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Homeowners everywhere are starting to discover the financial possibilities that solar power can offer. Initially there are questions about costs. These eventually turn into questions about savings, such as – how much money can solar panels save?

This article is a continuation of a series of posts about the financial aspects of residential solar power.

Let’s delve into the true monetary value of solar power now.

It is understandable that the initial reaction to the cost of a solar panel system is not always positive. The average person does not make multi-thousand dollar-sized purchases that often. This, of course, is the wrong way to look at solar power. It’s not a purchase. It’s an investment that can save the average homeowner many thousands of dollars over years of electricity usage.

So how much can solar panels save? Let’s take a look at an example that can be considered very typical for an average American homeowner over 25 years.

Assumptions –

Monthly electricity usage – 900 kilowatt hours
Energy usage over 25 years – 270,000 kilowatt hours
Utility energy rate – 13 cents/kilowatt hour
Solar power rate – 8 cents/kilowatt hour

Without Solar–
Cost over 25 years – 270,000 kwhs * 13 cents/kwh = $35,100.

With Solar–
Cost over 25 years – 243,000 kwhs * 8 cents/kWh = $19,440
Remaining utility costs – 27,000 kwhs * 13 cents/kWh = $3,510

In this example, and in the typical solar panel installation, systems are sized to offset no more than about 90 percent of conventional electricity usage. So total savings are approximately $12,000 over 25 years.

Go to the cost of solar page to learn why solar only costs $0.08/kWh.

The preceding example is actually on the conservative side. Solar power savings will in fact be much greater as utilities continue to raise rates as they have historically done over the past few decades. The chart below, from the U.S. Energy Information Administration, shows residential electric rate increases over the past 5 decades.

The chart shows that retail residential electricity prices have gone from just over 2 cents per kilowatt hour in the early 1960s to 12 cents per kilowatt hour as of 2010. Many Americans across the country now pay much more than 12 cents per kilowatt hour for their electricity.

It would be speculative to guess how much retail electricity rates will increase in the coming years, but there is every reason to believe that they are going up. Increasingly expensive extraction of fossil fuels and environmental regulatory pressures will keep upward pressure on conventional energy prices.

Homeowners are always looking for information on how to save on electricity. Increasingly, solar power will become one of the best ways to save on electricity. It’s simply the next best thing to consider after looking into taking home energy efficiency measures.

In the coming years, more and more people will look to solar power for a great way to save money on electricity.

There have been quite a few news stories of late about the state of Florida’s solar power industry.

These stories give a false impression that residential solar power is not yet legal in Florida.

The media has focused exclusively on the fact that Florida is one of only five states that does not allow for electricity to be purchased from a third party company. Many of the largest solar leasing companies in America fit this definition of a third party company.

Florida’s utilities simply do not want the competition from the solar leasing companies. These solar companies can compete with utilities simply because the cost of solar power is now cheaper than what utilities charge. However, the real savings that are possible with solar power do not get passed down to homeowners that sign long term leases or power purchase agreements with these solar leasing companies. These solar leasing companies charge their customers slightly less than what utilities charge, keeping the majority of the savings possible with solar power for themselves.

The real story is that there are no roadblocks to solar power in Florida. There’s readily available financing for those who want solar panels but do not have the upfront cash. Net metering laws are also in effect in Florida.

There are currently many solar panel installers in Florida that have installed hundreds of systems for residents of the state. These smaller companies do not wish to become the next power companies. They stand to make a decent profit simply performing solar installations. It’s a win-win for these installers and homeowners alike.

Florida homeowners who acquire financing to purchase a solar panel system will save many thousands of dollars more compared to signing a long term contract with a solar leasing company.

So why is this part of the story not being told in the media? It’s simple really. The electric utilities and large solar companies have the money and power to dominate the conversation in the media.

It does not really matter who wins between the utilities and solar leasing companies. It’s bad news for homeowners either way. These solar companies want to become the new power companies. Homeowners will not stand to gain much financially with these solar companies.

