Solar energy systems beat traditional utilities on cost


Solar energy systems beat traditional utilities on costThe rates that Americans pay for their utilities are influenced by a variety of factors, many of which are uncontrollable. If you’re considering switching to a home or business solar photovoltaic (PV) electricity generation system, the following information may help you to make the decision to embrace PV power for your home.

The price of grid-supplied electricity is dependent on the energy source used for its generation. For decades, America has relied on fossil fuels to power the massive generators that make up the electric grid system, but accessing those oil, natural gas and coal sources present significant challenges.

Costs of extraction, refining and delivery

Before the utilities can deliver electric power to homes and businesses, someone must deliver electricity-generating energy to them. Coal mining has played a large part in the economies of many American states, but it is expensive to extract and presents health and environmental threats to those who work with it. Oil and natural gas provide similar extraction challenges. Oil spills are publicized widely, as are the environmental disasters they cause. The recent development in natural gas extraction — fracking — has been releasing significant quantities of fuel, but the full extent of environmental damage that process may cause is not yet understood.

Aging, insufficient infrastructure

After extraction, fuel sources must be refined and transported to the electricity generation facility. Refining raw (crude) petroleum is dangerous work and results in the emissions of toxic gases into the atmosphere. These days, the transportation systems that carry the fuels to the utilities — trucks, pipelines, ocean vessels — are often old and in need of an overhaul or simply not large enough to move quantities sufficient to satisfy an ever increasing demand. In New England, the price for traditionally sourced electricity is expected to continue to rise as the demand for fuel exceeds the capacity of existing pipelines to carry it to the utility facility.

Solar electric power offers a viable and cost-effective alternative

There are two main reasons why solar PV power is the best energy source for your home or business: Costs are low, and your return on investment is high.

Low costs: Solar PV systems have no extraction, refining or delivery costs. Solar radiance (sunshine) causes a chemical reaction inside solar PV cells that creates an electric current. To generate power, the cell need only be exposed to solar radiance. Accordingly, after design and installation of the system, there are no costs associated with the subsequent generation of electricity. As a system owner, you will never have to pay those extraction or delivery costs in relation to your PV-generated electricity.

And, the costs of the solar PV systems themselves are dropping. Since 2010, the average price of a home-based PV system has dropped by 53 percent, and more price drops are anticipated. Notably as those prices drop, the equipment purchased is more efficient than ever before, so the lower price buys increased efficiency.

Returns on the solar electricity investment continue to rise: Many states offer property tax exemptions of the value added to a home by the installation of a PV system. Often sales and use taxes (applied on purchasing and installing the system) are also waived, which reduces the overall cost of the system substantially.

Systems that generate 100 percent of the home’s electricity needs will pay for themselves within a few years, and all the electricity generated after that is free.

Homes that draw on both grid-sourced electricity and a PV system will have lower bills for their grid-sourced electricity. The reduction in monthly electricity costs will eventually pay off the system as well, leaving a completely free electricity generation system in place.

Cleaner public utility systems

Many states require their utility companies to generate a certain percentage of their electricity from renewable sources, including solar. Many of those utility companies are offering their customers added incentives for installing PV systems.

  • Net metering: A net-metered PV system registers the amount of both the grid and PV electricity consumed by the home. The value of the grid electricity is reduced by the amount of PV electricity consumed, which results in an overall lower electric bill for the homeowner. Excess PV electricity is fed back into the grid as part of the utility’s “distributed generation” requirement. Depending on the utility company and the state, homeowners also may be paid a retail price for the value of the excess electricity.
  • Renewable energy credits: States that offer Renewable Energy Credits (RECs) allow homeowners to generate a credit for each gross unit of PV power they generate (usually 1,000 kW). The credits are then salable on the commodities markets. Utility companies can buy the credits and apply them to their renewable-energy portfolio, as a fulfillment aspect of their renewable energy quota.

Solar PV systems provide a clean source of electricity. Incentives and rebates keep purchase costs down while continuing revenue generation through credits, and net-metering increases the value of the system even more. Additionally, the elimination of extraction and delivery costs allows the cost per kWh to be set, and kept, low for the life of the system. No public utility company can beat that value.

RGS Energy, founded in 1978, is a market leader in solar energy system installation. To learn how solar can save you money and to get a free quote, visit RGSEnergy.com.

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