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Is Solar Power Financially Feasible for Middle-Class America?

Anna Johansson's picture

Anna is a freelance writer, researcher, and business consultant from Olympia, WA. A columnist for, and more, Anna specializes in entrepreneurship...

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  • Nov 13, 2016


Homeowners all across the country have heard about solar power for years now, but the reality is that only a fraction has ever considered installing panels on their own homes. The reason is that middle-class Americans know very little about the true cost.

When it comes to solar panels, homeowners have lots of questions. Primarily, though, they want to know how much it’ll cost to install solar panels, what the anticipated monthly savings are, and when the break-even point will occur. If you find yourself asking questions related to these issues, then you’re on the right track. It means you’re taking an analytical approach and have a clear understanding of what you need to do to save money on your energy bill.

How Much Do Solar Panels Cost?

Let’s start with the issue of cost. How much upfront money do you have to invest in solar panels in order to get the infrastructure up and running? Well, for starters, you’re going to need four major components: solar panels, a controller, batteries, and an inverter.

The reason so few middle-class families have been able to install solar panels in the past is that these four components simply cost too much. But now, thanks to new technological developments, government incentives, and economies of scale, the cost of solar panels is dropping.

Installing solar panels on your home isn’t like buying a car, though. Costs vary across the entire market and your price will depend on three key factors: (1) The state you live in, (2) How much electricity your system will produce, and (3) What finance options you qualify for.

When you first see the price tag for solar panel installation, you’ll probably want to clutch your wallet and walk away – but have some patience. While the initial price on a home consuming average amounts of electricity may range from $26,000 to $39,000, that’s just the sticker price. Once you account for things like zero-down financing, statewide energy tax credits, federal tax credits, and company discounts, you can generally slash that cost in half and pay it off on a monthly basis. Over the 25-year plus lifespan of the system, the savings should triple or quadruple the upfront investment.

What Are the Savings and Benefits?

When installing a solar panel system, the key is to identify a reasonable break-even point and then do everything you can to improve payback.

“The most important factors for making solar an attractive investment include high electric rates, net-metering policies, financial incentives and good sunlight,” says Andy Black of Mother Earth News. “Unlike the other factors, sunlight is available in almost all of the continental United States.”

If you live in a state with high electric rates – such as Hawaii, California, or New York – solar panels make a lot of sense. If you’re using a ton of electricity each month, regardless of where you live, it makes even more sense.

You should also be on the lookout for new incentives, rebates, and financing options. These are all generous hooks used by the government and private companies to increase participation, but you can’t expect them to be around forever. As soon as adoption rates increase to a substantial level, you may see some of these incentives disappear. So take full advantage now and you can enjoy the maximum savings and benefits.

You have to look at solar as an investment. Like any investment, you have to provide some capital up front and risk something tangible in order to hopefully see a return in the future. Well, when it comes to installing solar panels on your home, think of this as a low risk, high reward scenario. Over the long haul, you’re going to save tens of thousands of dollars. That’s money that can be applied towards your mortgage, a retirement account, daycare, home improvements, or any number of other expenses.

Can You Afford Not to Go Solar?

Will going solar cost you something on the front end? Maybe or maybe not (thanks to zero down financing). However, even if you do have to shell out a few thousand dollars on the front end, the savings will be well worth it down the road. And, quite honestly, you can’t afford to not go solar. Solar power is the future of middle-class America.

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Josh Nilsen's picture
Josh Nilsen on Nov 13, 2016

Solar and battery storage as a service so hot right now.

When you don’t have any responsibility of the up front cost and can get the benefits immediately, it’s kind of hard to say no to that.

The same concept will be there for electric cars too. No money down leasing for EV’s means you get an electric car on day one and start saving on day one.

ICE / the conventional utility grid *cannot* compete with that.

Nathan Wilson's picture
Nathan Wilson on Nov 13, 2016

Yes, solar energy is affordable for the middle class!

The latest report from analysts at Lazard show that in much of the Texas and the US Southwest, utility scale solar (with fossil backup) can be as cheap as just 3 ¢/kWh above the cost of fossil fuel generated electricity (it’s more costly in the north, adding 20 ¢/kWh in some cases). The current federal subsidy closes most of the gap with fossil fuels. In many markets, the cost of fossil fuel backup capacity is “externalized”, which helps to make solar appear competitive with fossil fuel.

The Lazard report also notes that wind energy in the central plains is about half the cost of the cheapest solar energy, easily beating fossil fuel when the subsidy is counted, and matching it without subsidy, even with the cost of fossil backup internalized.

Many utilities are offering solar & wind energy certificate programs, which allow consumers to pay for the clean energy certificates that come with the solar & wind energy that they produce or buy.

Unfortunately, Lazard finds that home solar is much more expensive:
Rooftop solar PV technology is still not cost competitive without significant subsidies, primarily due to higher installation costs.“.

Specifically, Lazard finds that rooftop residential solar with the subsidy is 18¢/kWh versus 3.8 ¢/kWh for utility solar, not including grid costs or fossil backup. So how can home PV system owners save money? It’s due to the magic of “net metering”, which shifts most of the cost of grid service and fossil backup to other electricity user. Yes, PV owners are contributing clean energy to the grid, but they are doing so at four times the utility-scale alternative. Markets which are early adopters of PV (Nevada, Hawaii) have realized the fundamental non-scalability of net-metering, and have reduced or eliminated it.

Solar energy is great. But net-metering and the cost shift that it implies are bad for society, bad for electricity users, and bad for the environment.

Nathan Wilson's picture
Nathan Wilson on Nov 13, 2016

Removed duplicate.

Jesper Antonsson's picture
Jesper Antonsson on Nov 14, 2016

Residential solar power is fundamentally pretty expensive. Since solar is growing, expect a day where grid power around noon on sunny days is very inexpensive, a day where there’s no net metering, where more grid costs have been shifted to fixed rates and so on. So if you don’t get to break-even within five years, or get a foolproof no-money-down solar-as-a-service contract, then expect to lose money, since your daily savings will mostly vanish soon.

You have to look at solar as an investment.

I disagree. I think peace of mind will only come from looking at it as a hobby or as an adornment that helps your status in the neighborhood. If you look at it as an investment, you’ll probably become quite disappointed.

Btw, anyone installing fixed tilt systems is lowering the potential solar penetration in the grid by crowding out high capacity factor tracking systems. So typical residential solar does society a disservice on multiple fronts.

Engineer- Poet's picture
Engineer- Poet on Nov 15, 2016

Moderators – please nuke the “Agen Judi Poker Online” spam account.

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