Solar Power Costs
The Cost of Going Solar
If you were looking to transfer your home from conventional energy to solar even as little as 10 years ago you would be looking at paying over 6 times the cost of a complete system today. Today, however, prices have dropped to all-time lows due to the continual advances in solar technology and dramatic industry growth. Since 2008 the cost of solar power systems has significantly decreased year over year that was helped even further by generous solar tax credits and incentive programs that are available to all California buyers through the end of 2016. If you’re like most people and want to take advantage of these tax credits (which can account for as much as a 40% discount!) before they expire then read below to find out just how much a new solar system installation would cost for your home as well as the different financing options.
Of course every installation will be specific to your home and your needs but you can make some simple estimations by figuring out the average kilowatt (kWh) usage for your home throughout the year. Once you have this information you can compare it to overall California averages for solar system costs. The average California home is 1,583 square feet and consumes an average of about 6,000 kWh hours of electricity per year. For a home this size using that amount of electricity a 3 kW solar system would probably be recommended at an average cost of about $20,000. For homes requiring additional electricity, solar costs could go up to $35,000 for a 4 kW system which can service a home using up to 8,000 kWh hours per year. These numbers vary if your home is larger/smaller and depending on your kWh usage but this should give you a ballpark idea of what a suitable system for your home would cost.
Paying for Your System
Now that you know roughly what your system will cost the next question is, “How should I pay for it?” Buyers now have various options available to them when it’s time to pay for their new solar system whether you want to pay in full for would prefer to opt for financing. If you plan on going the financing route then you’ll be happy to know that the solar sector has a lot of opportunities to help you get the most out of your solar system. Below are a few of the ways you can get your solar system installed with little or no money down:
1 Power Purchase Agreements (PPA)
A power purchase agreement is a relatively new concept that gained traction in the solar industry in the last decade as a way to let homeowners have all the benefits of solar power without actually having to purchase the system. Under a PPA agreement a third-party owns, maintains, and pays for the system and the homeowner pays a pre-determined monthly amount regardless of how much energy the system actually produces. This is a great option that essentially takes all upfront costs out of the transaction and gives the homeowner exactly what they’re looking for – clean, renewable energy at an affordable cost.
2 Solar Lease
A solar lease is very similar to a PPA in that there are no upfront costs, no loans, and no maintenance is required as these are all taken care of by the company you choose to lease your solar panels through. The main difference being that in a solar lease you are not paying a set fee for your electricity but instead you pay an agreed upon amount to rent the solar panels for a fixed period of time (usually 20 years). At the end of the lease you can either purchase the panels, invest in new panels, or start a new lease.
3 Home Equity Loans
For those who want to take a big step in their energy independence and want to own their system rather than rent from third parties then home equity loans are a great option to help achieve that goal. A home equity line of credit (HELOC) allows homeowners to borrow money using the equity in their home as collateral to pay for the cost of the solar system. Using home equity loans most homeowners are able to save more on their electricity bills compared to their loan payments from the start, especially for longer termed loans.
4 Property Assessed Clean Energy (PACE)
The PACE program is a financing option available through your local California government. The PACE program allows homeowners to finance their solar system with low cost loans that are repaid by increasing the cost of your annual property tax bill usually over a term of 20 years. If you sell your house before then end of the loan term then the new property owner simply takes over payments and maintains all the previous owners benefits of the existing loan.
Regardless of the path you take to reaching your goal of solar powering your home a reality, you definitely won’t regret your choice in switching to the cleaner, renewable, cost saving electricity option.