On the other hand, savvy homeowners know that they can benefit much more by becoming power owners. This is the true potential for residential solar power. Traditionally, home ownership has been a large part of the American Dream. Energy ownership is the new American Dream. This is not possible if some other entity, solar or traditional utility, owns your solar panel system.

Help spread the word that the time to go solar in Florida is now. Here’s more information about Florida’s solar power industry.

Quite a few people that are early on in their research into residential solar want to know how many solar panels to power a house.

Much like those asking about solar panel cost per square foot, it’s not exactly the right question to be asking. However, in a continuing mission to deliver some basic solar power knowledge, this question will be addressed and better ones will be revealed.

While asking “how many solar panels do I need?” might seem like a fair question, let’s go into detail why there are better questions to ask. The number of solar panels that homeowners need, or the size of their solar panel system, is based on their average yearly electricity usage. So the best starter question is “how much electricity do I use?” Since there is a wide range of electricity usage for any given homeowner, this number can vary widely.

To answer the question and give a typical range, the number of solar panels that are needed can vary from 10 – 30, on average. As of 2015, most solar panels have a wattage of at least 250, with some reaching 300. Being on the conservative side and using 250 watt solar panels, this would mean average solar panel system sizes can vary from 2,500 watts to 7,500 watts based on the 10-30 panel range previously mentioned. Some people will require systems considerably larger than 7.5 kilowatts, but that is not the norm.

The national average for residential electric usage is approximately 900 kilowatt-hours per month. A 20 panel solar panel system will yield as much as 700 kilowatt-hours per month. This 5 kilowatt system will only offset about 80% of the 900 kWhs used. This is typical as solar panel systems are not sized to completely offset total electric usage.

As you can see, asking how many solar panels to power a home is not quite the right question, but real close to it. Total electric usage throughout a year is what solar installers will need to know to determine system size and ultimately, the number of panels needed. It’a also good to note that most homes have enough roof space to accommodate the number of solar panels typically needed.

Feel free to leave a comment or ask a question for more information about solar system sizes.

Senators Tom Udall and Ed Markey have just proposed a bill to spur further expansion of renewable energy production from the nation’s major utilities.

This post, from the blog of the Union of Concerned Scientists (blog.ucsusa.org), details a proposal for our largest energy providers to increase the use of renewables to 30 percent by the year 2030.

The senators know that this plan must look good at all angles for it to have a fighting chance. Their new Renewable Electricity Standard (RES) addresses all concerns by claiming to be able to benefit consumers and boost the economy while achieving its primary goal of transition our country to one that is based on clean energy.

A market-based method is used to enable utilities to gradually adopt more renewable energy sources like wind, geothermal, and solar power. Basic competitive principles among renewable energy developers allow for utilities to have access to clean power at the lowest prices possible, while costs continue to fall.

The primary way in which this proposal aims to benefit consumers involves the benefits of diversifying the nation’s power mix. As more renewable energy is added, the demand and costs associated with fossil fuels like natural gas decline. This decline more than offsets the added investments in renewable energy. In fact, the study concludes that consumers will save $25 billion in electricity costs from 2015-2030.

Much of the expected renewable energy in the RES will be wind and solar power. The plan calls for our wind power capacity to reach 180 gigawatts and our solar power capacity to be 13 times higher at 152 gigawatts by 2030.

Local economies will stand to benefit greatly from this new RES. Many billions will be received via annual operations, capital investments, and property taxes.

The obvious environmental benefit entails a significant reduction in CO2 emissions by power plants. Our utilities are responsible for 40 percent of total CO2 emissions. Under the RES, these emissions can be reduced 11 percent by 2030. This amounts to removing 1.5 billion tons of CO2 between 2015 and 2030.

Major savings in public health costs are also a direct benefit of CO2 reduction. It is estimated that $40.4 billion will be saved over the next 15 years if this RES were to become law. It is important to realize that this reduction of emissions will help prevent thousands of premature deaths due to air pollution.

It can be summed up that the new Renewable Electricity Standard proposed by Udall and Markey represents a realistic and common sense approach at dealing with our carbon emissions problem. Hopefully those that are responsible for the approval of this bill can see its wisdom as well.

