Solar Power - Return on Investment for Your Home

Have you ever thought about getting solar energy?

Ever wondered what the pros and cons are?

What types of solar panels there are out there?

In this article, I'll try and put the pieces together. There's a bunch of things to consider when getting solar power, but can be a simple process if you do it step by step.

The main idea about installing solar panels on your roof (apart from the benefit to the environment and less greenhouse gases) is for the panels to save you money in the long run.

This is a long term investment. The solar panels cost X amount of dollars to install, and they make Y amount of energy each year, saving you Z dollars off your power bill.

And, most importantly, after so many years, the initial cost of the panel will be completely paid of in power bill savings. And any solar power you get after that is pure profit. This is the 'break even' point.

This is the solar energy equation in its simplest form.

And for most solar panels, this break even point is quite a few years in the future. On average, solar electric panels take between 10-15 years to reach this point. Solar hot water panels take 8-12 years.

This may seem a very long time, but it's important to remember most panels come with a 20-25 year warranty. So as long as you don't move house and leave the panels, it's a 'guaranteed' investment.

To get a picture of how to price solar panels, we need to first look at how they are measured. Basically, it all comes down to $/kW.

A kW is an abbreviation for 1000 watts - this is the electricity output. The other important term here is kW hours. This term is used to figure out how much electricity you use over time.

To give you an idea of kW hours, if you left a 100 watt light bulb on for 10 hours, you would use up 1kW. How does this help? Well, the average American household uses about 866 kW hours per month.

So if you have a 1kW solar panel making 5kWh per day, then every month this will supply about 150 kWh, or 1/6 of your total energy needs.

So how to figure out your break even point? Well, let's start with the first part of the equation. How much do the solar panels cost?

Well, panels come in different sizes. These sizes are actually named after how much electricity the panels make. The usual sizes are 1kW, 1.5kW, 2kW, 3.5kW etc. A 1kW panel will generate approximately 1kW of electricity per hour of direct sunlight.

Up until 2006, solar panels usually cost between USD $6.50 to USD $7.50 per watt, including panels, inverters, mounts, and electrical items. This means a 1kW system would cost about $6500 to $7500.

Recent development in the field of thin-film photovoltaics mean that this cost may be dramatically reduced. For example, a Californian company called Nanosolar have announced they can produce panels for $0.99 a watt. This brings the price of a 1kW system down to around $999.

These thin-film panels have just recently come on the market, but are not being offered to residential customers yet. On December 18, 2007 Nanosolar shipped their first solar panels for a one-megawatt solar power plant in Germany. So it is worth watching this sector with interest.

To carry on the solar equation, you need to know how much sunlight you'll get per day. This varies from state to state, country to country. It also depends on where your panels are facing, and at what angle.

For instance, if you live in Florida, you'll get more year round sun than if you live in Oregon. Whether it's cold or not doesn't make too much difference. Actually, photovoltaics work better when it's cold. (Solar Hot Water panels like heat, but they can work in cold climates too.)

So if you live in Florida, for example, and your roof faces south (for winter sun,) and you don't have any trees shading your panels, and your roof slope is about 25 degrees*, then you're onto a good thing.

That's not to say that if you live in Oregon or other less sunny states solar panels won't be beneficial. Solar panels are used around the world in many different climates.

*It's best practise to tilt solar panels at the angle of the latitude you're in - eg. Colorado is at 38 degrees latitude. So you'd tilt the panels at 38 degrees and point them south. This is a rule of thumb, so if your panels are at 45 degrees, they'll still work fine.

This is the last important factor - how efficient are your panels?

Solar panels on average are about 15% efficient. This means if 100 watts worth of sun energy struck a panel, the panel would actually produce about 15 watts.

So you might buy one expensive super-efficient panel or two cheaper less efficient panels and get about the same amount of electricity. All solar panels will have an efficiency rating in their product info.

Once you have how much your solar panels will cost, and how much electricity they'll make, there's one more important step.

Put that into dollars. Take your power bill, and see how many kW hours you use per month, and how much that costs. Then see how much (potentially) a solar panel could save you.

This will give you the dollars saved, per month, by owning a solar panel.* By looking at the price of your solar panel, this should give you a fair idea of how long it will take before the panel 'pays itself off.' This is your break even point.

*To be able to sell your power back to the grid, you need to have net metering. Alternately, you can store solar power in batteries to be used when you need it.

This is a very simplified version of the break even point.

Other things to take into account are:

• Rising power prices. This could make your solar panel much more valuable in the long run.
• A battery system. This will store excess power, so you can use it when you need it. This will also mean you have power if there is a power cut. This does add to the cost of the solar panel system though.
• Falling panel prices. As solar energy becomes more popular, more panels are being produced, bringing the cost down.
• State rebates. Many states and countries are offering incentives to make it easier for people to afford solar panels.