Across the country, thousands of people are saving money by installing solar photovoltaic (PV) panels on their homes and businesses. Although many factors are involved in “why” and “how” PV panels reduce the costs of powering a home or business, a recent study by the North Carolina Clean Energy Technology Center demonstrates that PV system-owning residents in 46 of America’s 50 largest cities have experienced significant costs savings due to their investment in solar technology.
Size and location of PV system determines amount of cost savings
In many parts of the country (most notably the northeastern states), people think there isn’t enough solar radiance (sunlight) to create a sufficient quantity of electricity for their home or business. While it is true that the northern states receive less average daily radiance than the southern or southwestern states, each state receives enough sunlight on a daily basis to create enough electricity to substantially offset the cost to homeowners of utility-provided electricity. In fact, almost all U.S. states are exposed to more sunlight on an annual basis than is Germany.
Germany now generates as much as 50 percent of its national daily electricity capacity through solar PV systems, despite the fact that it is exposed to less average daily solar radiance than in Alaska. The N.C. study confirmed that PV system owners from Seattle to Boston are saving hundreds of dollars on their electric bill each year, while their southern neighbors are saving even more.
The N.C. study was careful to consider cost savings based on the size of the system, as well. Larger homes require larger systems, but most average sized homes are fully functional with a 5 kilowatt (kW) solar PV system. The savings noted above were calculated based on a 5 kW system in each of the 50 selected cities.
Purchasing the system offers the highest return on investment
Since 2010, the cost of purchasing and installing a PV system has dropped significantly. Part of the price reduction comes from the attractiveness created by advances in technologies. Higher efficiency solar cells can produce more electricity than ever before, so fewer panels are needed. At the same time, government incentives continue to attract purchasers by reducing the purchase cost by 30 percent (with a Federal Tax Investment Credit) and even more with state-based tax incentives. Many states offer sales and use tax deductions, also property taxes are often waived on the enhanced value of homes with installed PV systems.
The N.C. study confirms those savings and calculates that a solar PV investment has a higher return on investment than does a stock market investment, and that homeowners in 42 of the 46 cities pay less than their local utility-connected neighbors for their electricity.
When purchasing is not an option
Even PV power aficionados without the opportunity to purchase their own system have the opportunity to access clean PV power through either a leased system or just the purchase of the power itself. In both cases, the cost of the system will still be reduced by the available incentives, and that reduced cost will be reflected in the leasee’s monthly fee or rental amount. Here’s how that works:
Leasing a PV system: Some states allow installers to lease the PV system equipment to homeowners and businesses. The installers will purchase the equipment, based on the site where it will be installed. The lease amount will then be calculated on the after-incentive cost. The installers retain title to the equipment, but also perform all maintenance on it over time, so the leasee enjoys only the clean, reliable electricity source without maintenance chores.
Purchasing the power only: A “Power Purchase Agreement” (PPA) connects the home to the PV producer in the same way that the current electricity supplier is connected to the home. The PV producer creates the electricity within its own system, then transfers a portion of that electricity to the home. The agreement states the value per kW hour that the homeowner will pay for the use of that electricity. Again, the installer retains title to, and responsibility for, the system for the life of the agreement.
Both the lease and the PPA can include a fixed price per kWh, so the homeowner always knows how much the price per electric unit will be. That fixed price can be set for the life of the contract (lease or PPA), which can be as long as 20 years.
Existing electricity generation sources are aging and struggling
The cost of energy has spiked over the past few years as America’s energy infrastructure ages and the supplies of traditional fuels are depleted. The cost of excavating, processing, and transporting these traditional fuels creates price per unit uncertainties from season to season and state to state. The environmental impact of traditional fuels is significant and is, in itself, a primary reason for many people to move away from that pollution-producing grid. A solar PV system provides clean, reliable and cost-effective electricity, with no price hikes, and little or no carbon emissions. And, thanks to the North Carolina Clean Energy Technology Center, we now know that purchasing a solar PV system is an excellent financial investment.
RGS Energy has almost 40 years of experience in installing solar energy systems throughout the country, in a wide variety of settings. To find out how solar energy could power your home, visit www.rgsenergy.com.