In a continuing series of posts dedicated to the cost of solar, we will now delve into solar panel cost per watt.

There are quite a few ways to measure the cost of just about anything. A solar panel system is no exception to that rule. However, some ways are much better than others. For example, when a consumer takes on financing a large purchase, all too often the monthly payment amount gets too much attention. Savvy consumers know that what really matters is what the total amount plus interest is, not just what the monthly payments are.

Unfortunately, many companies in the solar industry use the same tried and true payment focused sales pitches. They want to take focus away from the amount that a homeowner will eventually pay over a long 20 period. The fact is that a solar panel system can now be paid off in as little as just a few years in some parts of the U.S.

Again, savvy homeowners will want to know what their total cost for solar power is. A great way to measure this is cost per watt. A typical solar panel can produce 250 watts. The typical solar panel system can consist of 20 panels. This brings the total wattage to 5,000. The more affordable solar installers can install a system for 3 dollars per watt, making the system in this example cost $15,000 before tax credits and rebates. The industry average according to the Solar Energy Industries Association is about $3.60/watt.

The cost of solar per watt takes into account the total cost of the system and installation. This is why it is a good metric to use. Of course, those who require financing will need to consider the additional interest charges over a typical period of 6-10 years.

It should be mentioned that when someone is asking – “how much do solar panels cost per watt?” – it is implied that they want to know what the cost of a fully installed and functioning solar panel system is. This is mentioned because the cost per watt for just the panels can be as low as 70 cents. Taking into account the other materials, installation fees, connection and permitting fees brings the total to $3.00/watt. There can sometimes be confusion between these two ideas so it is important to ask about total installed cost per watt.

Now is a great time for homeowners to start looking into solar power. The cost of solar panels cannot be reduced much more and many installers are already charging reasonable installation fees. The typical homeowner can now save thousands over the long term with low cost per watt solar power.

Tesla Motors has finally unveiled its long anticipated home energy storage solution – Powerwall.

The all-electric car company is beginning to redefine itself as an energy company, its intention all along. The premise for Tesla, as its founder Elon Musk has stated, is to help transition the world to one that is based on the sustainable generation and use of electricity.

The company is offering a 7 and a 10 kilowatt battery. The prices are $3,000 and $3,500, respectively. These prices do not include the necessary inverter and installation costs. While the system can be used without solar panels, it can be seen as more cost effective when added to a solar home since the inverter has already been paid for.

There are two primary purposes for these battery systems.

1. Peak Rate Avoidance – Many power companies charge higher rates for electricity during peak evening hours. Cheaper rate energy can be stored in a Powerwall, then used during peak hours.

2. Emergency Power – Those who live in places where storms can cut off electricity or areas where the grid can be unreliable, the Powerwall can provide electricity when the grid is not supplying any.

It’s primary use will be high electric rate avoidance. Powerwall can provide about a few hours of power every day based on average homeowner electricity usage. This will be in the evening hours when many utilities charge extra for power.

While current energy storage prices prevent complete energy independence, the Powerwall is definitely a step in the right direction. Let’s take a look at the numbers involved.

For the 10kw system at $3,500, the cost per kilowatt is $350. This is significant as Tesla has managed to achieve relatively low pricing for cutting-edge lithium-ion battery technology.

What about pricing related to everyday home use? Assuming a homeowner gets frequent use out of Powerwall over its warrantied 10 year expected life, the cost is about 15 cents per kilowatt hour.

Economically this only currently makes sense in states where peak energy costs 20 cents or more per kilowatt hour. A solar powered homeowner who lives in one of these states is paying 8 cents per kilowatt hour for solar power during the day time and 15 cents per kilowatt hour for a few hours from stored solar power. This would save a bit of money compared to the more expensive 20 cents or more per kilowatt hour peak rate.

For many of us, however, battery prices must still fall quite a bit for massive adoption of storage technologies like the Powerwall. Solar plus net metering is still much more cost effective without battery storage.

