Federal Renewable Energy Tax Credit – In 2010, the average homeowner in the United States paid about $40,000 (or less than $8 per watt) for a full-size solar panel system for their home. By 2021, the average cost of installing solar panels has dropped 50% to about $20,000 (or about $3.20 per watt).
Dividing math is very easy. Just multiply the cost per watt by the size of the system your home needs: $3.20 per watt times 6,000 watts (the average system size for a residential home) equals $19,200 – here’s the average cost to install solar panels in your home. . But where exactly do these numbers come from? And are there local incentives to reduce that cost? We’re here to help you find out.
The solar energy industry has experienced unprecedented growth over the past 10 years. Why? It’s all thanks to the Solar Investment Tax Credit (ITC), a federal policy passed in 2006 that offers incentives to homeowners, businesses and solar generators (like Chariot) who want to install rooftop or ground solar panels . solar farm.
Since then, the average annual growth rate in the industry has been 42% and tens of thousands of jobs have been created. In fact, according to the Solar Industry Association:
Even better, as consumer prices decrease, the quality, life and efficiency of PV technology increases. It’s a perfect win-win scenario and deserves a critical look to understand exactly how homeowners can benefit from installing solar panels on their homes.
The national average cost of solar panels in the US is $3.20 per watt. However, there are several factors that can cause these costs to increase or decrease. The two most likely to affect these costs are:
The final number can vary widely, as companies charge different prices for installation for various reasons, including time of year, location, and shipping costs from their warehouse to your home. Now, most importantly, these prices have fallen 99% since 1980 and are expected to fall even more after the end of the housing ITC in 2023.
Even if every solar panel is exactly the same, we found four side costs that affect the cost of installing a panel. So even though production costs are falling, you need to look at the changes in these fees to estimate your net costs.
These solar panels probably won’t produce much electricity since the house is in a wooded area and is surrounded by shade trees.
Let’s face it: a house in Phoenix generates more solar electricity than one in Portland, Oregon, or Maine, even if neither house has trees.
Geography is very important for efficient solar energy production. No matter where you live, you can always install solar panels on your roof, but it also depends on where you live.
It’s less obvious than you think. Just because it’s sunny doesn’t mean your solar panels are getting the same amount of sunlight as yesterday or the day before. And just because you live in the Southwest doesn’t automatically make your home a good candidate for solar panels. Whether it’s from trees, nearby buildings, or other obstructions, your roof should regularly consider the amount of coverage.
It’s not every day you see rows of solar panels on the roof of an A-frame house.
This is a double disadvantage. The contours of your roof affect the number of solar panels you need to produce the energy your home needs, as well as the labor required to install them for maximum efficiency. For example, pitched roofs with high peaks create many nooks and crannies for shadows and can be difficult for solar panel installers to navigate.
It’s a big one to be honest. Your energy bill will determine the size of solar system you need, which means the number of panels you need. While the average residential solar system in the US is in the 5 kilowatt range, your family may be especially frugal, meaning you may only need 4 kW to power your 2,000 square foot home.
On the other hand, if you have a large family that entertains often and has a lot of equipment installed in the same 2,000 square foot home, you may need an 8 kW system and that will cost more.
As mentioned above, the ITC is a general boon for the expansion and health of the solar industry. By 2021, ITC predicts a 26% decrease in solar panel installation costs and is a big reason why the solar industry has consistently seen a 42% annual growth rate over the past decade.
By reducing the initial cost of installing solar panels, more people were able to invest in installing solar panels for their homes and businesses. This steady increase in solar panel production underpins the growth of solar energy, increasing the viability and long-term impact of solar energy.
Unfortunately, the ITC for housing will expire in full in 2024 and cuts are already underway. Fortunately, the overall cost of installing solar panels has decreased over the lifetime of the MTC, but the solar panel industry is still poised for a slowdown in installations in the near future. So if there was ever a time to consider solar panels for your home, now is the time. The discount will only decrease.
Even for the greenest of us, making the full transition to renewable energy can be prohibitively expensive. This is especially true for using solar energy in your home or business. We welcome anyone and everyone who wants to install solar panels on their roof, but we understand that people need to research the cost and all the details involved first.
A good place to start is with an online solar installation cost calculator. While some are more detailed than others, most will ask you a few basic questions:
From there, you should contact reputable solar panel companies in your area and get quotes. As we discussed above, the specific details of your home will affect the cost of installation labor, which is the source of any differences in the quotes you receive.
Finally, if you’re evaluating the environmental benefits of solar energy, you also need to understand the underlying cost of that cost. It is important to get all available information from these companies so that you can calculate your costs as efficiently as possible. A good solar installer will want to fully explain the costs, including the payback period your solar system will pay for itself.
Chariot Energy is about to become one of those residential solar panel suppliers! Stay tuned for that announcement, or you can show your solar-free love today with one of our flat-rate electricity plans. They are powered by 100% solar energy from our solar farm in West Texas. Check out our available plans for your area today!
And if you want to learn more about this topic, read our article on everything you need to know about solar panels for your home. Have you thought about switching to clean energy? If so, there is a federal program that can significantly reduce the overall cost of a new solar installation. This daily tax incentive program, called the federal Investment Tax Credit (or ITC), can save you thousands. However, these savings are only available for a limited time. It pays to start planning now.
Through our tax dollars, we all contribute to the federal tax incentive for solar ITCs. It’s one of the drivers of the solar boom in the United States, and a big reason why many of your neighbors are switching to clean, affordable, renewable solar power. Importantly, a tax credit is quite different from a deduction. This will directly be a credit for the amount of income tax you owe. If you’re a W-2 employee, this usually means filing for a longer tax period. Put your tax dollars to work and explore solar power options for your home!
Originally established in 2005, the Solar ITC promotes renewable energy by allowing solar customers to deduct a significant percentage of the total project cost from their federal income tax liability. In 2022, the solar tax credit will allow reimbursement of 30% of project costs. This applies to both residential and commercial systems – without limitation. In fact, the average Solar Alternatives customer saves nearly $12,000 on solar energy costs thanks to the ITC!
With the cost of solar down 80% in the past decade, there’s never been a better time to switch. S
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