Solar costs have so many variables, it is difficult to put an exact number on the cost of solar power. It will vary greatly from household to household and state to state. There are currently federal tax credits to consider and some states also offer tax credits or deductions to install solar power.
Added to that, solar panels will last about 25 years, inverters 15–20 years and batteries anywhere from 10–15 years. The good news is that all three of those components are lasting longer all the time and the purchase cost is going down as more and more products flood the market and solar becomes more popular to consumers.
There are a lot of numbers out there in cost per kilowatt of every kind of power including solar. Many of the solar numbers being quoted are outdated so if you are doing your own research be careful of that. There is a general consensus that the costs are going down and will continue to do so.
Another problem you will run into is that the cost numbers that are published don’t include all of the costs. For example, Washington State has one of the lowest basic electrical rates in the country but by the time the state and local authorities get done tacking on their add-ons the price goes up considerably.
We decided to take a look at our own costs which we can identify now that we have been operating for two years, going on three.
Our system operates a modern 1500 SF house with attached garage, woodshed, and carport and a 1300 SF barn. We also have a well with a 240v pump. Our appliances are typical of most households.
Our initial cost installed was $22,000. The Federal Government offered a 30% full tax credit so we only had to pay $15,400 for the system.
I am going to assume the life expectancies of the main components per the following;
Panels – 25 years
Inverter – 20 years
Batteries 12 years
I’m using 20 years as my cost timeline because the panels and inverter will last that long. Maybe the inverter will be a couple of years short but the panels will last even longer so that would even out. It’s just an estimate and any one of these components could go over or under this valuation. Since the batteries only last 12 years give or take, I will prorate the next 8 years with todays replacement costs for a total of 20 years.
We also have to add the generator and fuel costs. We use our backup generator about 100–125 hours per year. To keep this article simple I’ve calculated that cost to be $538.00 per year.
Here is how the totals break down:
System cost for 20 years $15,400
Battery Replacement 8 years $ 4,200
Generator and Fuel $10,750
Grand Total for 20 Years $30,350
That equals $1,517 per year or $126 per month or .68 per KWH (per what my system produces).
Where I came from we paid .20 per KWH for public power. Some areas of the country pay much more.
At this point it looks like I am paying a small fortune for solar power but the above information is not complete. If I am going to compare apples to apples I also have to include the cost of public power installation in our formula. It is stated above that I paid .20 per kWh for power where I used to live. That’s true. That is everything that is on the bill but the bill does NOT include costs to hook your power up to your house. The solar numbers quoted above do. Remember that my solar price included installation.
If you live in the city next to a power pole, you might pay anywhere from a few hundred dollars on up to have your power connected but if you build your house further away from the power lines it can cost anywhere from $8.00 to $14.00 per foot to get connected to the power lines. In my case it would have cost $8,500 IF my property were next to a road that had power lines on it. I just had an estimate done for a client that wants to build on 80 acres and his quotes ran from $17,000 to $25,000 to connect to the local power utility. Because I live so far from the nearest power line my actual costs would have been over $40,000 to bring power to this property.
If we use the example above of paying $.20 per kWh and then add the power connection fee to it, that would compute to another $.14kwh bringing the total to $.34kwh and $.62kwh for my client. All of a sudden, solar power looks to be much more competitive.
We can draw several conclusions from this pricing exercise by looking at the numbers above. It is cost effective to have solar power if you live in a sunny climate and don’t have to use a generator much. It is cost effective to have solar power if you build too far away from the power grid (the rule of thumb is ¼ mile).
There is also one other factor to add to the equation. My price per KWh won’t go up for 20 years. I doubt you can say the same for those on public power. By that time my price of $.68 per KWh might be looking pretty good.