Looking towards the future, a reduction of battery and solar power prices will eventually turn the grid into a kind of back up energy provider as we all become more self-sufficient producers of power. This diminished role could have it playing more of a power manager than its traditional one of power seller.

Again, the Powerwall is definitely a major step forward for sustainable energy. Costs will continue to fall. A significant piece of the cost puzzle will arrive with the completion of Tesla’s Gigafactory. It is estimated that this battery plant will be able to reduce costs an additional 30% due to economies of scale.

Tesla’s goals reach much farther than residential energy storage. The company is continuing to work with large corporations and utility companies. They will continue their open source patent policy so that other companies can help speed up our transition to a clean energy society.

In California’s continued push to be a clean energy leader, Governor Jerry Brown signed an executive order to help curb air pollution.

Brown said that California must reduce gas emissions to 40% below what the levels were in 1990 by the year 2030. This is part of an overall goal to reduce emissions to 80% below 1990 levels by 2050, a measure set by former Governor, Arnold Schwarzenegger.

The Governor’s plan includes three main goals; making buildings more energy efficient, reducing the amount of gas used by vehicles (electric vehicles, hybrids, and overall more efficient vehicles), and promoting more expansion of renewable energy sources.

While the state of California emits a tiny fraction of the world wide greenhouse gases, its influence on the world can not be denied. California is the world’s seventh largest economy and people from around the world are intrigued by much of what happens in the state. Positive environmental action will then have a considerable impact in other parts of the world.

A switch to a more sustainable, clean energy society is well within our reach. Brown mentioned how the American people transformed the country in preparation for World War II. He knows that if we can all work together for a common environmental cause, great things can happen.

California has been a leader in renewable energy, specifically solar power. The state has far more solar capacity than any other. While the state is off to a good start, Brown and other leaders in California know that the pace of solar installations must pick up in speed. In fact, to meet the 2050 goal, emissions must be reduced five times as fast as what is currently happening.

The Governor has received some push back from these goals, of course. Oil companies have stated that the goals are not attainable. The fact remains that we have the technological solutions and they are becoming more and more cost competitive.

The changes that are called for will be disruptive, there’s no doubt about it. The turmoil will eventually subside as clean energy companies slowly replace fossil fuel based companies. Electric vehicles will continue to get cheaper and solar power has already proven itself a winner on cost. An affordable battery storage option is the only thing stopping (temporarily) a full transition to renewables.

We are witnessing the very beginnings of a society that will breathe clean air and be prosperous at the same time.

This post is a continuation on a theme of addressing more specific solar power questions. This particular one will answer a very common one – How much do solar panels cost per square foot?

Any solar power professional will first mention that this is not exactly the right question to be asking. While there is often a correlation between house (and roof size) and energy usage, the sizing and cost of a solar panel system has much more to do with average annual energy usage.

Many homeowners want to know how many solar panels they can fit on their rooftops. This is an understandable initial reaction when first considering solar power.

Let’s answer the question with three different scenarios, and at the same time show why it is the wrong question to be asking –

1.
Roof Size – 1,500 square feet
System Size – 5 kilowatt
System Cost – $15,000
Solar Panel Cost Per Square Foot – $10




2.

Roof Size – 2,000 square feet
System Size – 5 kilowatt
System Cost – $15,000
Solar Panel Cost Per Square Foot – $7.5




3.

Roof Size – 3,000 square feet
System Size – 5 kilowatt
System Cost – $15,000
Solar Panel Cost Per Square Foot – $5

As you can see, there is no exact solar panel cost per square foot. In the three scenarios listed above, all of the homes were of different sizes yet used the same amount of electricity. While this may not be typical, it would not be too difficult to find three homes that fit this situation.

Again, the point is that the cost of a solar panel system is directly tied to how much electricity a homeowner uses, not the size of a roof.

The typical 5 kilowatt system will take up between 350 and 400 square feet. Since the average American rooftop is at least 1,500 square feet, most homeowners have more than enough space for a solar panel system that will fit their energy needs.

