Since many factors affect pricing, it’s difficult to provide an exact price for a solar electric system without performing a site evaluation. Factors that affect pricing include: how much electricity you currently use, how much you want to reduce your electricity bill (for instance, 50, 80 or 100 percent?), the solar panel brand you choose, the orientation of your roof, your roof’s material and age, the size and type of your service entrance and much more.
Generally speaking, a solar electric system can range in cost from about $12,000 to $60,000 and beyond. The average solar system installation costs around $25,000 to $35,000. All of these prices are before solar rebates and tax incentives, so the actual out-of-pocket cost can be much lower.
The best way to find out how much solar energy will cost for your home or business is to contact AMECO Solar and request a solar estimate. Then, we can look at your specific energy needs along with your roof’s situation to provide you with a more exact cost of a solar panel installation.
Beside the differences in energy consumption and the situation a roof presents for solar panels, there are other factors that affect the cost of solar panel installation.
First of all, there are wide variations in the way solar panels are made and assembled. Some of the modules recently entering the US market are made in Asia, and are less expensive than European or American brands.
Also, the cost of installation varies depending on whether you hire a solar contractor that uses employees versus companies who hire temporary labor and subcontract the installation. If you use a firm with an established reputation (one with employees, workman’s compensation and liability insurance), you may pay a little more for quality of work and “peace of mind.”
Frequently, a firm that has just recently entered the solar industry may offer discounts to gain market share or experience. However, being the cheapest is not always the best business model! We’ve witnessed many companies go out of business after 1-3 years. If something were to happen to your solar system, it will be difficult to receive service from a company that no longer exists.
Depending on your previous energy consumption and the size of your solar array, you can save hundreds to thousands of dollars each year. For instance, a 2 kilowatt solar electric system that is replacing electricity at 30 cents a kWh might save between $900 to $1,125.00 per year.
Keep in mind that rates in California are increasing dramatically each year – so your solar savings will also increase proportionally. Currently, the highest tier in the Southern California Edison territory has reached 31 cents, not including state and local taxes. There’s no telling when the price will increase again.
The payback period varies greatly for solar owners depending on solar system size and the amount of electricity that was previously used.
It is more instructive to think of solar as an investment that yields an annual return, much as a bank savings account provides interest.
A solar electric system may generate savings that would equal an annual ROI (return on investment) of 7% to 15% per year at today’s electric rates. These savings are not taxed as would be the interest earned from a bank savings account. Therefore, you would have to find a savings account or investment yielding 14% to 28% to equal the return on a solar electric system, since these earnings are taxed as income.
No matter what ROI your solar electric system generates, going solar is ultimately a choice about how you will be buying your power. Either 1) you will pay the utility for energy mostly made by fossil fuels forever or 2) you will pay to install solar panels that generate clean, renewable energy for your home. It is a choice between renting your power or owning it and developing equity.
On average, a residential solar electric system ranges in size from 250 to 900 square feet. The size varies depending on a variety of factors from how much electricity you use and the size of your roof to how much you want to reduce your bill and the type of solar panel that you choose (some are more efficient than others so they require less space).
The amount of energy production from your solar panels depends on the size of the solar array. In California, the average residential customer purchases 6,500 kilowatt hours (kWh) of electricity per year. Typically, there is enough sunshine falling on the average home to produce this amount of energy, meaning that a solar system can be designed to offset all of your electrical needs.
It can sometimes be cost-prohibitive to install a solar system that offsets 100% of your bill, so we often recommend that you choose one that reduces or “shaves down” your bill. This usually amounts to solar panels that will offset your needs by 50% to 80%.
The California Solar Initiative (CSI) is the solar rebate program for the following utility companies: SCE, PG&E and SDG&E. The program was designed to decline in rebate amount as solar panel installation became a more popular option for utility customers.
When it first began, rebates amounts were over $4.00 per watt. As of Spring 2014, SCE, PG&E and SDG&E have all run out of funding for the program and there are no more residential solar electric systems available for customers of these utilities. However, the CSI also offers rebates for others types of solar installations. They are as follows: commercial solar electric installations, residential and commercial solar hot water installations, and commercial solar pool heating systems.
