February 8, 2018

Solar Rate Costs: Facts and Figures

Solar Rate Costs: Facts and Figures

Consumers today who are interested in making the switch to residential solar often ask the same question: Isn’t this expensive?
That question can lead to several different answers, so it is helpful to investigate the initial costs as well as the ongoing rates for both solar and electric power.

Solar Panel Installation

The first and primary concern for residential consumers is the upfront installation costs. Solar installers include everything in their rate quotes: this includes both the cost of the panels and the cost to install the system on the home. In 2017, the cost for solar panels ranged from $2.87 -- $3.85 per watt (after incentives)
A standard home system is 5kW, which means that on average homeowners can expect to pay between $10,000 and $13,500. This includes a federal tax rebate that will reduce your cost by 30 percent. Depending on your home state, you may also be able to utilize tax rebates and credits to bring that initial number down even further.

Solar Rates

Another factor to consider when looking at the overall solar rate is how much your monthly bill will be after making the switch to solar. Rates for electric energy have been increasing steadily for the past five years. In the past three years alone, there have been increases of between 3 and 40 percent on monthly rates. As electric rates increase, so does the cost savings going solar provides.
Energy Sage (funded in part by the U.S. Department of Energy) has provided a helpful table to show the consumer savings over the course of 20 years.
2017 Solar panel savings estimates by state table

2017 Solar panel savings estimates by state table


Arizona $12,215 0.1277 $17,033
California $13,370 0.1822 $28,360
Colorado $12,635 0.1278 $16,635
Florida $9,905 0.1139 $16,182
Massachusetts $14,350 0.1947 $30,243
Maryland $11,690 0.1404 $20,466
New Jersey $12,390 0.1616 $24,622
New York $13,650 0.1838 $28,446
Texas $11,270 0.1113 $14,221
Washington $14,595 0.0964 $7,484

Source: Energy Sage

Possible Changes

Although solar energy represents a stronger long-term decision, some legislative decisions could affect short-term costs. As we have discussed in our article about solar tariffs, panel costs could increase in 2018.
Because solar energy is a clean, renewable energy source that does not burden state and city electrical grids, both federal and state programs offer tax incentives to homeowners willing to make the switch to solar. This can reduce the upfront installation costs. Each state offers different rebates, so it is important to check the regulations and requirements in your state.

Solar in the Future

Because of rapid advances in the capabilities of solar panels and system components, analysts predict that prices will continue to fall for increasingly sophisticated systems. As a result, solar use is on the rise – in fact, in 2017 solar led all other energy in new systems installation, accounting for 39% of all energy types. This is a promising development for both solar companies and consumers.
There is some speculation that trade agreements (including the proposed tariff) will cause fluctuations in the marketplace and potentially cause new installations to fall, but the evidence is not clear. It may impact overseas production and the importing of solar modules, which could affect domestic solar companies.
Overall, the outlook for solar is bright. Installation, consumption, and solar jobs are all on the rise – a positive development in any field. Prices continue to fall for both installation and module rates (despite protectionist tariffs), all of which makes solar an attractive option for consumers both today and in years to come.


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