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Annual Energy Savings Potential is high as Demand For Solar Rises

image credit: https://www.fixr.com/blog/2018/05/24/mapping-how-much-your-home-can-save-through-installation-of-solar-panels/

In the last ten years, the demand for solar energy in the U.S.A. has increased by 784%. While coal has received renewed attention from government, solar energy is catching the eye of more and more homeowners as the potential energy savings become more attractive.

Not only does the U.S. have the world's largest solar power plant in the Mojave desert, but it is also the fourth largest producer of solar energy in the world. In order to predict and meet demand, an understanding of the potential geographical growth of the sector needs to be gained.

How location affects savings

While geographic and climate factors affect the likelihood of solar becoming a reliable source of energy in each state, the overall picture is fairly constant. The above graphic takes the cost of energy and the availability of direct sunlight into account, to calculate the potential energy savings for homeowners in each state. This, in turn, can give an indication of the potential growth for the industry.

The top two states with regard to potential savings are on opposite coasts; California leads with potential annual savings of $1,513, with Connecticut close behind and a saving potential of $1,401 per year. Unlike non-renewable energy, solar puts the power in the homeowners hands. It provides an opportunity to not only earn back the initial investment in savings, but also start earning a return on that investment.

While the southwest and northeast coasts offer the highest savings over all, the inland states fare relatively well, with only two states offering savings of less than $600 per year (still a fair and enticing saving for any homeowner). However, savings are not the only factor to consider, as installation is still a significant investment.

Installation costs offset by rebates and incentives

Nationally, the average cost for a solar panel system costs between $20,000 and $25,000 though this amount can be offset by the various state and federal rebates and tax credits available. With costs and savings considered, the average pay-off rate ranges from a high of 26.9 years in Washington, to a low of 7.3 years in California.

The solar panel sales and installation industry should consider the growth of the industry in each state, alongside the potential savings and the attractiveness of those savings to homeowners. While demand continues to rise, it is important that the industry is able to keep up with the demand. Unfortunately there is no definitive database for all rebates nationwide.  Apart from the state and federal rebates mentioned above, there are also cash rebates, solar renewable energy certificates and performance based incentives that vary significantly by state, and even municipality, and will affect demand for industry professionals.

A range of solar solutions to drive demand

The other consideration is the type of system on offer. While we have spoken about the costs and savings relating to purchasing a system outright, certain providers offer the opportunity to lease a system. This doesn’t require a large initial outlay, however, lessees are not afforded access to state and local incentives; meaning the potential return on investment will take longer as annual recoup amounts are lower.

As materials become cheaper and technology allows for more versatile systems, solar is becoming a more and more attractive option, compared to traditional non-renewable energy. It is not only clean and inexhaustible, but it offers users an opportunity to pay off and eventually earn on their investment, and a system is said to add about $15,000 to the value of a home for resale. By continuing to develop and lower costs, as well as provide a range of new systems, the solar industry can encourage users to switch to solar, thus driving the market and ensuring this Earth-friendly alternative becomes the norm.

 

Cristina Miguelez's picture

Thank Cristina for the Post!

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Discussions

Matt Chester's picture
Matt Chester on Mar 26, 2019 1:15 am GMT

Great post, Cristina. I'd also love to see the map of potential savings reworked to demonstrate the variance of potential payback periods for the upfront capital costs to really drive how how affordable solar is even in the states with the lowest potential savings. 

Cristina Miguelez's picture
Cristina Miguelez on Mar 26, 2019 2:35 pm GMT

Thanks for your message, Matt. It is definitely a great suggestion. Actually, we are currently working on another piece about solar energy in each state that I expect to publish soon. However, I’ll pass your idea to my team to see if it is possible to tackle the topic from the perspective you mention. Thanks!

Matt Chester's picture
Matt Chester on Mar 27, 2019 1:05 am GMT

Sounds great-- looking forward to your next piece

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