A 2019 estimate puts the residential solar power penetration across the US at an abysmal 1.8%. Yet, a staggering 78% of homeowners “want” to install solar power systems in their homes. So, why is there a massive disconnect from reality?
The answer is the perceived cost of solar panels.
97% of homeowners still believe that solar panel installation costs well above $20,000. Even with decent savings, they feel that it would be decades before they realize any savings. It’s just too little, too late – they feel. However, things couldn’t be further from the truth.
Prices in Downward Spiral
Did you know that solar panel prices have dropped by as much as 45% in the past five years?
Rapid improvement in power generation efficiencies, complemented by the reduction in production costs of solar panels, has made solar panels more affordable than ever before. This trend is expected to continue over the next several decades.
That’s not all.
The introduction of Federal ITC (tax credit) has made a massive impact on the total cost of ownership (TCO) of the solar equipment. It offers homeowners 26% tax credit on the price of their solar equipment.
Besides, there’s also National Grid’s Renewable Energy Growth program, which offers homeowners steady monthly payments. These performance-based incentives (PBI) are either credited to your monthly electric bill or paid to you in cash. For a 10 kW solar panel system, you may qualify for up to roughly $4200 in annual payments or credits, at the rate of $.25 per kWh. That’s for 15-20 years.
You can give up your PBIs, and instead go for a solar grant. Rhode Island homeowners can request an upfront solar grant on their equipment purchase. At the rate of $.85 per kilowatt of installed solar, capped at $7000, they can realize sizeable returns on their investment.
Actual Cost of Owning a Solar Panel System in Rhode Island
|Standard Price of a 10kW Solar Panel||$30,000|
|Federal ITC (tax credit)||– $7800|
|Solar Grant Program||– $7000|
|Actual Cost of Ownership||$15,200|
Thanks to various incentives, you spend only $15,200 on your solar equipment.
When you consider the energy savings worth $2,400 (at $.20) annually, you recover your $15,200 over a span of 6.33 years, i.e., roughly 6 years and 4 months.
Once you break even, your solar power will continue to deliver electric bill savings for the rest of its life, which is usually in the range of 20-25 years.
Solar is a smart investment, no matter how you look at it.