Everyone knows exactly how much a gallon of gasoline costs and how many miles one can drive one’s car when we fill its tank with gas. But how many of us know how much a Photovoltaic (PV) solar panel costs and what will be the total expense when one installs a system of solar panels to provide energy for the house.
We can get mileage from gasoline instantly but solar panels do not work that way. It takes a while to store energy before it is made available for use. This blog post tries to explain two aspects of installing solar panels as an alternate source of energy, namely the cost involved and the cost effectiveness of this system.
First, let us consider the cost involved in setting up solar panels. Solar panels are photovoltaic systems which capture sun’s rays and convert them into electrical energy. The cost of PV systems are calculated as so many dollars per Watt, $/W.
However there are other aspects to be considered when calculating the cost. Are we talking about DC Watt or AC Watt, or are we considering the cost as per Watt peak, $/Wp? Irrespective of all these considerations one must be aware that when we install solar panels, they not only produce energy for current use but also for future use. This certainly sounds good.
Let us now consider how much the set up will cost you. Since each home requires its own unique configuration of solar panels, the cost will differ from house to house. Every state and local body offers solar rebates, and also solar tax credits. These rebates and credits are not uniform all over the country.
This means that the cost of installing solar panels will not only differ from home to home but also from region to region. If you pay Federal income tax, you can claim Federal solar tax solar energy tax credit for 30% of the cost of installing solar energy system in your home.
Listed below are some resources which would help you assess the cost of installing solar energy system in your home. First on the list is the Open PV Project, which is a project of the National Renewable Energy Lab. This will give you information on how much PV systems will cost in different parts of the country.
According to this list, in 2010, on average the cost was $7.15/W. However, this is only a ball park figure since not all solar installation companies had participated in compiling this data. But the data provided by the Open PV Project will give you some idea of difference between states in the cost of installing solar PV systems.
For example, the cost solar panel system is $5.64/W in Arizona, but it is $7.64/W in New Jersey. Secondly, in certain states it is required that companies which install solar systems report to the state their installation charges. If the company which had installed your solar PV system had not done so, the state will not give you any rebate.
On account of this requirement, it is possible to have a good idea of what the installation of solar panels will cost. You will find that in Pennsylvania, the Sunshine Solar Rebate program reports an average rate of $5.32/W for domestic installations with 8 Kilowatts as median system capacity.
On the other hand, Go Solar California that is a joint project of California Energy Commission and California Public Utilities Commission reports an average cost of $7.19/W in its latest quarterly report on costs for domestic solar panel installations.
Thirdly, if all this confuses you, you can just follow the rule of thumb, and use a default value of $7.00/W for home installation of solar panels. Though is not an exact figure it will give you a good idea of what the project will cost you. Of course, this will reduce when you take into consideration the rebates and tax credits that you will be eligible to get.
Lastly, make sure you get quotations from three, or at least two, reliable companies that install solar panels for homes. You should be aware that since there is so much variability involved in installing solar energy systems in your home, you will get a proper estimate of the cost of installing a solar PV system in your home only when the installing company gives you a figure.
Anyway, going by the default figure of $7.00/W, it could cost you $35,000 for a system that would provide you an average of 5KW energy. When you take into consideration the rebates you will be eligible to get and the 30% Federal solar tax credit, your actual cost would be considerably less.