas stove.

The size of your system and its costs will depend on how much of your electrical usage you want to offset and also how good the solar resource is in your area. A number of tools to determine this information are available on the Web, but the best noncommercial site is the National Renewable Energy Laboratory’s (NREL) PV Watts calculator.

Take a look at the generic examples in the accompanying table and you will see a huge variance in system costs. Getting a grasp on the difference between the sizes shown in the table is not very easy because of all the variables. What size system would you need? Sizing a system can and should be a very detailed process. For general purposes of establishing some “ballpark figures,” most systems installed in the United States are in the range of 2 to 5 kW, with systems larger than 5 kW being exceptionally large, and systems below 2 kW being fairly modest. To put it into a more human perspective, consider my circa 1937, 3,000-square-foot farmhouse in the Pacific Northwest, which has a 2.1 kW system on a pole-mounted tracker in the backyard. Although we use an electric hot water heater and electric stove, all of the lighting and other appliances are energy efficient models, and we are obsessively energy conscious. Our annual electrical usage each year is a miserly 4,800 kilowatt-hours, of which 75 percent is produced by the solar-electric array.

The average cost across the country for a professionally installed system is about $8 to $9 per watt, with batteries adding an additional 20 to 30 percent to the cost. If you are a handy do-it-yourselfer, you can save around $2 per watt, but your system may be more difficult to certify for incentives.

The table does not include federal, state, and utility incentives and rebates that may be available to you, sometimes reducing the overall cost by as much as 50 percent. Another factor to consider is whether your state and utility have favorable net metering regulations — the rate and methods by which your electric utility purchases your excess electricity production and credits your utility bill. Some places have wildly favorable incentives, while a few locations are much less enthusiastic about embracing renewable energy.

Currently the best federal residential solar incentives ever in existence (30 percent) are available for home energy systems, so there’s not likely a better time than the present to think about installing renewable energy on your home. If you consider your investment as purchasing all or part of your electricity in advance for the next 25 years or more, the upfront costs can make excellent financial sense, especially if you believe that the cost of electricity will continue to rise during that same period.

Average Costs of a Home Solar-Electric System*

System Type

2 kW
(small/average)

5 kW
(average/big)

10 kW
(gigantic)

Off-grid

$20,800

$52,000

$104,000

Grid-intertied

$16,000

$40,000

$80,000

On-grid with battery backup

$19,200

$48,000

$96,000

 

 

 

 

*Professional installation costs before incentives

— Linda Pinkham, former managing editor of Home Power magazine


Photo by istockphoto/Markus Gunn