How Much Do Solar Panels Cost?

Where did this Fossil Fuel Addiction Come From?The Industrial Revolution in the United Kingdom (1750 to 1850) was a pivotal time in our evolution.  This was a period in which major technological advances in transportation, agriculture, manufacturing and mining allowed for the mass exodus from farms and into cities.  This period reshaped all aspects of society and culture – its impact continues to reflect on modern society for it was during the Industrial Revolution that our collective affinity for burning fossil fuels was first developed.  Within the past 250 years, man’s burning of fossil fuels (oil, gas and coal) has released hundreds of millions of years worth of carbon stores into the atmosphere and brought the concept of the Carbon Footprint into our lexicon.  This method of energy generation is destroying our air quality and warming the planet, therefore increasing demand for alternative energy sources (wind, solar, hydroelectric) is creating more choices for consumers.

I would not consider myself a ‘hardcore’ environmentalist, but I have modified my personal  consumption in a several ways over the past decade.  In 2006, I became interested in solar as a potential energy source for my home however the cost at that time was prohibitive  (it would have taken me over 40 years to make back my initial investment in the form of cost savings).  I have recently decided to revisit solar panels and am pleased to report that the industry has evolved and costs have come down.  Before I get into the specifics of solar panel costs, I offer a bit of background on the technology.

Solar Panels

Solar panels convert photons from the sun into electricity (the photovoltaic effect).  A panel is made of hundreds of individual solar cells.  Each cell is able to generate a certain amount of electricity, therefore higher energy levels can be generated by adding extra panels.  At the extreme, huge desert solar farms such as the 70,000 panel Nellis Solar Power Plant in Nevada are capable of producing 25 million kilowatt hours worth of electricity annually (enough to power 1,750 average American households).  

The cost to install enough solar panels to power your home depends on 2 factors – your consumption and the annual number of sunlight hours in your region.   

Step 1 – Determine Your Household Consumption

The Department of Energy estimates that the average American household consumes 14,000 kilowatts of electricity each year.  For a more precise measure of your specific consumption, you can either refer to your last electrical bill or visit the BD Batteries link in the Bibliography to this article, where you can provide an inventory of all your appliances and the site will estimate the consumption.

In all likelihood, if you decide to install solar panels, you will either under-produce Individuals who install solar panels are able to either produce less than their home requires (ie solar supplements their electrical needs) OR produce more than they require (and selling the excess back to their electrical supplier). 

Step 2 – Find the Average Number of Daily Sunlight Hours in your Region

The average number of daily sunlight hours http://solarpanelsystem varies by region, and this information is easily found online.  In 2011, Chicago averaged just 3.1 hours worth of sunshine per day (lowest in the US) while Inyokern, CA averaged 7.6 hours per day.  

Step 3 – Calculate Number of Panels needed to meet your Consumption

Using an online calculator, it is a straightforward calculation to tell how many kilowatts per day you need to produce based on your available sunlight hours.  For example, a Chicago home would need twice the number california solar rebates of panels to produce the same daily output as the same home in Inyokern.  

Said differently, if my home consumed 24 kilowatts (kw) per day and I averaged 3 hours of sun, I would need to buy enough panels to generate (24kw / 3hrs =) 8 kw/hr during my 3 sunlight hours.  If I had 6 hours of sun, I would need to buy half the number of panels because I would need to generate (24kw / 6hrs =) 4 kw/hr.

Step 4 – So How Much Are We Talking About Here?

Once you know your required daily kw, you can now calculate how many panels you need.  Panels come in different sizes, so for the purpose of this analysis I will assume 65 Watt Panels at an average cost of $175 each.   The conversion from kilowatts to watts and accounting for loss from inefficiencies is a little complicated, therefore I provide the following chart:

Step 5 – The Cost-Benefit Analysis

These costs may seem a little intimidating, but remember that we are paying a one time cost for no more electrical bills.  To make sure we are comparing ‘apples-to-apples’, I like this quick-and-dirty tip to compare solar with conventional electricity:

Find a mortgage payment calculator online.  Your bank probably has one on their web site.

Pretend that you are borrowing the full amount of the solar conversion as a new loan

Assume a 6% annual rate and a 10 year term (and amortization)

If the payments needed to carry this loan are LESS than your current monthly electrical bill, you should be investigating solar further. 

If the payments are a little bit MORE, do some digging and find out if you can cut back on your consumption and contact a local solar contractor.  There may be government incentives that help swing the numbers.

If the payments are a lot MORE, stick with what you already have.

Unfortunately, I live in a rainy climate and solar panels are not feasible for my situation (although I am looking up realtors in Inyokern as you read this article!).  If you are interested in exploring the topic of alternative energy further, Alternative Energy for Dummies is a decent place to start.  I would love to hear your take on this approach, or if you have installed solar panels, how you are finding them.  Please leave your comments below for other readers to see.