Information on the State’s rebate program, called the California Solar Initiative, can be found on the Go Solar California website.
It should be noted that rebates are not offered for residential solar electric systems for customers of the SCE, PG&E and SDG&E utilities. These rebate programs ran out of funding and officially closed as of Spring 2014.
LADWP currently offers solar rebates to their customers; more info can be found by clicking through to read more on rebates.
Many cities such as Burbank, Anaheim, Glendale, Riverside and Pasadena (among others) have their own municipal rebate programs. Funding for these municipal utility companies is intermittent, and rules change with little advance notice. We recommend visiting your utility’s website and looking for specifics on their solar incentives.
There is currently a 30% federal tax credit for any qualifying residential or commercial solar electric system. This tax credit is slated to expire on December 31, 2016.
For commercial solar installations, the federal and state accelerated depreciation deductions (MACRS) can also significantly reduce the solar installation cost.
No, your property taxes will not go up if you install solar panels. For the time being, the value of your property in California may not be re-appraised by the County Assessor’s Office for solar-related property improvements.
A PV system is a solar electric system. PV is short for photovoltaic, a word that represents the technological process of turning solar energy into usable power for your home or business.
The basic building block of a PV system is known as a cell. Many cells put together are known as a solar module, and many solar modules assembled together form a solar array. A PV system will consist of an array of modules and an inverter (or many micro-inverters).
An inverter changes the DC electricity generated by solar panels into AC electricity for household or business use. Currently, AMECO Solar offers two types of inverters: central “string” inverters and micro-inverters. If you would like to know which type of inverter is best for your solar project, we suggest reading our blog article on inverters discusses both technologies in detail.
Net Metering (sometimes referred to as Net Energy Metering or NEM) is the process that allows solar owners to sell energy to the utility when the panels are overproducing. Then, the solar owner may use these credits during the nighttime when the solar panels do not generate any energy.
After a year of solar production, the utility company will balance out your credits/debits and provide you with a final bill. For many solar customers, this will result in no money being owed to the utility with extra credits left over. Some utility companies roll over these extra credits to the next year while others merely eliminate the extra credits and adjust the account to zero again. Some utilities will pay you for the excess electricity. As an example, Southern California Edison is currently paying about $0.045 per kWh.
Net metering is a huge benefit to solar owners and is fundamental to the economics of owning a solar system. It is also instrumental to the development of Distributed Generation (DG) where energy collection comes from many small renewable energy sources lessening the stress on the overall grid and providing significant environmental benefits.
Currently, both SCE and LADWP have Net Energy Metering programs with a limit on the amount of solar owners who can participate.
A grid-tied solar system is one that connects directly into the wires of your utility. This allows you to use electricity from the grid whenever your solar panels do not produce enough electricity (such as during nighttime). At this point, our company is only installing solar systems that are tied to the grid.
Our grid-tied customers elect to enroll in a Net Energy Metering program. This is when you generate excess electricity (typically during the daytime) and it enters the grid to be used by your neighbors. Your meter will tally the amount your produce and use. At a certain point, your utility company will tally everything up and will give credit to your account if you produced more than you used.
If a solar system is a “grid-tied” (meaning linked to the utility’s electricity system), then your solar system will shut down in the event of a black out.
To avoid energy loss during a blackout, a solar owner could add a battery backup system for storage. However, since many utility companies will not approve a solar system with battery backup, AMECO Solar does not currently install battery backup systems.
Both SCE and LADWP have made it increasingly difficult to install a solar system with battery backup in their territories. As a result, AMECO Solar does not currently offer battery backup as part of our solar services.
Even if the utility companies easily allowed battery backup, it may not be the best investment at this point in time. First, batteries add significantly to the expense of a system while providing no payback. Furthermore, they are hazardous, need weekly maintenance and will need to be replaced every 5-10 years.
As an alternative, SMA offers a special inverter that allows for the addition of an electrical socket. If there is a black out or the grid shuts down during the day, this plug has the capability of powering small appliances (such as a lap top, mobile and tablets, fans, etc.) up to 1500 watts. It may be an option for those who would like to avoid complete energy loss during a power outage.