Solar Energy: Easier To Invest In Now Than 10 Years Ago?
Solar power seems like the panacea to meet the nation’s electrical needs. The sun isn’t going anywhere any time soon, sunlight arrives for free every day, and literally sustains the earth rather than pollute it . These are all reasons the sun is such a great resource, which is certainly understating things.
Though in theory it seems to be the answer to all power concerns, and compared to 10 years ago it has become a more viable option. Solar energy on a residential level is certainly more widely considered than it was in 2004. Yet, challenges remain in getting solar power even closer to the mainstream, particularly in North America. But, sometimes challenges can be the very things that set a shift in perception and set new markets into motion, too.
Cost of traditional electricity continue to rise
Compared to a decade ago, two main factors make solar panel installation an easier decision to make now – federal and state tax incentives and growing prices of traditional sources of energy.
Consider the fact that according to a study from the Edison Electric Institute, the cost of electricity rose by 2.5 percent each year from 2000 to 2006. That beat the rate of inflation that grew at 1.99 percent a year during that same period. One of the major factors driving the rate of increase is the rising cost of coal and natural gas, which currently produce the bulk of U.S. electricity. The reasons for the incentives are pretty clear, then.
Solar panels – increasingly cost-effective
Since your electric bill will continue to rise at the same rate as these fuels, installing solar panels becomes a potentially more cost-effective investment each year. According to the data, the time it will take to pay off the initial expense decreases each year, which seems to make solar energy into a long-game play for homeowners, even if the upfront costs tend to make solar panel installation a barrier to some households at this point in history.
Add to that your tax credits, and solar panels become an increasingly reasonable investment as they move into the public consciousness more and more. The current 30 percent federal tax credit will continue to be in effect up through Dec. 31, 2016. There are other credits available in many states. Sunny states like Arizona, New Mexico, and California currently have additional incentives that include waived fees, cash back, and expedited permits.
Costs and potential savings
As mentioned earlier, having solar panels installed is an expensive proposition upfront. At $5 a Watt (approximately $15,000 for an average home), solar panels must be looked at as a significant investment that comes with immediate financial and environmental benefits.
On average, Americans consume 1kW per hour of electricity which comes out to approximately 900 kWh a month. Think of it this way; an energy-efficient refrigerator will cost you about $0.12 a Watt, or around $50 a year. A large plasma television comes in about 700 kWh or $100 a year.
Covering the difference
Energy costs continue to increase along with your energy needs, so if you had a 3kW system installed (and based on an average amount of sunlight) it would create approximately 450 kWh per month, or cover half of your monthly electricity expenses. That means, assuming your monthly bill was $100, you would save $50 a month for as long as you have a solar panel system.
The cost of installing solar panels is a large upfront investment right now. But as the technology improves and the incentives increase, they will become an option that more and more people will find easier to invest as the cost of fuel rises. As you look at the future of energy generation, keeping it clean, and recognizing the importance of plentiful, renewable sources, solar energy continues to be a path worth pursuing on all levels.
Solar energy and you
What do you feel is the biggest barrier to residential solar energy?
Have you noted a rise in overall energy costs at your house?
What kinds of things have you considered to reduce your bills and your consumption?
What are your thoughts on the ratio between upfront installation costs and long-term energy savings?
Let us know in the comments section of this post.