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Chapter 8: Cost Efficiency of Solar Panel Systems

The choice to install a home solar module can be daunting, considering the many options, technical differences between them and – perhaps most intimidating - the hefty initial costs. A fully autonomous system designed to power even a basic home will cost in the range of tens of thousands of dollars. However, the decision to go solar can be made more gradually, without an excessive up-front investment of time and money. One can slowly build a modular system that begins as an emergency power generator or a way to decrease on-grid demands, and gradually becomes increasingly autonomous.

Many households choose to initially purchase a solar water heater. Basic solar water heating kit costs can run in the range of a few thousand dollars and can dramatically reduce the requirements of additional solar components added subsequently. If hot water is already provided by its own thermal solar source, then photovoltaic electrical systems do not need the power to fulfill that function. On average, a solar water heating system reduces the cost of heating water by approximately 50-80%. Of course, this fluctuates by region, by the size and type of system installed, and by hot water usage.

A second option is to begin with an emergency power system. These kits are designed not to power a household autonomously, but to supply emergency power in the event of a grid blackout. They generally produce and store enough power to run an energy-efficient refrigerator for two or three days as well as basic lighting, a radio and/or TV and a microwave. They also reduce, but do not eliminate, energy demands placed on the grid during times of normal power operation.

For some, there may be no time like the present to go solar given the many available state and federal rebates and tax cuts offered for making energy-efficient upgrades to one’s home. Net expenses of installing a solar system can be cut almost in half after taking these incentives into account.

One particularly attractive way to install a new solar system is to include it into a new mortgage or refinance of a home. For example, including the cost of a new solar water heater into a thirty year mortgage usually amounts to approximately $13-20 per month. This can be reduced by up to $5 per month by the federal income tax allowance for solar home improvements. At a savings of 50-80% on hot water heating costs, many families will easily save the remaining $8-15 per month added to the mortgage with a reduced power bill. Thus, in many cases, the installation of a solar hot water heater during home purchase or refinancing can actually decrease one’s overall monthly expenses.

On the other hand, it may pay to wait to install a home solar panel system. As with any technologies in their infancies, solar systems are likely to become more streamlined, more efficient and more cost effective in the years to come. With increased funding in green research, advances are currently being made at a rapid pace. Thus, a few years from now, solar systems may prove to be much more affordable. However, as affordability increases, it is possible that the incentives offered today will decrease.