Curious about whether or not your solar panels are worth the hefty price? Read on to see the true cost.
The monthly savings from your solar panels are dependent upon five main factors: the cost of installation, the climate, government incentives, the level of electricity usage, and your electricity cost. The culmination of these factors will dictate the extent of your monthly savings.
Curious about your potential monthly savings? Read on to discover what solar panels can do for you.
Cost of Installation
The first thing that you need to consider before you can calculate your monthly savings, is how much it will cost you to install your solar panels. The overall cost directly related to the size of your home, as naturally the larger your home, the more electricity you will need for everything to function properly.
The cost of installation will be largely dependent on where you live and the supply and demand of solar panels, but as a general rule of thumb, expect to spend between two and four dollars per watt for the installation process. We will find the average between these two, and say that it is three dollars. With this figure in mind, we can now move forward and assume a medium-sized home will have a total of 5kW installed total, so we can multiply this out and see that that total cost will be fifteen thousand dollars for installation.
As you would naturally expect, anything that impedes sunlight will naturally lower the productivity of your solar panels. With this fact in mind, your monthly savings from your solar panel will be largely affected by the climate of where you put them. If you put it somewhere like Seattle, with high levels of precipitation and oftentimes cloudy skies, your net savings are not going to be very good. If, however, you put your solar panels in a warm place like Mesa Arizona, you can expect to save a fairly significant amount of money, as the climate is much more conducive to solar power.
Here are some interesting figures to show how important a good climate is to the effectiveness of solar panels. Mild cloudiness has been shown to lower energy production from solar panels by up to twenty-five percent. Cloudy days have been shown to lower the energy production of solar panels by nearly seventy percent, making them very ineffective.
The less your solar panels are affected by cloudy or rainy weather, the more money they will save you on a monthly basis, and the better long-term investment they will be. If you do live in an area that is cloudy, although it isn’t ideal, it is not the end of the world. Recent solar panels are built with something known as net metering, which allows them to store extra electricity produced on sunnier days for cloudy days, meaning an occasional cloudy day will not have a significant effect on your home’s day-to-day operations.
One of the best things about solar panels, and one that will have a significant impact on your monthly savings, is the government incentives that are provided. The government has recently passed many initiates that encourage investment in green energy, and as a result, there are several tax write-offs from purchasing solar panels. One of the biggest is if you have solar panels installed before the year 2023, the government will give you a tax credit worth a quarter of your installation costs.
These are significant savings, as this will save you several thousand dollars in installation costs. It will also play a role in your net monthly savings, as it will add to the money saved each money from using solar by largely decreasing the duration of the payback period, and allow your panels to become profitable much quicker. In addition to the federal benefits that have been states, state and local government also have additional incentives for solar panels, making the cost significantly cheaper than it would be originally.
There is a great deal of variation in terms of tax incentives, as states like Hawaii and California offer a lot more than other states such as Texas and Alaska. Nonetheless, it would be a good use of your time to read over your state and local governments’ tax write-offs, as it will make your solar panel much more affordable and easier on your wallet.
Level of electricity usage
To determine your net monthly savings from solar panels, you simply need to calculate how much you spend each month currently. This can be done by multiplying the costs per watt by the total amount used on a monthly basis. Now contrast this with the cost per watt being saved with solar panels, and subtract the difference between the two. This will be your monthly savings, but to understand your net monthly savings, you will need to calculate how long it will take for your savings to equal or exceed the total cost of the solar panel installation.
Cost of electricity
This will play a significant role when calculating your net monthly savings. Why? Because there are significant variation amount states and the price of electricity there. For example, if you live in a state with a relatively low population, such as South Dakota, you will likely spend a lot less on your monthly electricity bills. As a result, installing solar panels will not yield as many savings. If you install this exact same solar panel in a state with higher demand and a higher population, such as California, then you will save a lot more money, as the regular cost of utilities is significantly higher.
Another factor to consider when trying to calculate your monthly savings is the natural tendency of electricity costs to increase over time. This occurs as a result of population growth, as the demand in a given area for electricity continues to increase, often at a much quicker rate than the communities mean to build more plants to produce electricity. With this in mind, over time, the longer you own a solar panel, the higher your monthly savings will be relative to what you would’ve been paying. In this way, there is a positive relationship between the duration of time in which you own a solar panel and your net savings.
This is important to consider, as your first few months of owning a solar panel will save you significantly less than it would ten years down the road. To give a sense of perspective of how much a solar panel can save you monthly relative to your initial bill, consider that a solar panel saves around 20 cents for every Kilowatt per hour of electricity generated. With this in mind, we can multiply it by a modest figure of 800 Kilowatts per hour for the month, and calculate a net savings of one hundred and sixty dollars for the month. This is a significant amount of money saved! Not only that, but it will likely increase over time.