Solar Panels Produce Financial and Environmental Benefits

Updated: September 24, 2009 [Prices on PV panels have declined rapidly in the past several months so that the cost examples given were outdated. They have been revised.]

Considerations Before You Place a Solar Module on Your Roof

Whether you want to gain a small degree of energy independence, live off of the grid, or just do something good for the planet, installing a solar energy system is great way to reach your goals. But before embarking on a solar journey, there are some important questions to ask yourself:

Does the place where you intend to install the solar modules receive sufficient direct sunlight to generate solar electricity?

How much of your energy needs can you meet with solar energy?
How much time do you need to recoup your investment?

Navigating through these and many other important questions will put you on the right path to solar energy. Read on to find out the most important factors to consider when contemplating whether installing solar panels for your home is right for you.

Are You a Candidate for Solar Panels?

Examining some central aspects of solar energy before beginning your solar project is important if you want to make the most of your investment. Here are some key questions to address:

Is your site suitable for a solar array?

An ideal location for a solar electric system is one that receives ample direct sunlight. Although solar is particularly well suited for the southwestern United States, virtually any location in the US, even way up north in Minnesota and in Canada, may be appropriate for solar-so long as the solar modules are placed where they can receive direct sunlight unobstructed by shade from adjoining buildings or trees and where they can be free from snow or debris. The amount of solar energy received in any location at any one time will depend on geographic location, local weather conditions, as well as the time of day and the time of year. Shade from trees, nearby buildings, and other obstructions can reduce your solar panel's effectiveness but doesn't necessarily rule out the possibility of setting up such a system.

Do you have enough space for home solar panels?

How much of your electricity you want to generate using a home solar system will greatly determine how much space you'll require. If you have a large home, you will likely require more energy, but you may also have an adequately-sized roof. Solar panels can also be on a solar pole mount anywhere on your property if your roof does not offer sufficient square footage.

Are there any state or municipal installation restrictions?

Every community has their own unique regulations for renewable energy systems. You should consult with the local administration such as the city or town to consider whether there are any local codes or ordinances that you need to consider before starting to build. You will likely need to obtain a building or electrical permit, or both, from the city or town in which you live before you start your project.

Do you belong to a homeowners' association limiting your use of your property?

If you are a member of a homeowners' association, be sure to check to see whether you need the association's approval or whether there are any other restrictions within the CC&Rs (covenants, conditions, and restrictions) limiting what or where you can place solar panels on your property.

Perform an Audit to Reduce Your Need for Electricity

Before you spend significant sums on a solar energy project, look for ways to conserve energy with your current home. The average US home uses approximately 11,000 kWh (kilowatt hours) of electricity annually, although the average consumption varies considerably in different parts of the country. In addition, you can get more for your renewable energy buck by cutting back on the amount of electricity you currently consume. This way, you are able to generate a greater share of your electricity mix through solar energy.

There are many upgrades you can make to your home to reduce your overall energy consumption. For instance, you could

Increase the insulation in your attic, walls, or floors, which will cut back on energy needed for air conditioning and heating (if you use electric heat).

Seal air leaks around windows, doors, outlets, and vents to ensure you're not allowing heat to transfer between your home and the outdoors.
Upgrade your electronics and appliances to ENERGY STAR models, which use much less power than industry standards.
Install energy efficient lighting. Two great options are compact fluorescents (CFLs) for task lamps and overhead lights, and light-emitting diodes (LEDs) in outdoor lighting and some indoor fixtures.
Use electricity more efficiently by remembering to turn off lights (or installing timers and motion sensors), electronics, and the like. You may also want to wash your clothes in cold water, unplug idle electronics, install power strips to make powering down simpler, and adjust the thermostat on your hot water tank, refrigerator, pool, sauna, and heating and cooling appliances. And for those most committed to cutting energy consumption, consider hanging your laundry to dry or taking polar bear showers (cold, that is!).

For more ideas on how you can tune up your home to achieve even greater electricity savings, try the Home Energy Saver Calculator.

Potential Costs of a Solar PV System

Estimating how much you could potentially spend on a new solar photovoltaic (PV) system depends on several variables, including:

How much energy you consume: the average home uses approximately 900 kWh monthly.
How much of your current energy needs you intend to meet with a new solar project: Most new adopters of solar energy do not intend to meet all of their current energy needs through solar energy, believing that new efficiencies such as in appliances and light bulbs will reduce overall consumption
How many peak sun hours your solar array will be able to harness: The expression "peak sun hours" refers to the amount of solar energy available during the day, which is fewer than the number of hours the sun shines during the day. The amount of energy delivered to the earth from sunlight in the morning and the evening is less than that at noon when the earth receives the maximum solar radiation. The amount of energy also varies seasonally.
Whether you install the home solar energy system yourself or have a professional do it for you.
The availability of municipal, state, and federal incentives: a comprehensive list is available from the Database of State Incentives for Renewables & Efficiency.

If you live in Colorado, for instance, here's how your system costs might break down:

Monthly energy consumption: 600 kWh per month or approximately 20 kWh per day.
In some parts of Colorado, there are on average as many as 5 peak hours per day
System size: 4.38 kW to meet all of your current electricity needs.
Installed system price per watt: $7 including parts and installation.

To get a final price for the above Colorado system, you'll then need to adjust for the quantity of energy you'll generate, and subtract any rebates and incentives.

If you are trying to provide 75% of your electricity needs, you will need a system that will generate 75% of your total required 4380 watts, which is equivalent to 3285 watts. If each panel produces 180 watts, then your system will require approximately 18 panels.
At a cost of $7/watt, the pre-tax cost is $22,995.
For purposes of our example, assume that the only incentive available is the federal tax credit 30%, reducing the cost to $16,097.

This solar calculator will help you estimate how much solar energy your neighborhood receives and how big your system needs to be to meet your projected renewable electricity goals.

Significant Potential Savings of a Residental Solar PV System

The price per watt for solar panels has come down significantly since they were first manufactured-they've been declining steadily by about 4% every year. In recent months, the prices have dropped and are expected to continue to decline. This combined with increases in system efficiencies mean even better returns on investment in years to come.

The threat of increasing petroleum prices also makes renewable home-grown energy more attractive. By installing a solar panel system, you'll be guaranteeing your price per watt for the life of your system, thus protecting yourself from wild fluctuations in the energy market over time.

Based on the residential solar PV system outlined above, you could be saving as much as $492 every year (with electricity rates estimated at $0.13/kWh for 540 kWh). And with an average solar array life span of 25 years, you'll break even in about 9 years and receive nearly 160% ROI over the lifetime of the system.

Major Savings and Incentives for a PV System Favor Going Solar Today

The bottom line is that installing solar is a sound investment. Not only will you be locking in your energy costs for the life of your system, you'll also be producing your own clean energy, which will reduce your carbon footprint and help you get closer to your goal of achieving carbon neutrality.