Ten years ago there were just 9,183 megawatts of solar energy installed across the United States. Today that number has nearly tripled, with more than 27.2 gigawatts of solar installations dotting America’s rooftops and landscapes. Even though solar installations have surpassed one million this past year, there is still a long, daunting road ahead until the US economy is self sustaining.
According to research done by the Princeton-based Carbon Mitigation Initiative, if we have any hope of offsetting carbon emissions in the next 50 years, the world’s solar capacity would have to increase 100-fold. On a smaller scale, closer to home, the U.S. would need to install 737 gigawatts by 2050 in order to address the climate crisis. In other words, our nation’s solar capacity would have to undergo a 1,000 percent increase over the next 14 years.
Even though energy experts like Cédric Philibert, from the International Energy Agency, believe this goal is both realistic and achievable, and even if you are passionate about going green, private solar installations aren’t always the best decision for everyone. In this article we will explore four large factors to consider when deciding if solar power is the right choice for you. From pricing and off-set costs to location and incentives, these tips will help you to choose the best energy option possible.
One: Cost of Solar Power
In 1977, the average cost of solar cells was a bank-breaking $76.67 per watt. At $0.26 per watt, today’s solar cells cost nearly 300-percent less – making solar remarkably more affordable for both private and public installations. Despite the fact that solar prices will continue to decline to unprecedented lows, cost is still one of the biggest factors influencing solar installation. As of early 2016, homeowners were paying approximately $3.75 per watt to install a solar panel system. With the average PV system sizing in at 5000 watts, the standard cost for solar installation ran around $12,500 (after the Federal ITC discount).
For most homeowners, this project would be considered a major investment. There are, however, several financing options and incentives that help to make solar installations more attainable.
- Leasing plans: A leasing plan means signing a power purchase agreement (PPA) in which a third party, typically the solar provider, owns the solar panel system. Leasing plans impact the cost, maintenance, terms, financial offsets and savings/returns on the investment of your solar system, but is a great option if you’re more interested in the electricity and environmental advantages more than the financial benefits. Leasing is also recommended if you want to avoid the responsibility of maintaining or repairing your system or if you don’t want to wait a full year before receiving the financial benefits of tax credits.
- Solar loans: Similar to home improvement loans, a solar loan is borrowed money from a lender that you agree to pay back, plus interest, in monthly installments over the loan term. Loans are a good option if you want to maximize the financial benefits of installing a solar panel system, rather than just reaping environmental benefits. It’s also a good option if you are eligible to reduce federal and state tax liabilities or if you want to increase the market value of your home.
- Federal and local subsidies: The US federal renewable-energy tax credit is a 30-percent tax credit for solar systems on both residential and commercial properties, while additional state and local incentives help to further reduce the price of solar installation. For example, with the federal tax credit, a $21,400 system would end up costing you around $15,000 and local credits would make it cost even less. If you’re able to save $1,500 a year on your electric bill, you’ll pay off your investment in 10 years of less.