We often get the question “is solar energy expensive?” The pricing of solar energy can seem intimidating and is what holds many people back from switching to solar. However, there are numerous cost-saving benefits and tax incentives that can offset that initial investment and save you money over time.
Average Cost of Solar Energy
When someone talks about the cost of solar energy, they are specifically referring to the cost of installation. This is the biggest difference in paying for solar versus traditional energy. The costs for solar energy come from installation rather than monthly payments like they do for traditional energy. Once solar panels have been installed, energy costs are greatly lowered if not completely eliminated. Because of this, the up-front costs of solar energy may seem intimidating, but they are offset by long-term payoffs.
Typically, a house needs five kilowatts of power, and the costs for solar panels to produce this much energy are roughly $15,000 on average. This amount varies depending on where one lives within the United States. Additionally, the costs of solar installation are decreasing. While this number may seem high, the average American pays about $117 a month for electricity. Solar installation may seem expensive, but it is a one-time purchase rather than a perpetual monthly cost.
Learn more about the Solar Tax Credit in this free guide.
Solar Tax Credits
The average cost listed above for solar energy is just the base price with no benefits added. However, there are incentives to encourage people to switch to solar, and the most noteworthy incentive is the federal investment tax credit or ITC. This tax credit reduces the amount of taxes one has to pay when they install solar panels, thereby reducing the costs of switching to solar energy.
This tax credit reduces the costs of solar energy by roughly 30 percent. The $15,000 number used above for a five-kilowatt solar energy installation would actually go down to roughly $11,000 after tax credits have been added. If we were to divide the cost of solar installation by the average monthly cost of standard electricity (11,000/117), we would find that solar installation costs about the same as 94 months of standard electricity or almost eight years. This means that if you plan on staying in your home for any period of time longer than that, the solar panels have already paid for themselves!
Is Solar Energy Expensive?
The initial costs of solar energy may seem intimidating but thanks to tax credits and minimal follow-up costs, solar energy is actually less expensive than standard electricity in the long-run. If you have any additional questions, don’t hesitate to contact us through our website or by phone.