Home solar panel systems, both off- and on-grid systems, are becoming more readily available to consumers through both increased supply and a growing market from environmental awareness propaganda.  For years, people have debated the cost/benefit of solar panels for energy production with the general consensus being that traditional means of energy production are far more cost effective (previously with little concern given to the environmental impact of said energy production).  With that said, it is difficult to find good, solid numerical figures to perform a cost analysis for home solar panel systems.

The variety of available home solar panel systems today is vast.  Multiple manufacturers, types of panels, on- or off-grid, roof or ground mounts, and other factors all play into the cost of a solar panel system.  This analysis used several core inputs:

  1. On-grid system (off-grid requires additional cost of battery system)
  2. Roof installation (ground installations are typically more expensive due to mounting)
  3. Total system cost has been reduced by the $2,000 Federal Tax Rebate available in 2008
  4. A rebate is given by your local energy company (estimates used from Planit Solar)

Before the cost is addressed, the production efficiency should be discussed.  While manufacturers do not all have the same kilowatt-hour (kWh) production per square foot of solar panels, the range is fairly consistent.  The two manufacturers included in this analysis range from 1.6 to 2.0 kWh optimal energy production per square foot each month.  Take out your energy bills for the last twelve months and you can divide your kWh usage by 1.5 (for conservatism) and this will tell you how many square feet of solar panels you would need to power your home.  This is important for determining an overall system cost for your projected solar panel system, but it does not factor in to the figures that will be discussed shortly because the analysis focuses on cost per kWh, which effectively equalizes solar panel systems of all sizes.

For a solar panel system to power a home that averages 1,000 kWh usage per month (understanding seasonal issues are averaged in to control for air conditioning and other such circumstances), the total system cost is projected at approximately $50,000.  This is a hefty price-tag for a system that does not produce very much energy.  However, consumers have the ability to take out long-term financing with similar interest rates to mortgages, therefore the possibility of this investment amount is within reach.

The total system cost is enough to turn most people off from this idea.  Upon further analysis, the total cost of the system becomes irrelevant.  The type of solar panels being discussed have a minimum of a twenty-five year guarantee, so that is the useful life over which the next number crunching exercise will take place.  When one considers the total system cost divided by the total number of expected kWh produced over the life of the system, the cost per kWh ranges from $0.16 to $0.17.  This is in line with energy costs from your grid.  I cannot speak with for anyone but myself, however my energy costs $0.16 per kWh when you include the taxes and service charges.  That puts the solar panel array at the same cost per kWh equivalent to energy from the grid provided that your system maintains optimal output for twenty-five years.  This is an unreasonable assumption, so you can expect the solar panel system to cost slightly more than the grid energy.

Solar panel technology is still slightly more cost prohibitive than grid-derived energy.  The gap appears to be closing, though, so environmentally-conscience and budget-conscience consumers should be on the look-out for this technology to become financially beneficial in the next few years.  Remember, while the initial cost is seemingly high, the cost gap per kWh for solar panels versus grid energy is closing.