Solar Power in U.S. Homes Saves Money in the Short Term, Too

Solar power is inching closer to the mainstream, with more U.S. households replacing conventional electric service with home-based solar electricity systems. The American Solar Energy Society and the society's magazine, Solar Today, say that solar energy is becoming more of a presence in single-family homes, and beginning to challenge fossil-fuel-generated power, especially on the basis of cost.

The ASES' stats show that in 2009, residential-grid-connected photovoltaic, or PV, installations grew 40 percent in the U.S. to 435 megawatts (or MWs as they are referred to in the solar energy world). Doing some quick math here, the typical size for a residential installation is about 2.5 kilowatts. Divide that into 435 MW and the result is 170,000 homes now equipped with solar arrays.

"International markets for solar energy have saturated and plateaued, which has brought the market more to the U.S.," Seth Masia, editor of Solar Today, told HousingWatch. "Solar power installations have averaged about 35 percent to 40 percent annual growth over the past five years [in the U.S.]."
That's a huge jump from 2009 when, says Mike Taylor, the Solar Electric Power Association's director of research, "There were a little more than 40,000 systems installed throughout U.S., 90 percent of those in residential homes."

Masia says the first question that consumers always ask is: "What's this gonna cost me?" Well, lucky for those folks interested in the possibility of home solar energy, the costs have sharply decreased in the past few years.

"Costs were first $8 to $9 per watt, which then decreased to $6 to $7, and now we're at $4 to $5 per watt," he says. "For states with high electricity rates the system could pay for itself in six or seven years. Tack on incentives for switching to renewable energy and it could be as fast at two or three years." For states with a low electricity rate, return on investment could take as long as 20 years, though.

Solar Today's Masia says "saving depends entirely on the size of the system, climate and, critically, on local electricity rates" and offers these statistics:

A 2.5-kilowatt system in San Diego (5.5 sun hours daily is 12.5 cents per kilowatt hour) would save roughly $625 a year on their electric bill. In Chicago (3.15 sun hours at 9.26 cents per kwh) the savings would be $266; in Boston (3.8 hours at 16.27 cents per kwh) would be a $564 yearly savings; and in Honolulu (6 hours at 29.2 cents per kwh) the annual savings would be $1,600.

California and New Jersey are examples of high electricity rate markets, with California coming in at four times as many systems installed, according to SEPA's Taylor. Not surprising, with that state's reputation for being on the forefront of all things environmental. Also, states with high electricity rates have more incentive to look at alternative electricity sources. To find out about incentives in a particular state, check out the Database of State Incentives for Renewables & Efficiency or DSIRE website.

The good news for consumers, says Taylor, is that in the near future, solar companies who install commercial systems will begin offering residential installations which alleviate the high cost for the homeowner of installing their own systems. There would be a monthly fee for residents, similar to their electric bill.

Another possibility is that local utility companies may be willing to pay to get customers onto their system and pay a wholesale rate.

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