Some of the benefits of solar panels are lower electric bills, increase your home’s value, and lower your carbon footprint. But the downside of solar panels is the high initial investment, inconsistent availability due to clouds and trees, and the need for an appropriate south-facing roof. But out of the ups-and-downs of solar energy the most sought out answer is whether the cost of the initial investment is worth it.
The cost of solar panels and installation ranges between $2,000 to $50,000 and up, depending on various factors. You can have them professionally installed, which can be costly, per The Wire, Kansas City Power & Light’s newsletter, it cost a local customer about $30,000 to install their solar panels. The other option is to purchase a DIY guide which cost between $50 to $200. These DIY guides guarantee that you can buy the materials you need at local hardware stores and online that cut the cost down to the $2000 range.
Either way you choose to install your solar panels, some research on tax credits and rebates may defray some costs. The federal government tax credit is 30% of residential system’s cost, with no upper limit, can be deducted from your tax obligation for the year1. Each state varies on their tax credits and rebates. According to KCP&L, Missouri residents were getting a $2-per-watt rebate on solar projects which now is being challenged by Missouri courts2. For more information on tax credits and rebates for Missouri, Kansas, or your state visit Database of State Incentives for Renewables & Efficiency.
Once you have an idea of how much of a tax credit you’ll receive then you can calculate your payback period on your investment. Simply follow this formula3:
The Retail Cost – The state tax credit = The amount eligible for the federal tax credit.
The amount eligible for federal tax credit – 30% federal tax credit = The actual cost.
The actual cost ÷ savings per year on electricity = Years to payoff investment.
Therefore, if you end up spending $15,000 on your solar system after your tax credits/rebates which gives you a savings of $2,400 a year on your electric bill then you’ll pay for your solar power system within 6 -7 years. Which is a good investment in this scenario but if you spent $30,000 then it would take 12 – 14 years, $50,000 would take about 20+ years.
If you feel that you can handle the cost and come out ahead then solar power is ideal for you and your family. Any savings for your finances and the environment is always a plus!
Sources:
1 “Adding Solar: What you need to know.” KCP&L The Wire Newsletter. Fall 2011.
2 Ibid.
3 Ibid.
“Resources.” dsireusa.org