Just like we’re always looking for ways to cut down on everyday expenses, why not do the same with our utility bills? Bargaining over utility costs isn’t typically easy since we usually have few options for electricity, gas, and water providers. It often feels like a monopolized market where we have to accept the rates given. However, there are ways to reduce electricity costs, and switching to solar power could be a particularly impactful method. We’re considering this switch seriously, so let’s analyze the potential savings and determine if the investment is worth it.
### Estimating Your Current Electricity Expense
Calculating your electricity use can vary based on factors such as:
– The size and age of your home
– The number and quality of doors and windows
– Weatherproofing measures
– The type and quantity of electric appliances
– The number of people living in your home
On average, people in the U.S. use about 877 kWh of electricity per month, which adds up to roughly 10,649 kWh annually. With the average cost per kWh around $0.13, most households spend about $1384.37 on electricity each year.
In my case, our electricity costs $0.11 per kWh, a bit lower than the national average. Our yearly electricity cost for a seven-person household in an 1888 sq. ft. home was $1461.24. This seems higher than the average because we have more people living with us and a 30,000-gallon pool we use for half of the year. Taking these factors into account, we’re actually spending less than similar-sized households.
### Cost of Opting for Solar Panels
After figuring out your annual and per kWh costs, the next step is estimating the cost of solar panels. Most solar systems generate around 6 kW, providing between 7,000 and 9,000 kWh of energy. While this might seem insufficient for the entire year, it’s usually enough. Your house will use solar power first and switch to the grid when needed. Conversely, any surplus solar energy goes back to the grid, effectively allowing you to sell excess power and buy it when needed. Many users find they reach a zero-balance with their electricity company.
### Is It Really Worth It?
Opting for solar panels means you won’t have to pay the electricity company anymore, just for the solar panels. You can buy them outright or lease them over 10-12 years. Many people choose leasing if they can’t afford the upfront cost, though leasing involves interest, which can result in a net loss.
Installation costs for solar panels range from $15,000 to $25,000, depending on your location and roof specifics. In my area, it’s closer to $15,000. Based on our current spending, it would take about 10 1/4 years to recoup the investment, which needs careful thought.
### The Bonus of Tax Credits
The federal government still offers tax credits for solar panel purchases, a program started in 2005 and set to phase out by 2024. If we buy solar panels this year for $15,000, we’d get a 26% tax credit, bringing the cost down to $11,100. This shortens the payback period to 7 3/4 years, after which we’d have around 17 years of essentially free electricity.
### Summary of Going Solar
If you’re thinking about solar energy, you first need to review your current electricity use and look for ways to cut it down. Determine your per kWh cost and annual expenditure to see if solar panels are a good investment for you. Don’t forget about the added benefit of tax credits!
In our case, we’re still on the fence, mainly because we’re not sure if investing in solar panels will offer better returns compared to other options. So, the decision is still up in the air.
Have you found that going solar could reduce your electricity costs?