According to industry analysts, 2010 witnessed a significant rise in domestic solar-electric installations in the United States, in all three market sectors -- residential, commercial, and utility. The Solar Energy Industries Association reports that, in financial terms, the U.S. solar market increased significantly in value over the previous year, totaling $6 billion as compared to $3.6 billion in 2009 (see References 1, pages 5 and 3). With this rate of growth, it's clear that word has gotten out about the possible benefits of installing solar-power systems. As a homeowner, however, encouraging market trends don't mean much to you if you don't first get the facts.
The installation price of a residential solar-electric system in 2010 was $5 to $8 per watt (see References 1, page 10). Therefore, a small to medium-sized residential system generating 2 kilowatts (kW), or 2,000 watts, of electricity would cost $10,000 to $16,000. For a larger system generating 5kW of electricity, the total equipment and installation cost would be $25,000 to $40,000. (See References 2)
Return on Investment
The average household in the United States spent about $2,200 on utility bills in 2009. This amount encompasses energy used for heating, cooling, hot water, appliances, lighting and other household electricity consumption (see References 3). If your house operates entirely on solar energy, from the heat pump to the electrical system, you would save the entire amount of your annual utility bill each year. You might reap extra financial rewards if your system generates more power than you use and you are able to feed the excess power back into the main grid, a service for which your utility company would pay you.
A residential photovoltaic power system can generate 76 to 109 percent of its initial cost over 20 years (see References 4, page v), depending on available incentives and other variables. The primary, and most expensive, component of the system is the PV array -- the solar-radiation collecting panels -- many of which come with a 10- to 25-year warranty, depending on the brand (see References 5).
Tax credits are available through the federal government's Energy Star program to defray the cost of installing home solar. As of 2011, American homeowners can get up to 30 percent of the cost of their solar-power system, including installation, for their new or existing, primary or vacation residence. This tax credit is effective through 2016 and has no upper limit. Homeowners can apply this credit to purchase and installation of solar water-heating for the home as well. Qualifying solar installations must comply with local building codes. (See References 6) In addition to federal, state and local utility incentives, new financing models are available. These include third-party ownership, favorable property tax assessments and the sale of solar renewable energy certificates (see References 4, page v).
- Solar Energy Industries Association; U.S. Solar Market Insight -- 2010 Year in Review -- Executive Summary; 2010
- "Mother Earth News"; What's the Average Cost to Install a Solar-Electric System to Power Your Home?; Linda Pinkham; May 2009
- Energy Star: Where Does My Money Go?
- National Renewable Energy Laboratory; Solar Photovoltaic Financing: Residential Sector Deployment; Jason Coughlin and Karlynn Cory ; March 2009
- Wholesale Solar: Compare Solar Panels Before You Buy
- Energy Star: 2011 Tax Credits for Consumer Energy Efficiency
Lynne Haley Rose has written extensively for Internet publications on topics in business, finance, fitness and renewable energy. Her poetry has been honored by the Washington Poets Association and published in "Poetry Northwest," "Willow Springs" and online at Fogged Clarity. She has a Bachelor of Arts from Gonzaga University and a Master of Fine Arts in creative writing from Eastern Washington University.