If you are looking for ways to take your home’s energy efficiency to the next level while also increasing the value of your property, then installing PV solar panels on your home’s rooftop is likely one of the top options you are considering.
In this guide, we explore the current cost per watt, total solar system cost, available tax credits, net metering, pros and cons, and whether going solar makes sense for your home.
Solar costs are typically quoted per watt installed. The current national average cost of a solar panels system can range from $2.80 to $3.50 per watt installed (before the 26% solar investment tax credits), depending on the project size, panel type, accessibility and location. This price range captures approximately 80% of all residential solar installations in the US for a system size between 5kW and 10kW of solar-generating capacity.
What is a Typical Solar System Size?
A typical residential solar power system size averages between 5kW (5,000 watts) and 8kW (8,000 watts), depending on the size and span of the roof surface and household needs.
How Many Solar Panels Do I Need?
Assuming a typical 5kW-6kW solar system, you will need between 14 and 20 panels for a complete system.
If you are using conventional panels with 250 watts of solar-generating capacity, then you will need 20 panels.
If you are using high-efficiency solar panels like those offered by SunPower with 370 watts of solar-generating capacity, then you will only need 14 panels for a 5kW system.
High-efficiency panels are generally a good option for rooftops with limited space.
Total Cost of a Solar PV System
For a larger deployment like an 8kW solar system installed at $3.06 per watt, the total upfront cost will be approximately $24,480 before applying the federal solar investment tax credits.
How Do Solar Investment Tax Credits Work?
Federal solar investment tax credits apply to the cost of the entire system, not just the cost of the panels. So, if your total upfront cost of going solar was $15,000, then after applying the 26% solar tax credits, your final cost will be $15,000 – 26% = $11,100
In 2023, solar tax credits will be reduced to 22%, so if you install a 5kW solar system in 2023, then your final cost after the solar tax credits will be $15,000 – 22% = $11,700.
How Do Solar Panels Work?
Solar panels convert solar energy carried by photons into electricity. The electricity generated by solar panels comes in the form of direct current (DC).
To use solar-generated electricity at home, direct current needs to be converted to alternating current. To do this, solar panels are connected to an inverter like SolarEdge or Enphase that convert direct current to alternating current for home use. The alternating current from an inverter is then sent to your home’s electric meter, which also acts as a connection to the power grid.
How Does Net Metering Work?
If your local electric utility offers net metering, then whenever excess electricity generated by the solar panels is not used domestically, it will be sent to the electric grid, earning you electricity use credits.
Currently, there are 41 states and District of Columbia that have mandatory net metering rules requiring local electric utilities to buy back any excess electricity from the customers.
How Do I know whether my Home is a Good Fit for Solar Panels?
While solar panels can be a great investment for many homes, some homes and their rooftops may receive too little sunlight to justify solar investment. In North America, an unobstructed rooftop that faces south is typically a minimum requirement for going rooftop solar. The larger the area of the roof that faces south, the more likely it is that you may be able to take advantage of solar energy.
One of the tools that can tell whether your rooftop has sufficient solar exposure and is project SunRoof. This helpful tool was built by Google to see whether solar panels make financial sense for a particular home.
What if my Roof is Not a Good Fit for Solar Panels?
Even if solar power doesn’t make financial sense for your home’s rooftop due to the orientation of the roof (not facing south) or its size, there are still a number of things you can do to improve your home’s energy efficiency including insulation and air-leak sealing, energy-efficient windows, CoolRoof rated roofing, solar hot water, smart energy-saving thermostats, and more.
Solar panels can help reduce your home’s reliance on the local power grid, as well as help reduce your electricity costs. If the local utility relies on burning coal to generate electricity (as opposed to nuclear or wind), then going solar can also help improve air quality, while reducing pollution.
Solar panels may not work for every home’s rooftop. Even if your roof faces south and has sufficient span to justify the installation of solar panels, you will want to make sure that your roof can handle the extra weight of the solar panels.
From an environmental perspective, solar panels take energy to produce, which means that they are not pollution free. In fact, there is significant pollution associated with the production of solar panels. Disposing and recycling of solar panels is also a tricky subject. However, the net effect of generating clean electricity over a couple of decades is more than enough to offset the pollution effects from manufacturing and recycling of solar panels.
ROI – Solar Payback Period
Residential solar power has an excellent ROI in terms of the number of years it takes for a solar power system to pay for itself. The current estimated average solar pay-back period is just over 8-10 years.
Most solar panels are designed to last for 20 to 25 years, which means that a solar power system can be an attractive investment that will pay for itself two to three times, while also boosting the resale value of your property.
Thanks to the dramatic reduction in the cost of solar energy over the last 10 years, coupled with generous federal solar investment tax credits, state and local utility incentives, going solar might be one of the smartest home energy efficiency upgrades to consider this year.