Home Solar Power Won’t Break the Bank

Affordable solar power is now a feasible option for more homeowners thanks to local, state and federal renewable energy incentives, as well as feed-in tariffs and other policies that favor renewables.

Two men installing solar panels on a rooftop

Thanks to lower equipment costs and generous incentives, more homeowners can afford solar electric systems.

Photo By Daniel Schoenen

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In the past few years, installing home solar power has become an affordable option for many more people. As more homeowners tap into solar power, we collectively reduce our reliance on fossil fuels that drive climate change. Here are the factors that are changing the playing field.

Lower prices. Solar panels are a sizeable investment, but according to a recent report from the Solar Energy Industries Association, the average national price for a solar electric system is now less than $5 per watt installed. That’s a notable drop since 2009, when prices averaged $8 per watt. Ten years before that, they were about $12 per watt. A small home solar electric system might be 2 kilowatts (kw) — or 2,000 watts. At $12 per watt, the system would have cost $24,000. At $5 per watt, it’s more like $10,000.

Federal incentive. You can receive a large federal tax credit for purchasing a home solar electric system. This tax credit — which is available through 2016 — is 30 percent of the price of the system, with no upper limit. So for that same 2-kw, $10,000 system, the cost would now be down to $7,000. (For more information, visit Energy Star.)

Local incentives. As energy prices climb and the public’s understanding of climate change deepens, many states are taking steps to support renewable energy, including tax incentives and grant programs. Twenty-nine states have adopted Renewable Portfolio Standards, which set specific quotas for how much of a utility’s power must come from renewable sources. To comply with these policies, many utility companies offer rebates to customers who install grid-connected solar electric systems, and those rebates can add up.

Kansas City, Mo., for instance, has a big local rebate — $2 per watt. Jeff Droz is a solar installer in the area, and his company, Roof Power Solar, installs systems that are about $4.50 per watt, or $9,000 for a 2-kw system (before rebates). The local rebate and the federal tax credit would bring that cost to $3,500.

When the costs are that low, solar panels pay for themselves relatively quickly in lower utility bills. For residential home solar power projects, Droz says the payback period is typically five to six years. A similar project without any local incentives would take roughly twice as long to pay for itself. For businesses, the incentives are even bigger, and the payback period can be less than two years. Quite the bargain, says Droz: “Very few investments will return your money in a couple of years and continue to save thousands of dollars each year for 25-plus years.”

Getting the rules right. While incentives are enticing, they’re not the only factor in small-scale solar’s growth, says Jim Kennerly, a senior policy analyst at the North Carolina Clean Energy Technology Center. “Incentives are important, but they’re going to become less important than rules. Rules are what will allow you to sell your power,” he says. Most utility companies allow homeowners to connect to the utility’s grid and sell their excess power. Related policies include interconnection standards (technical, legal and procedural requirements that customers and utilities must abide by), net-metering regulations (which essentially allow you to “bank” your excess electricity production on the grid), and feed-in tariffs (long-term contracts with a utility to buy your power at a set price).

No set of renewable energy incentives or policies can be taken for granted. Even net metering, which enjoys widespread support and is now available in 43 states, is starting to meet resistance from some utilities. To keep these policies in place — and spread them to more locations — people who support solar power will have to continue arguing that such policies are a good idea.

Solar where you live. To learn more about local incentives, rules and regulations, browse the Database of State Incentives for Renewables and Efficiency. To keep up with solar news in your area, watch the work of the American Solar Energy Society, a solar advocacy group with regional chapters across the United States.

Megan E. Phelps is a freelance writer based in Kansas. She enjoys reading and writing about all things related to sustainable living including homesteading skills, green building and renewable energy. You can find her on .

11/2/2013 6:36:25 PM

Once again ANOTHER Enviro-Whacko MMGW (Man Made Global Warming) Fanatic is given space within the pages of ME. Ms. Phelps writes: "As more homeowners tap into solar power, we collectively reduce our reliance on fossil fuels that drive climate change." Forget for a moment the bad grammar, the entire premise is that MMGW is seen by Ms. Phelps as a scientific fact, when IN FACT it has been proven as no such thing! The burning of fossil fuels has NOT, I repeat, NOT been proven to be a corollary cause, much less a fundamental cause, of a CURRENTLY UNDETERMINED phenomenon known as 'Global Warming'. Point of fact, the SCIENCE has debunked most of the fundamental premises proposed by the Envir-Whacko MMGW Fanatics such as Ms. Phelps, providing concrete data that has been checked and is readily available for HONEST PEOPLE inquiring into the subject matter. Ms. Phelps would do both herself and her audience a service (and certainly ME would), by editing out all the Hard Left propaganda hyperbole and sticking to the facts! Stress the LOWERING of monthly costs to the home owner applying solar power to their homes, stress the independence fact: if/when the Grid goes down due to storms, mechanical breakdowns, etc., the home owner using solar/wind power can still be 'up and running'. Mother Earth editors need to stop with the Hard Left propaganda and as Joe Friday used to say, provide us with "Just the facts ma'am, just the facts."

10/26/2013 1:56:28 PM

I still miss the former in-depth, detailed style TMEN used to have. Most articles I see now are fluff...just like this one. I could have written them off the top of my head. WTH!

10/25/2013 8:19:05 AM

The article makes the assumption that solar power is affordable because the government pays for part of it. Where does the government get its money?

10/24/2013 6:06:31 PM

"A small home solar electric system might be 2 kilowatts (kw) — or 2,000 watts." What does that mean to a layman? Is that 2,000 watts per day, per month? These articles are written for people with the assumption we know the lingo but I'm trying to figure out watt it all means to me! lol

10/23/2013 6:31:59 PM

Not seeing information about leasing equipment instead of owning. Can be option for those who are not interest in maint. costs? Fluff???