How much does solar cost?

And how much will it save you?
Joyanna Laughlin

The more energy you consume, the larger photovoltaic (PV) system it takes to provide that energy. Gather your last year of utility bills and figure out how much electricity you consume per month in kilowatt-hours (Kwh).

1. Before you consider installing a PV system, make sure that your home is as energy-efficient as possible. For example, add eco-friendly insulation where needed, install compact fluorescent and other low-voltage lighting, use natural gas instead of electricity, purchase a tankless on-demand water heater, and buy Energy Star–qualified appliances.

2. Ask an installer to make a site visit and give you a cost estimate. The installer will determine how much sunny (preferably south-facing) roof space is available on your home and see if window gables, chimneys, and especially the shadows cast by trees (solar panels are very sensitive to shading) reduce your useable roof space.

3. Determine your budget. A standard 3-Kwh system costs between $20,000 and $30,000 installed, before rebates and incentives. About 50 percent of the system’s total price is the panels; 30 percent to 35 percent of the cost is an inverter (which turns the direct-current electricity the panels produce into the alternating current that you can use), a forward- and reverse-running meter, mounting hardware, conduit, and wire; the remaining 15 percent to 20 percent is labor, permit fees, and taxes. Maintenance costs are extra.

What is payback? The way a PV system pays for itself is by offsetting your utility bill. The payback ― the number of months or years needed to recover the cost of equipment and installation ― for your PV system depends on the initial cost to purchase the system and the price you pay for electricity. Payback can range from as few as 5 years to as many as 30 years; however, most experts estimate a payback period of 10 to 12 years.

What is net metering? When you have a grid-tied PV system and it’s producing more electricity than you are consuming, you can sell your extra electricity back to the utility and your meter will spin backward. This concept is called net metering. In order to participate in net metering, you will need to have at least one special meter installed on your home’s exterior that spins backward and forward. The meter costs about $300, but your utility company may cover part or all of the cost. In Colorado, the utility is required to pay for the meter and its installation.

Solar hot water: In Loveland, Colorado, about an hour north of Denver, sits the Discovery House, a four-bedroom home that would fit in almost any neighborhood in the West. It was built in 2004 by Colorado-based McStain Neighborhoods as a research home to test out energy-saving and environmentally friendly building products and practices ― including solar hot water.

According to Jeff Medanich, McStain’s special projects manager, the Discovery House (now privately owned) has three 4- by 8-foot solar hot water panels on the roof and a 180-gallon storage tank in the basement that provided all of the hot water needed for a family of two between March and September 2005. Industrial Solar Technologies supplied the solar hot water system and Lennox provided the HVAC system. McStain now offers solar hot water systems as an option on its single-family homes. “And homeowners may realize payback in five years or less,” Medanich says.