Tuesday, January 24, 2006

How much does solar cost to install? Good article summary

Hey there Future solarDwellers:

If you want a good summary of what the economics of solar are looking like for the average homeowner in California, which have gotten better recently with a new federal tax credit (up to $2,000) combined with the roughly 30% rebate you get from the state when you install solar, take a quick look at the article linked below.

Here's the link to the article mentioned above:Solar-powered home incentives funded. And a small quote from the article:

John Schaefer, president and founder of Real Goods, said the average size of the array Real Goods installs is about 250 square feet, and could reduce electricity bills from $150 per month to $30 per month.

Schaefer said installation of a system that size generally costs around $15,000 out of pocket, with an additional $10,000 being picked up by state and federal programs.

Schaefer said the combination of federal and state programs beginning this year make a solar energy system one of the best investments available.

"It returns 10 to 15 percent," he said. "That's better than anything in the stock market or any CD. You'd be crazy not to buy."

Schaefer said he expects to see a 50 percent increase in his business in the next year.

For a quick idea of the cost comparison, a 2500 Watt (2.5 kW) system would cost about $22,500 at the going "fully installed" average contractor rate of $9.00/watt in California. After the California $2.80/watt rebate, the total comes down to $15,500 (-$2.80 x 2500 watts). After the new federal $2,000 tax credit, the total is down to $13,500.

And the payback?? Such a system would produce or "pay you back" about $685 worth of electricity every year, or a return on your investment of about 5%. And assuming rates go up every year, the electricity your pv system produces 10 years from now will be worth even more: about $965/year, or about a 7% return on investment if electricity bill rates keep going up a conservative 3% per year. Your system will be totally paid off in about 15 years, but your panels will produce for 10 years beyond that!!! That's truly great: the electricity your solar panels produce gets more valuable over time, because electricity rates go up over time. In other words, when the electric company raises its rates, they have to pay you more to buy back/give you credit for the electricity you produce.

Seems like a pretty ideal time for solar to me . . .

--the solarDweller

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