The idea of getting free energy from the sun is an appealing prospect when you see your power bill increase each year. Today, solar panels are everywhere. You might see them in fields along the highway or on homes and businesses in your community.
With the rising costs of utilities and the falling price of solar panels, many consumers want to know if solar panels will save them money on utility costs. Even with the high upfront cost, in some cases, the panels can completely cover your electric bill.
Here are the key factors to consider when calculating how much you can save by converting to solar panels.
Your Typical Electric Costs
For most families, the cost of electricity rises every year. In 2017, the average home paid 12.95 cents per kilowatt-hour used. In 2014, the average electric bill was $114, using an average of 911-kilowatt hours of power. Where you live will determine your cost of power. If you live in an area with higher than average utility costs, you will save more money than states that have lower costs of electricity. For example, New England, Hawaii, and California have the highest cost per kilowatt-hour for electricity, while states like Mississippi and Louisiana have the lowest.
How Much Energy Your Home Consumes Each Month
In addition to the cost per kilowatt-hour, you need to consider how much energy your household consumes. Homes use between 500 to over 2000 kilowatts of power each month. For instance, Hawaii has a high cost of energy, but overall a low consumption rate, where California has both a high cost and a high rate of consumption. The weather and access to alternative sources of power are the biggest factors in how much energy you use each month. Alternate sources of energy such as gas or propane can impact your electric use. The size of your household and age of your home can also factor into the amount of energy you use in your home.
Your Home’s Exposure to Sunlight
Solar power gets its energy from the sun; therefore, the number of sunny days is a major factor in the amount of savings you can achieve. States with a lot of sunshine like Arizona and California can more easily capture the energy from the sun’s rays than states with more cloudy days. The position of your home in relation to the sun and the amount of shade on your home will also impact the sun exposure you can capture through solar panels.
The Initial Cost of the Solar Panels (Including Installation)
In most cases, it will cost between three and five cents per kilowatt to install solar panels. For the average home that can be an upfront price tag of $15,000 to 25,000 dollars. Today's solar panels have a lifespan of around 20 years, making it a long-term investment.
Many companies will finance the purchase of solar panels, including installation costs, allowing you to pay for the panels with your energy savings.
Lastly, you can look at local, state, and federal incentives, which can lower the upfront cost of converting your home to solar energy. The federal government and some states provide tax credits for conversions. States and local power companies may also offer cash rebates.
Using a savings calculator can help you determine the net savings for conversion, based on your current energy costs and the cost of buying and installing solar panels on your home.