To sum up, the main cost determinant when buying solar panels is average yearly energy usage, not roof size.

A recent article from motherjones.com details a growing fight over solar power profits.

While electric utilities across the country are starting to consider solar power, this article specifically delves into a Phoenix area company – Arizona Public Service.

After years of taking anti-solar actions, APS is starting to develop its own solar program. By way of approval from the Arizona Corporation Commission, APS will invest $28.5 million for 10 megawatts of solar panels. The utility will then offer homeowners a $30 per month credit if they decide to participate in the solar program and allow the utility to install solar panels on their rooftops.

So what’s the new fight over profits from solar power?

The new fight is between utilities, like APS, and major solar panel leasing companies. The solar leasing companies are off to a great start over the past few years. They have been taking full advantage of the affordability of solar power and now the utilities want to do the same thing.

Who stands to lose in this power struggle? Homeowners, of course. Solar power represents a tremendous financial opportunity. Utilities wish to remain in control of the residential energy market and solar leasing companies want to become the new power companies. Either way, homeowners will not reap the true financial benefits of solar power.

APS is offering the $30 monthly credit as a way to undercut its competitors – the solar leasers. A $30 dollar monthly credit might sound good to the typical homeowner until they realize that they would save thousands more over the long term by installing their own solar panel system.

If anything, utilities were forced into the solar game. Residential solar is being adopted at such a fast rate that utilities are realizing that they either take part or become a minor player in the new energy industry.

Distributed solar power plus economically justified battery storage technologies will eventually make the grid more of a back up energy provider.

Small to medium sized solar contractors are doing great work by allowing homeowners to benefit from the full value of solar power by helping them purchase and install solar panel systems.

Word is starting to spread about the considerable long term value of solar power. Hopefully more people will make a switch to solar on their terms, instead of giving most of the solar profit to utilities and solar leasing companies.

Many homeowners continue to ask – Is solar power worth it?

The resounding answer is….YES!

Some people who see the potential solar panel system cost of $15,000 – $20,000 can’t get past the initial large number shock. They would be even more shocked if they were told what they would be paying if they don’t switch to solar. If they do nothing and stick with their utility they’ll pay about $30,000 – $40,000.

Many homeowners pay about $125 per month for their electricity needs. This amounts to $30,000 over 20 years. Actually, it would be much more as utilities have historically raised rates at 6 percent per year. The same homeowners could finance a solar panel system that would cover 90 perecent of their needs and pay no more than $20,000.

Is saving $10,000 over 20 years worth it? Of course it is.

Once people get past the initial sticker shock of solar and realize that they would be paying their utility much more, the affordability of solar power becomes very apparent.

Many also do not realize that there is readily available financing for solar panel systems to help homeowners avoid up front costs.

It should also be mentioned that the numbers presented here are, if anything, lower-end averages. Many homeowners in the Southwest and Northeast, for example, pay hundreds of dollars for their monthly power bills. These homeowners would require a system that costs more than $20,000. However, the value and savings of solar remains the same.

What is the value of solar power? Regardless of the size of the system, residential solar power is approximately 8 cents per kilowatt hour ($0.08/kwh). The average cost for residential electricity is about $0.13/kwh. That 5 cent difference spread over 20 years equals thousands of dollars. Of course, millions of people pay more than 13 cents per kilowatt hour. Solar power makes even more sense for them.

Unfortuntately, not every homeowner can go solar. Their roofs might not be suitable, there could be major shading issues, or there might not be enough spacing for a ground mounted system.

For the rest, solar power represents a financial opportunity like none other. As an investment, the ROI of solar easily beats the stock market. It also represents a major shift in control from the utilities to the homeowners. By going solar, homeowners essentially lock in their power costs over a period of 25 years or more. No more rate hikes.

Another powerful idea is that solar power means energy ownership. In addition to owning a home, people can now own the energy that their homes require. This is a truly revolutionary development that will go a long way in creating a more democratized society.

Spread the good word to the homeowners that you know that now is a great time to look into solar power. The long term savings are too good to pass up!