Solar Economics

Cost of Solar

Typically solar installations cost approximately $9-10 dollars per watt in a turnkey system. So a 3kW (3,000W) system might cost $27,000-$30,000 before rebates. HOWEVER, federal, state, and local rebates can bring the price down considerably, and in some locations, magnificently. The size of the solar system that you need will depend mostly on how much electricity you use, as well as a long list of other criteria that an installer or sales professional will evaluate. Tilt, orientation, and shading of your roof are examples of some of these.

Federal Solar Incentives:

Starting in 2009 the $2,000 cap on the Federal Solar Tax Credit has been lifted and instead it is 30% of the out-of-pocket cost with no cap. This rebate is a reduction of your tax obligation. It is not a deduction, it’s a credit. Its as good as cash and can be rolled over if you don’t have that tax liability.  Note, if there is a rebate provided by a utility to a homeowner as an inducement to install solar equipment, then the basis of the solar equipment is reduced by the amount of the rebate.

State and Local Incentives:

Please check each 1BOG Solar cities page for information about specific local rebates and government incentives. We’ll update these pages as news comes in!

Volume Pricing

Rebates and incentives are one way to get the price down. Another way is to group together residents and negotiate volume purchase discounts. A $1 per watt discount could mean $3,000 in savings!

Creative Financing Products

Even if rebates and incentives are paying for more than half of the costs, there can still be a considerable cash outlay to the consumer. Interestingly, if you finance with a home equity loan (note: you might be able to deduct the interest there) many people find that their electricity savings are greater than their loan payments, meaning that they save money from day 1.

Also worth noting is that there will soon be many financing companies offering to lease solar systems, which means no up-front cost… And possible immediate savings as well.

FINANCIAL BENEFITS:

• Save On Electricity Costs
  Your solar system will reduce your electric costs. When your system is producing more power than you are using, you sell that power to the utility company. As you do so, your meter actually spins backwards! It’s a really empowering thing to watch.
• Stabilize Your Monthly Expenditures
  Have you ever said, “I can’t believe they’re raising our electric rates?” What if every time they raised electric rates you effectively got a raise? If you have a solar system on your roof producing a commodity like electricity, that’s exactly the case. Power costs go up, your post costs the same. The sun, to the best of our knowledge, has no plans to charge you.
• Solar Increases the Value of Your Home
  The most commonly cited resource on this states the following (see our solar home value video for more): For each $1 you save in electric costs annually, your home jumps up $20 in value, according to a study from the Appraisal Institute. In comparison to many other home renovations, solar can often recover more than 100% of the original cost. The best common home renovation is a deck which returned 4% more in resale value than in cost.



(Tables from Andrew J. Black’s Why Is A Solar Electric Home Worth More?)

• Positive Return On Investment
  Have you ever asked a car salesman what the “paypack period” is for a car? There isn’t one. Solar is one of the few things you can purchase that pays for itself. Studies show solar paying back 2-4 times its cost over 40 years. Payback occurs in 7-15 years which leaves 13-20 years of system life.

*We’re not tax pros here, please consult your CPA or tax professional before acting on any of this information.